Petroleum was discovered in the Middle East in 1930. Before that, people in the Arab world largely lived a nomadic tribal life. Their main livelihood came from pearl diving and small-scale agriculture. It was, in many ways, a poor economy.
When cultured pearls entered the global market, natural Arabian pearls lost their value. That triggered serious economic hardship in the region.
After the discovery of petroleum, the Middle East economy changed completely. The main reason was the growing use of petroleum in automobiles, aviation, industry, and shipping. Among these, automobiles became one of the largest consumers. According to statistics, the Middle East produces about 32% of the worldโs oil. Of this production, roughly 70% is used in motor vehicles, around 10% in various industries, nearly 6% as aviation fuel, and about 5% for ships. Approximately 43% of that oil is gasoline used in passenger vehicles, while about 27% is diesel used in trucks and similar vehicles.
To prepare for a future without petroleum, the Middle East has started building a parallel economy to reduce dependence on oil. But this diversification is being financed largely by income earned from petroleum. The challenge is that the region is now investing heavily in green energy development, a sector where many countries with limited petroleum resources had already entered much earlier. This reduces the likelihood that green energy exports will generate revenue comparable to past oil exports. Since this transformation is funded entirely by petroleum income, there is a risk that both accumulated wealth and large investments could be jeopardized if the strategy fails.
Instead, the Middle East could have focused on developing sectors whose demand does not decline over time, such as banking and finance. Some European countries have successfully implemented this model.
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