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What Happens When the Wells Run Dry?

By Claude Salhani | Fri, 08 January 2010 22:55 | 8

One nagging question that the industrial world has been asking itself since the discovery of the first oil well is what happens when the wells begin to run dry. The answer is relatively simple to imagine. We had a dry run, so to speak, when Dubai’s economy tanked a few years ago. And although the causes of Dubai’s ills and ails were financial and not oil related, the drama which unfolded gave us a watered-down version of what might transpire if and when the oil wells stop producing.

But before we run the Armageddon tape that the world will stop functioning because of lack of oil, let’s all take a deep breath and think again. The oil companies, the people who manufacture cars and airplanes and legions of scientists and inventors have all been planning for that day. And as far-fetched as it might seem to some of us, that day will undoubtedly come, very probably within our lifetime.

So what is likely to happen? First, the car manufacturers and people who build commercial aircrafts, the two largest consumers of fossil fuels have no doubt plans on what their next generation models will look like and what they will run on. Already some car manufacturers are producing hybrid cars that run partially on electricity. What will transpire will be a massive turn to nuclear energy. It may not be the safest of energies, however nuclear energy remains the cleanest. Or perhaps solar and wind.

So your average American will still be able to drive to the drive-thru bank and restaurant. The above average Chinese will still be able to afford his car and the average European will still be able to enjoy Sunday outings with Grandma sitting in the back seat between the bambinos.

What will change – and drastically so – will be the social-economic face of much of the oil producing countries as well as other nations, where overnight tens of thousands of workers will find themselves suddenly unemployed, broke, and with practically no prospects for any future whatsoever. And herewith lies the danger of a social eruption of near Biblical proportions. Think if you will of the ripple effect that would occur if one of the major oil producers stopped producing.

Take the United Arab Emirates (UAE) one of the major oil-producing states in the Gulf where the local population is outnumbered five-to one.  Out of a population of some 4.8 million less than 20 % are nationals of the country; and even among the nationals, a good percentage very probably hail from other neighboring countries, such as Palestine, Lebanon or other countries in the region.  The bulk of the population -- a whopping 50 percent  -- are from the Indian sub-continent; from India, Pakistan, Bangladesh, Balouchistan or from Iran and Afghanistan.

The same holds true in the rest of the Gulf Cooperation Council states; Kuwait, Saudi Arabia, Qatar, Bahrain, Oman.

They are the people who really make the country function on a day-to-day basis. They are the day laborers who have constructed much of this almost fairy tale-like wonderland, thanks to the petro-dollars which kept pouring in over the decades. They are the workers in the crude oil fields who drilled for this black gold in oven-like temperatures or helped refine it while earning pittances but still being able to sustain an extended family back home.

They are the shopkeepers who know no Sabbath and no rest, the money changers, the taxi drivers, the gardeners who keep hundreds of miles of  lush green lawns and vibrant flower beds carefully manicured and watered in the middle of the desert.

They are the people who do the “small jobs” which are of prime importance to the economy of the land but that receive no credit for their contribution.

The outcome of oil running out would have a ripple effect on every segment of the economy. Similar to what happens when you place hundreds of dominos in a complicated pattern and then knock the first one down.

The first to be affected from the dry wells will those poor souls mentioned in these preceding lines. They would no longer have oil fields or refineries to work in. Overnight, thousands will find themselves unemployed, unable to pay their rent. As was the case in Dubai when the economic crunch hit, thousands will abandon their cars at the airport and hop on a flight home, where they will add to the already heavy load of unemployment.

Now here comes the ripple effect. The sudden departure of these workers will force landlords, restaurants and other businesses to make their staff redundant. The “small jobs” will vanish one after another. The taxi drivers will first run out of gas and second run out of customers. The shop owners will find that their fresh fruits and legumes will begin to wither as their clientele fights for seats on the few remaining flights back home.

Eventually, tens of thousands of stranded expatriates, jobless, penniless and at wits ends will begin to riot. That’s when things begin to turn ugly.

The ripple effect of course will be felt back home with thousands returning to little prospect of anything better than what they had left behind years earlier, and in some instances, decades or entire lifetimes ago.

Of course oil not being an issue any longer the once darling children of the West will be quickly forgotten with the industrialized world concentrating on how to keep their cars running and their planes flying. That is until the disturbances begin to affect the West once again.

By. Claude Salhani for oilprice.com - the no.1 source for oil price information

About the author

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Leave a comment

  • Anonymous on January 09 2010 said:
    Good article there. Very informative.
  • Anonymous on January 13 2010 said:
    When oil becomes more scarce, the price will rise. Since oil fuels everything in the industrial nations, the cost of everything will rise, and so everyone except the very rich will have a lower standard of living.
    Those who lose their jobs permanently, due to the diversion of money to high oil prices will be the most hurt,
  • Anonymous on January 13 2010 said:
    The "Oil Well" will never run dry. When demand exceeds production, bad things have happened and will happen. Oil is the lifeblood of all industrial societies. Building hybrid cars use oil, everything in the car is derived from oil. The mining to extract the natural resources to build the car. The transportation of the natural resources to where the cars are built. The factories uses oil, the workers use oil to get to work. Everything we do uses oil. Everything we touch, all that we eat, uses oil. There is no replacement. This is in all industrial societies, not just the oil producing ones. Our economies assume massive quantities of "cheap" oil. They will fail without it. Enjoy the time we have left. The meek will inherit the earth.
  • Anonymous on January 14 2010 said:
    Agreed a good article, but there are other factors that will contribute to chaos quite a while before we reach the "dry well" state.

    As covered by on subscriber, it's the byproducts that will affect us much quicker, lubricants being a primary one, greases etc. and then the biggest as I see it is plastics. Every gadget, packaging and interiors of our transport vehicles (aircraft, trains cars) are using plastics, the majority of plastic types come from oil. I am under correction, but we have only made a few types of plastics artificially without the use of oil byproducts. So goodbye to cell phone covers, laptop covers, LCD and plasma screen covers, MP3 players, canopies and windows of aircraft etc etc. the list goes on. I believe we will see the chaos long before the last drop of oil. If we look at serious world events in the past we always seem to wake up at the eleventh hour as generally mankind procrastinates far too long before a reaction is made. The Y2K bug is a recent example just in our technology sector.
  • Anonymous on January 16 2010 said:
    After reading this article I found myself thinking of another article by the leading academic energy economist in the world: MY GOOD SELF. In that article, which will also go into my new book, I argue that the strategy of the countries in the Gulf will be as follows: TO PRODUCE AS LITTLE OIL AS POSSIBLE. Their oil (and gas) will be preserved to be used in the production of oil products and petrochemicals. I taught this sort of thing at the African Institute for Economic and Development planning, but NEVER expected to see it practiced, but it will be practiced. I just wish that the government of Sweden was as smart as some of the governments in the Gulf.
  • Anonymous on March 30 2010 said:
    "The meek will inherit the earth."

    Hrmm, nope. The meek will never inherit the Earth. Whomever controls the next source of power will. And the cycle will continue. It's human nature. Sad, but true.
  • Jim on February 07 2013 said:
    What Happens When the Wells Run Dry? The same thing that happened in 1973 when the media started a scare tactic and said that there will be no more oil in the world by 1980 and you’re starting the same thing now and stupid people will buy into it and as soon as the oil companies get the profits they want then everybody will be swimming in oil. I can see it now; gas rationing, odd license plates can gas up one day and even the next. etc
  • bwall49 on March 26 2014 said:
    Your not so subtle reference:

    ..."Of course oil not being an issue any longer the once darling children of the West will be quickly forgotten with the industrialized world concentrating on how to keep their cars running and their planes flying. That is until the disturbances begin to affect the West once again."

    At some point in time, the west will drastically reduce its imported oil for transportation and industry. Then, in the middle east, the sands of the country will swallow-up all the conspicuous consumption of the area as if it never existed...and, the middle east and its culture will just become a vague, bad memory.

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