The $300 billion bonanza

The $300 billion bonanza

Sep 23rd 2004
From The Economist print edition

What might oil producers do with all that extra cash?

IT SHOULD be easy to work out what people with $300 billion to spend are doing with their money. According to America’s Department of Energy, that is the sum that members of the Organisation of Petroleum Exporting Countries (OPEC) will haul in this year. Thanks to the surge in the price of oil, to nearly $50 a barrel a few weeks ago, the cartel’s export earnings are running at almost three times what they were in 1998, when a barrel fetched only around $10.

In fact, getting to the bottom of the bonanza is no simple task. For a start, the amount of oil exported is not known with great precision, thanks to OPEC’s secretiveness about production capacity. That makes it impossible to put a precise figure on OPEC’s revenues. Sharif Ghalib of the Energy Intelligence Group, an industry publisher, uses different assumptions from the Department of Energy and comes up with a figure of $360 billion.

As for what is being done with the money, it is hard to unravel patterns of domestic spending inside OPEC, given that the accounts of most oil producers are not worth the paper they are printed on. Finally, it is tricky to work out the impact of