Post

This is a very interesting short piece that gets to the core issues… open.substack.com/pub/gerardre...

“The most important consequence of the ongoing crisis in the Gulf will most likely …be ..the economic shock that follows as rising energy prices …Oil and gas sit are the basis of modern industry and when their prices rise the impact quickly moves far beyond the energy sector itself.”

“Chemicals, fertilisers, plastics, transport and manufacturing all depend heavily on hydrocarbons as fuels or feedstocks and as those input costs rise they are gradually passed through the entire system.”

The longer the crisis persists the greater these impact become because higher energy costs accumulate across supply chains, the result of which is rising inflation, slowing economic growth, economic pain and social unrest."

This is also why the deeper consequence of the current crisis may not be the short term price spike but the longer term acceleration away from fossil fuels. Countries that depend heavily on imported fuels are reminded with every crisis that their economies remain exposed to geopolitical shocks.”

My comment: You can see that any such shift will mean diminished global economic importance of GCC hydrocarbons. The question is this: how can the GCC countries adapt to the likely shift while containing the economic and social consequences for their societies ?

These were the questions that Keith Joseph was asking in the late 1970s about the UK. It’s also the question that Argentines were asking after the fall of the military junta in the 1980s and the Singaporeans have been asking themselves about their own role in the aftermath of US tarrifs.