I imagine that the drop in oil prices is keeping Gulf rulers occupied. The last time oil prices fell so steeply was shortly after the Asian crisis in 1998. Oil prices fell to $10 a barrel at the time. It cost just $15 to fill up the average mid-sized car versus $55 today.
But a lot has changed in the past decade. In 1998, Gulf rulers were fixated by just oil prices. Today, they are equally fixated by stock prices. Why? The Gulf countries have over a $1,000 billion dollars invested in foreign assets. The returns are an increasingly important source of income.
Kuwait’s experience illustrates the point. I estimate its oil exports will be worth around $80 billion this year. This is roughly equivalent to $257,000 per Kuwait household. It’s not a bad annual income.