Russia has been sitting pretty on its natural gas and can yank European countries around without any repercussions. But time is nigh when petrostates will lose their economic leverage. Already, the US is trying to reach energy independence from fracking. Brazil is exploiting its deep-sea oil reserves. And even with oil lobbies resisting any policy for change, developments are being made that will one day allow for alternative energy to heat homes and provide transport. Petrol dependent countries have to take signal for recent fluctuation in the demand and prices for oil and gas and innovate fast to keep ahead before petrol becomes a Dutch Disease. Revenue from selling oil and gas will decline within a few decades in countries that are unlikely to find much in the way of new reserves, like Nigeria and Saudi Arabia. Industries linked to petroleum, such as chemicals and refining will suffer as well.
The list of countries that rely on petroleum for at least half of their revenue include Kuwait, Iraq, Saudi Arabia, Qatar, Libya, Nigeria, and Iran (amongst a total of about 20 countries). These countries will also have narrow tax-bases. A shock to petroleum will cripple economies, especially in North Africa. Chad, Ivory Coast and Nigeria have the worse tax rates in the world. These countries will collapse when oil prices fall.
Before the Gulf collapse altogether, their petrodollars need to generate alternative sources of revenue, and now. One would assume that with huge sovereign wealth funds, the Arab states could ride out a shock, but this cannot be relied upon. A country like Saudi Arabia has a larger population and needs over $85/barrel to keep its population happy. The Saudis have started to diversify, though, broadening its petro-economy, not just as a producer, but a refiner, and producer of petro-based products. What does this mean for us at home? It means a whole new economic plan in the long term. Though oil prices have dipped, the search to find alternatives has not yet been coupled with the certain scarcity of oil in the future. It would be better for us all if alternative energies became commercially viable before pertrostates go bust.