Quite dicy… is it the end of the oil gulf countries with the rise of a new Avatar, “The EVs”.
The main exporters of oil and gas in the world are the Middle Eastern countries, and a large dependency of their revenues is on these resources. If you have the oil well, you are the Sultan of the world. But the story looks quite different with electric vehicles and the urge to move towards sustainability or to use more eco-friendly resources.
The world is always revolutionizing with new models of revenue generation ideas as well as different techniques to survive in the world and also save the planet Earth (our home). However, with every revolutionary concept, we do miss the old ways of living, and hence they become a part of our rendezvous to visit from time to time.
Let’s now dive into the reality of the Middle Eastern countries and how they going to be affected hugely due to the electrification of transportation.
- Middle Eastern countries can benefit from the higher oil prices by increasing their export earnings and fiscal revenues, used for funding public services, social welfare, and economic diversification. However, there is always one, an increase in oil prices increases the demand for EVs in other regions leading to a reduction in the long-term market share and influence the Middle Eastern Oil producers.
- Middle Eastern countries are harmed by the Lower oil prices by reducing the export earnings and fiscal revenues leading to budget deficits, debt accumulation, and social unrest. However, lower oil prices slow down the EV adoption in other regions prolonging the dependency and relevance of the Middle Eastern oil producers.
- Middle Eastern countries are challenged by the Lower EV costs by accelerating the global transition for clean energy and reducing the demand and price of oil and gas in the long run. The economic and political stability of the Middle Eastern producers can be undermined unless and until the diversification of their economies and investment in renewable energy sources.
- EV costs are lowered by the impact of the Middle Eastern countries and vary depending on the level of development, policy support, consumer behavior, and energy security.
- The largest oil producer and exporter in the Middle East countries is Saudi Arabia with moderate policy support for vehicle electrification. Saudi Arabia is one of the major consumers of oil and gas and faces huge economic development and environmental challenges. Therefore, lower EV costs can negatively affect Saudi Arabia which ultimately reduces its export earnings and fiscal revenues, affected by lower EV costs and reducing its domestic energy consumption and pollution levels.
- The second largest oil producer and exporter in the Middle East country is The United Arab Emirates (UAE) with a high policy support for vehicle electrification. One of the major consumers of oil and gas is the UAE and it faces energy security and climate change challenges. The UAE also benefits from both lower EV costs with an increase in its domestic energy security and climate ambition, and lower oil prices reducing its import bill.
- The third largest oil producer and exporter in the Middle East is Iran with low policy support for vehicle electrification. Iran is also a major consumer of oil and gas and faces huge economic sanctions and geopolitical challenges. Therefore, Iran is negatively affected by both lower EV costs that reduce the export earnings and market share, and lower oil prices that increase its economic pressure.
Nevertheless, if Oil prices go down, then the companies lose their value in the market value, leading to the loss of huge wealth. When the use of Oil is reduced to an insignificant amount, the change will be drastic for selling oil at such a low value, you need to use stop loss, beyond that it cannot be diminished.
But will it support the vehicle companies to resell their traditional car with the same old fuel at a lower price, and will it provide a guilty nature for using fuel that is not eco-friendly and you are supporting in saving our country?
As we go to purchase a vehicle, we get lots of options to decide which one to choose, depending on various factors but the most important factor is whether it falls in our budget, and then we take the necessary steps needed to meet the environmental needs.
So, now can we get the same options when it comes to fuel? And the options which one to go forward with? And after that, we can take the necessary measures needed for the environmental ticks to meet.
Do you think it is possible, that the price of oil fuel is reduced way low to match the capacity to compete the electrification charge? Will those Oil-enriched countries allow this to happen and let their economy become too weak to handle for themselves?
Can we go back to the past and travel the world without using oil but live in the future of electrification?
Too much dependency on the electricity. Everything is just charging and charging.