Khalid Al-Sulaiman

Okaz

 

IT seems the economic boom is slowing down with the decrease in oil prices. Oil-based governments will probably begin tightening their purses when their upcoming budgets are announced, as oil and its derivatives are the primary source of income for these states.



They might find themselves obliged to spend from accumulated savings to make up for the shortages. Savings cannot close the deficit forever, however. Gulf countries witnessed in the past a sharp reduction in oil prices, with the sharpest decrease hitting $8 a barrel. The increase following this slump hit $40, indicating the return of economic boom. But the ambitions of spending exceeded this level significantly, with price thresholds exceeding $80 and later $100.



Today, there are warnings oil prices might drop to $50 and maybe less. Although Gulf oil officials have many times tried to calm these fears, it seems the situation is out of control as the people of these countries are worried sick. The people view these statements as unrealistic, especially in light of ideas regarding the imposition of taxes and the reduction of some subsidized programs in order to face the post-oil era.



Each and every oil company will show now how they benefited from the economic boom and whether they have invested their huge revenue in developing its present and building its future. Most importantly, how did it save a penny for a rainy day?