Falling demand has also depressed oil prices. For years, China binged on oil, but its slumping economy has reduced demand for energy and materials. Add to that more conservation in the developed world, better battery technology and more reliance on natural gas for transportation. Meanwhile, technology breakthroughs have reduced many of the costs of drilling and exploration.
Nowadays, countries dependent on oil income can’t afford to wait. So they are casting about for some way to “stabilize” prices — that is, get them back up. Next month, 15 oil-producing countries, which together account for 73 percent of global output, are set to meet to discuss freezing supply at January levels. But it will be hard to muster a consensus, in part because members are competing for market share, and some, such as Iran and Iraq, are struggling to get back into the game. Chances are that prices are likely to remain low — in the $30 to $50 range — for the foreseeable future.
The fallout will touch nearly every aspect of international relations — particularly for those Middle Eastern, African and Latin American countries (and Russia), where oil has not only shaped economies but also has determined a way of life and pervaded the very nature of society.
Take Saudi Arabia, the world’s largest oil exporter. Oil revenues have constituted 75 to 90 percent of the budget over the last three years. Oil finances nearly all public services. Sixty percent of workers are in the public sector; oil funds their salaries. In a country where the gap between the haves (mostly the royal circle) and the have-nots (everyone else) is enormous, oil revenues have provided a kind of balm against Arab Spring–like protests. Since 2011, the royal family has pumped billions into public works and subsidies. But this is eroding Saudi currency reserves faster than they can be replaced.
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