Popular unrest in Tunisia and Egypt has already triggered changes or palace coups at the top and dominated the news for some time. Now, popular anger is spilling over into the streets of Aden and Sanaa in Yemen, and Manama in Bahrain. Apart from a lack of basic freedoms, or ruling elites that have overstayed their welcome despite subsidizing fuel and food for their massive underclasses, what else could these four oil-producing countries have in common that could shed some light on what is going on?

We think it is this:

Figure 1: Crude Oil Production (blue), Consumption (red) and Net Exports (green) for Egypt, Tunisia, Yemen and Bahrain (total for all four) from 1980 - 2009

The chart above was based on the Energy Information Administration (EIA) dataset generated for the baobab 2050 report titled Net Oil Exports will Fall To Zero Long Before Oil Production Does. Note that the dataset ends with 2009 data, as the EIA has not yet released its data for 2010 on its website. However it is a safe bet that the strong trend for declining net oil export probably continued, meaning that net exports as at the end of 2010 were down almost 60% from 2007, or down 80% in just fifteen years since the net export peak in 1995.

Could the impending disappearance of the little oil export revenue still coming in as at the end of 2009 have anything to do with the unrest in Egypt, Tunisia, Yemen and Bahrain? Figure 2 below may offer a clue:

Figure 2: Crude Oil Production (blue), Consumption (red) and Net Exports (green) for Saudi Arabia, Kuwait and the UAE (total for all three) from 1980 - 2009

Saudi Arabia, Kuwait and the UAE have a total population of about 33 million, including immigrant workers. As we can see from Figure 2 above, these three countries produce about 15.5 million barrels of oil per day and export 12.2 million barrels per day. At $100 per barrel, their gross export earnings per capita for every man, woman, child and immigrant worker ring in at $13,500 per capita per annum.

The four countries experiencing unrest have a smaller crude oil output, more than thirteen times less than the three gulf states, but a population over three times that of their rich cousins. As we can see from Figure 1 above, Egypt, Tunisia, Yemen and Bahrain together now have a production of about 1.15 million barrels of oil per day and net oil exports of about 150 thousand barrels per day. With a total population of about 113 million, the gross export earnings for every man, woman and child in these four countries at $100 / barrel is the grand sum of $48 per capita per annum – two hundred and eighty times less than the $13,500 raked in by their oil-rich Gulf cousins.

The ruling elites and families of the four countries that experienced unrest did their best for decades to keep the masses appeased while enriching themselves, but now the party lights are being snuffed out, along with what is left of the small revenue from oil exports of yesteryear. Revenues from net oil exports not only padded Swiss bank accounts, they also used to fund part of the fuel and food subsidies that kept the impoverished, underemployed and rapidly swelling populations at bay despite the lack of basic freedoms. Now that the windfall is disappearing, Christopher Davidson, a specialist in Gulf affairs at the University of Durham, is not surprised that the Arab street is flaring up:

Unlike oil-rich Qatar, Kuwait, and the United Arab Emirates, Bahrain doesn’t have petrodollars to spend on the cradle-to-grave welfare systems that have kept a lid on reform movements in those countries.

Christopher Davidson, a specialist in Gulf Affairs at the University of Durham in the United Kingdom, says the situation in Bahrain should be seen as a case of economic disenfranchisement magnified by underlying sectarian tensions.

“Post-oil Bahrain has unemployment and few opportunities for the young population,” he says. “However, there is the added dimension of sectarian unrest, with the Shia majority population having historically been second-class citizens to the ruling Sunni elites.”

The rulers of Saudi Arabia, Kuwait and the UAE may well survive this wave of unrest and revolutions sweeping the Middle East and North Africa thanks to the endless supply of petrodollars which can keep their populations fed and appeased for the most part. But one day, sooner than most people think, their net exports will also be tumbling towards the zero point as production declines set in while consumption continues to grow exponentially. Whether their populations will wait until the bitter end, as did the populations of Egypt, Tunisia, Bahrain and Yemen, is the $64 million dollar question.

21 Feb 2011: Since posting the above five days ago, events in Libya have flared to the point that the downfall of the Gaddafi regime now appears imminent. Libya’s net export profile is more like the Kuwaiti, Saudi and UAE, with about $8,800 in earnings from net oil exports per capita per annum. So how come the regime hasn’t bought off the Libyan people? This goes back to the specific methods employed by Gaddafi to hang on to power over four decades. Tribal allegiances in Libya are very strong, and so far he has played off one tribe against another. His luck has almost certainly ran out.

Here is the chart for Libya’s oil net export profile:

Figure 3: Production (blue), Consumption (red) and Net Exports (green) of Crude Oil for Libya, 1980 - 2009

And here are some comments of Saif al-Islam Gaddafi where the oil wealth is mentioned, in a live televised broadcast to the Libyan tribes:

“Libya has oil, and it is oil that has unified Libya … Who has the ability to manage oil in Libya? Where will the National Oil Company be based? In Tripoli … Baida, or Sabha? How can we split the oil? Where will we get the money to spend on our children?

“Do you expect the Libyans, if partition occurs or if a civil war occurs … to reach an agreement on how to share oil within a week, a month, two or three years?

So another equilibrium outcome is possible even when there appears to be sufficient oil wealth to appease the masses in police states: a new elite takes advantage of events to push out the old elite and take control of the oil wealth. Which should not be a surprise to anyone who is familiar with the balancing acts that Gaddafi had to pull off in a multi-tribe country where tribal allegiances are the strongest bond of all. The question then becomes whether such pretenders or aspirants to power exist in Saudi Arabia or Kuwait.