Oil… the Heart of the Matter

By Jumana Ghunaimat

تم نشره في Wed 24 August / Aug 2016. 12:00 AM
  • Jumana Ghunaimat

Oil producing countries lost a massive amount of financial resources, all around, due to the regression of oil prices recently, from over USD100 to around USD55 give and take.

To us, what matters, as Arabs, is the situation in Gulf countries, whose revenues of this particularly strategic commodity have fallen by roughly USD150 billion last year, in 2015, alone, with expectations of this to happen again this year, on a proximate scale, in spite of the slight increase in oil prices.

The years upcoming do not look my brighter for oil producer countries. Anticipations indicate prices will maintain the same range in the future, which means that these countries will endure a financially discomforting situation, given the price that breaks them even does remains above or around; at best, USD90 per barrel. Which is a number that is relatively beyond reach in the meantime, according to global studies.

Moreover, as the region whirls further into the turmoils of war, with ransom resources invested, in hand with enormous expenditures necessitated to retain the security networks nationwide; also accumulating more costs with the years; all this caused governments to control spending in accords to the emergently dominating financial and economic situation.

Notably, going through Gulf country decisions in light of the collapsing prices of oil in the global marketplace, they all raised fuel prices to help bridge the resulting deficits of this global predicament.

The United Arab Emirates, Kuwait, Saudi Arabia, as well as Bahrain and Qatar, all have made decisions of the sort in regards to the prices of fuels and oil derivatives intended to control spending in these categories, now that they went beyond the point of financial excess, with the prices of oil having decreased to around USD30 per barrel at one point.

Meanwhile, these states have begun to consider non-oil-related sources of revenue and income, reflective in their investment plans underway. Accordingly, the Saudi 2030 Vision, to preface the post-oil phase, was launched, to begin investment diversifications globally via investment funds. Other countries have fallen in line as well; albeit in lesser scales.

On contraire to the crisis in Gulf oil producers, Jordan endures a relatively less threatening situation; under much less strain. However, it still faces the culminating pressures of inflating energy demands, which is reflective on the Public Budget and Balance with much burdens that contribute to increasing financial deficits and indebtedness.

However similar, the issues oil producing countries have differ from those non-oil countries endure; either in scale or percussion, next to the variation in the suffering inflicted by price fluctuations of oil on every country’s economy, which may quite necessarily be extremely contradictive. While oil producer countries rejoice price leaps in the global oil market, Jordan hold its breath. And if, given the oil crisis, Gulf countries, with their massive industries, have had to increase prices and enact new taxation laws, what other choice does Jordan have?

Even oil countries had to increase fuel prices; what else can Jordan do? What options at hand incur less damage to consumer segments across society?

Everybody knows the Ministry of Energy has an accurate and thorough study on expectations and oil price predictions, as well as of reflections on Treasury and consumer. Scenarios to increase prices with the beginning of next year have been under-consideration since the government’s recent agreements with the International Monetary Fund (IMF), to arrive at the scenario entailing the least possible effects on lower-income segments of society.

The government has been able to put off the price increase a few months, but further delay is most probably “pushing it”. Therefore, we need to actually get ready, consider the public’s financial situation, particularly since growth in median incomes is barely touchable, which necessitates we tread carefully with this!