OPEC’s $1 Trillion Cash Quiets Poor on $100 Oil
By Ayesha Daya and Vivian Salama - Sep 19, 2011 4:01 PM ET .
Egyptian demonstrators rally in downtown Cairo's Tahrir square on July 29, 2011. Photographer: Khaled Desouki/AFP/Getty Images
Chart: OPEC Oil Revenue
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Saudi Arabia will spend $43 billion on its poorer citizens and religious institutions. Kuwaitis are getting free food for a year. Civil servants in Algeria received a 34 percent pay rise. Desert cities in the United Arab Emirates may soon enjoy uninterrupted electricity.
Organization of Petroleum Exporting Countries members are poised to earn an unprecedented $1 trillion this year, according to the U.S. Energy Department, as the group’s benchmark oil measure exceeded $100 a barrel for the longest period ever. They are promising to plow record amounts into public and social programs after pro-democracy movements overthrew rulers in Tunisia, Egypt and Libya and spread to Yemen and Syria.
Unlike past booms, when Abu Dhabi bought English soccer club Manchester City and Qatar acquired a stake in luxury carmaker Porsche SE, Gulf nations pledged $150 billion in additional spending this year on their citizens. They will need to keep U.S. benchmark West Texas Intermediate crude oil at more than $80 a barrel to afford their promises, according to Bank of America Corp.
“A sharp increase in spending to accommodate social pressures has averted potential disquiet over governance in most countries, though in the longer-term economic reforms will be needed to buoy private-sector growth and job creation,” Jean- Michel Saliba, a London-based economist at Bank of America, said in an e-mail Sept. 8. “Without the social spending, Gulf protests would possibly move the nations toward constitutional monarchy.”
OPEC’s basket of crudes, a weighted average of the group’s main export grades, has been trading at above $100 since Feb. 21. The basket price was $110.69 a barrel on Sept. 16 while WTI on the New York Mercantile Exchange closed that day at $87.96.
for complete:
http://www.bloomberg.com/news/2011-09-19/opec-s-1t-cash-quiets-poor-on-longest-ever-100-oil.html
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