LONDON — Back in the golden bubble days when stock markets were riding high and a barrel of crude oil sold for more than $140, there was no doubt which countries were getting richest quickest.

The Arab oil producers found themselves at the receiving end of a tidal flow of cash that they piled up in sovereign funds and investments round the world, while also enjoying an easy and hugely luxurious lifestyle.

Now things are different. Could the sharp drop in crude oil prices, combined with longer-term global aspirations to reduce oil dependence, lead Persian Gulf oil-producing states to reassess their priorities and development prospects?

Certainly in OPEC circles and among policymakers in the leading producer states there are some signs of apprehension. They can see a picture emerging, at least in the West and in Japan, of a world of electric transport, nuclear electricity, far greater energy use efficiency and green non-oil energy sources, notably wind power, biofuels and solar power in place of the almost total world oil dependence of the last century.

In one major oil producer — Saudi Arabia — the reaction to this longer-term prospect has already been made very clear, and it is a negative one. “World climate talks,” says Saudi negotiator Mohammad Al Sabban, “threaten Saudi Arabia’s economic survival.” He adds frankly that “Saudi Arabia has not done that much yet to diversify.”

Middle East comment is thick with estimates of the crude oil prices the various oil producers now “need.” The concept of “need” of course varies from country to country, with Iran and Iraq to the fore “needing” oil revenues as high as possible for political survival and to finance and subsidize populist policies, as against the more prudent “needs” of, say, the Saudis or Oman, being to fill budget gaps and to avoid delaying certain projects launched in the past when oil revenues looked set to be much higher.

Generally, a consensus among OPEC producers is that a crude price of around $75 is what is “needed.” The question is to what extent this can be engineered, if at all, by OPEC production restraints.

First, there is the proverbial tendency of certain OPEC members not to cooperate with production cuts, or to agree to them verbally but ignore them in practice. Second, in the immediate situation, inventories are brim full, both in America and Europe. In Rotterdam, storage tanks have no further space while harbor and coastal berths are crowded with moored and full oil tankers, all waiting hopefully for higher (around $80) crude prices ahead.

Of course, futures markets have been spectacularly wrong in recent times. Prudent budget makers in the Gulf states need to plan on oil prices remaining weak for some time ahead, and “some time” could mean anything from a year to six years, depending on which expert or forecasting guru one listens to.

Some Arab states plan gloomily, but realistically, for a major and lasting decline in oil revenues, well beyond the present recession, with the consequent need for a radical acceleration of diversification and related industrial and social change. An extreme example of this model would be Dubai, which had the incentivizing “benefit” of running out of oil anyway and has diversified dramatically, and initially with apparent success, into an entirely different pattern.

However, Dubai’s mounting debts and bankruptcies have led to some shaking of Arab heads about the dangers of going too fast along this route. Bahrain, with dwindling oil output, serves as a less extreme example of this pattern, or has at any rate avoided the property bubble effects and spending inefficiencies that have forced Dubai to turn next door to Abu Dhabi for help.

There are those, too, who simply hope things will return to business as usual, meaning the sky-high prices of 2007-2008 when there was talk of crude soaring to $200. Prominent in this category are Iran and Venezuela.

Others again, such as Kuwait, Qatar and Oman, and indeed Saudi Arabia itself, despite its gloomy spokesman, see something in between, such as a moderate firming of oil prices when the global recession eases, combined with the real need to branch out into both low-carbon projects, such as eco-cities and massive solar power developments, plus the growth of new export industries to fill the gap left by lower earnings.

Somewhere among these assessments and hopes there is a place for a real vision of a more stable and more prosperous Arabia, lifting itself free from the “curse of oil” and from the unbalanced and distorted societies, and disparities of wealth, that have been the hallmark of the oil-producing states.

Perhaps this might then open the path to a more dynamic and creative pattern of social and economic advance, recalling the medieval days of Arab greatness and intellectual leadership to which the whole world once looked for enlightenment.

David Howell is a former British Cabinet minister and former chairman of the Commons Foreign Affairs Committee. He is now a member of the House of Lords. Web site: howelld@parliament.uk

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.