Lately, I have been thinking about what will happen if oil
prices continue their downward spiral. I
live in Abu Dhabi, a heavily oil-dependent region of the United Arab
Emirates. According to the Emirate’s
official source of statistics, oil single-handedly dominates 55 percent of Abu
Dhabi’s GDP, a sizeable chunk I would say. (Source: SCAD, 2012). As a resident of
this glitzy place, and a well-remunerated employee of the public sector, the
plunging oil prices pose a palpable threat to me – yes, to my person!
Does this oil crisis mean an end for expats in Abu Dhabi? The
local press will have you believe that it doesn’t – at least not yet. Economists
at the Department of Economic Development are saying that the economy is
impervious; that there is plenty of financial padding; that the government’s priority
investments and projects will continue without a dent; and that the Emirate’s big
public sector will remain as is. I can’t help but expect the exact opposite –
especially with regards to the last point.
Saudi Arabia is determined to dominate the oil market even
if it means bringing the oil price down to $40, $30 or even $20 per barrel (See
article: Falling Oil Prices: This time around, it will be different http://www.irishtimes.com/business/energy-and-resources/falling-oil-prices-this-time-around-it-will-be-different-1.2051157).
This is scary, and it can only mean one
thing – in Abu Dhabi, there will be government cutbacks on admin spending, and
salaries, AND an additional threat of income taxes. What was so attractive
about this region will no longer be. The dream of the Middle East, a life of
riches and beauty, will come to an abrupt end for many expatriates!
Whatever Saudi’s motivation behind the manipulation of the
market, be it the dominance of the oil market, or geopolitical interests of its
western allies, please STOP the downward slide of oil prices!
