Here's why this is relevant in light of the subsequent decades and the oil boom of the 2000s: the benefits did not essentially change oil-sloshed economies. It reinforced the economies' dependence on oil while also entrenching the rulers in their often repressive, always non-democratic ways. As Lamb wrote in 1987, words that still apply today, "What the governments really accomplish with such largesse was to buy off everyone."
Oil prices struck $147 a barrel in July 2008, shattering the old record (in actual and inflation-adjusted dollars). The reasons were many, including China's soaring demand for oil, limited capacity to increase production in oil-producing nations, and wildcat speculation on stock exchanges.
But what Lamb wrote in 1987 was just as true in the 2000s. Arab and oil-producing nations of the Middle East did not use their new wealth to modernize their political structures, to become more transparent, to become more democratic. They did, in Bahrain, the United Arab Emirates and Qatar, use their new wealth to diversify their economies, but that's where it ended. And even their investment schemes began to fater. The new oil-price increases also signaled that the 1990s era of cheap oil was over. It's highly unlikely that such an era would return. The International Energy Agency predicts that because of steadily rising demand, the world needs to add new oil production at a rate of 3.5 million barrels each year, on top of today's production level of 89.9 million barrels a day. By 2013, the world is expected to consume 94.1 million barrels per day. That's an average consumption growth of 1.6 percent a year. The agency predicts that "developing countries will drive demand growth, their total consumption equaling that of mature economies by 2015.” Asia, the Middle East and Latin America will account for nearly 90% of demand growth over the five-year forecast period, the IEA projects.
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