December 2004
Columns

Editorial Comment

OPEC income trends
Vol. 225 No. 12
Editorial
Fischer
PERRY A. FISCHER, EDITOR  

Women bear OPEC's burden. I was grocery shopping the other day, trying to decide which laundry detergent to buy. Do I pick the blue bottle on the left, the one with the magic blue crystals? Or should I choose the white bottle on the right, the one with the oxy boosters? I'm always paranoid in these decisions, knowing that my choice has been subliminally determined by marketers. And, because it's subliminal, I have no clue as to how I've been manipulated. I was trying to remember what the signs said behind the soap spokesman on TV. Was it Oxyboosters – keeping your laundry white, repeated 50 times on the wall behind him? “Shut up, you think too much!” I told myself, reaching for the white bottle on the right. A woman – an Indian woman, I'm guessing, judging from her clothes and the red dot on her forehead – had sidled up beside me.

She preferred the magic crystals, and reached for the blue bottle on the left, keeping her head in a submissive, downward pose. Her hands and forearms were perfect and graceful, as best I could see (she was heavily clothed in flowing garments). She gave a furtive glance toward my wife and me before hurrying away. I could see that her face was disfigured. It may seem strange, but, by the time I'd left the store, I was thinking about Matt Simmons, the oilfield investment banker.

Among the many topics that Mr. Simmons has addressed – all centered on the supply and demand of oil – he has lately been discussing the per capita income of OPEC countries. He makes the point that increasing poverty in most of the OPEC countries is a major contributor to terrorism. As the tables on this page show, despite its oil wealth, most of OPEC is slipping into greater poverty. Unfortunately, Matt uses 1982 as a comparative year – there could not be a more atypical year. Even so, his point is valid.

   OPEC demographics    
      Population
(Thousands of people)

GDP per capita,
US$

2002 in
1987
US$
  
          1982     1992     2002     1982     2002   
  
  
   Algeria 20,192 26,581 31,476 2,235 1,720 1,290   
   Indonesia 155,157 184,490 218,700 607 792 594   
   Iran 42,313 56,656 65,969 2,922 1,613 1,210   
   Iraq 14,110 18,310 24,220 2,606 1,078 809   
   Kuwait 1,500 1,422 2,364 14,391 14,944 11,208   
   Libya 3,335 4,492 5,535 9,493 3,567 2,675   
   Nigeria 75,774 101,884 132,909 1,018 321 240   
   Qatar 273 492 611 27,828 30,779 23,084   
   Saudi Arabia 10,491 16,831 22,110 11,548 8,635 6,476   
   UAE 1,216 2,083 3,049 25,179 23,368 17,526   
   Venezuela 15,496 20,440 25,099 4,255 3,759 2,819   
  
  
   Totals    340,307    433,681    523,048    1,932    1,566    1,175   
   Source: OPEC Statistical Bulletin 2004   

   What prosperity do normal countries enjoy?   
      2002 GDP per capita, US$   
  
  
   Argentina  7,170   
   Australia 19,070   
   Belgium 22,370   
   Greece 11,030   
   Ireland 26,890   
   Mexico  6,150   
   Spain 14,570   
   OPEC  1,566   

There are noteworthy exceptions, such as the UAE, Kuwait and Qatar. However, according to Simmons, even for Saudi to enjoy per capita income similar to say, Spain, oil would have to average $50 per barrel. Moreover, for all of OPEC, on average, to achieve Spain's per capita income, oil would have to rise to between $105 and $182 per barrel.

An editor friend of mine had also seen this particular presentation. We were discussing it on the phone:

“Why is it our [wealthy importing nations] responsibility to help OPEC?” he asked.

“It isn't our responsibility,” I answered, “It's just that it would be in our best long-term interest. Of course, $50 and higher oil is also in the best interest of an energy investment banker.”

After hanging up, it occurred to me that per capita income is a ratio; so, it's not surprising that an investment banker would focus on the numerator – money – when a casual look at the tables would clearly indicate that the denominator – population growth – is also a problem, perhaps a greater problem than oil income. And what is the best way to deal with runaway population growth? At the risk of being on the wrong side of Rush Limbaugh's “femiNazis” squad, it's the 1980's phrase: empowerment of women.

While the big, industrialized nations such as Japan, Europe, the US and even China (although by draconian means) have their population growth under control, (and in some cases, too much under control) the OPEC countries do not. Although there is some hope that, at least globally, population growth will lessen, particularly as women become more educated and join in the business workforce, this is a particularly distant hope in the Middle Eastern oil-exporting countries. That most of the world's oil exporters can no longer rely on oil revenues to keep up with rampant population growth means a continuing increase in poverty. And I am sure that nothing good will come of it. Saudi Arabia is one of the most critical in this regard.

At present, within these countries, most of the solution is focused on expanding oil exports and economic diversification. The average Saudi woman has six children. So without empowering women, this is again focusing on the income side of the problem. Root of the problem is deeply embedded in culture and religion, but change in these beliefs and attitudes, to the extent that it is occurring at all, is not keeping up with the problem. I know little about cultures different from my own, whether in the OPEC countries or otherwise; and most people's knowledge about other cultures is similarly deprived.

For those reasons, this cannot be a solution imposed from the outside. Yet these countries must come to terms with ancient traditions that will drive people into crushing poverty (and resentment) in a modern world.

I saw the Indian lady again at the checkout counter. This time, I got a much better look at her face. Though the evidence would argue otherwise, I found myself hoping, perversely, that she suffered those hideous burns in a fire.  WO


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