End Of Oil’s Golden Days
Category: Business

WE hope the oil-rich countries will start realizing that the future of oil and oil prices don’t look as promising as it used to. The dream of reaching $100 per barrel or closer is over.

For the next five to ten years, the oil price will hover within the close range of $60 to $65, if we are being optimistic about the latter level. The recent events in the Gulf is a great illustration of the fact that the previous panic of the oil markets and the sudden surge in oil prices as well as the concern over the supply security and the importance of the Gulf are no longer there.

The American administration has admitted that the Gulf, as an oil supply route, is not that important and not of domestic concerns as it will not will any supply disruption. USA has sufficiently supplied, and the world should tackle its oil concerns, while Asian consumers must take care of their oil supply security. In the meantime, USA shale oil has become the top exporter of oil to China, ahead of all OPEC countries.

This brings us to our country – Kuwait, and the continuous increase in our annual budget for expenditures, something that we can’t see any end to. There is continuous dependence on oil income by more than 92 percent, without the realization that our government, in the last five years if not more, failed to balance its budget. It had to use our financial reserve to fill the gap such that the country, within the coming four to five years, will be completely out of reserve.

We used $15 billion from our financial reserve in the last five years to meet the deficit or balance the budget. This means we have to find new sources of income to finance our state budget in the coming years especially since the oil prices will not move above $65 per barrel.

This means we will be annually incurring more deficits and increasing our state expenses, in anticipation of the oil price increasing year by year. We do not realize or we are ignoring the fact that the barrel price will not go beyond $65, but will most likely to remain down at $60 per barrel. Our asking price to balance our budget today and tomorrow must be within the level of $80, but this level will be impossible to reach and will not be acceptable to the USA administration which is looking for a barrel price anything below $70. The good old days have gone. We did nothing to find an alternative source of income.

Since 1965, our guardians have been pushing us to seek new source of income. Now, after 54 years, we are still dependent on one source of income. At the same time, our government is promising to find and create 35,000 new jobs every year, at a time when it is impossible for the oil price to go above $65 a barrel. We hope the message has been received and read well, and necessary action will be taken before it is too late.

30 Jun, 2019 15928
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