3 ms·

Interesting that Australia (Western Australia in particular) still hasn't learned this lesson.

• dredmorbius 10y ago
  The effect seems different for regions of countries rather than countries as a whole. For most of the first half of the 20th century, the Saudi Arabia of the world, in terms of oil extraction, was the United States. But the situation was moderated by a few factors, at least as I see it: 1. The US had an industrial capacity (though much of that developed over this period), largely in the northeast. Much of the oil production was in economically underdeveloped regions of the country, particularly Texas and Oklahoma. 2. There wasn't a large world market for oil initially. Oil demand was being built up as supply was established. Flooding the market with cheap oil money simply didn't happen. Actually, demand was so low relative to extraction costs that oil prices hit a low of two cents per barrel after the 1930 East Texas Oilfield discovery (see Daniel Yergin's The Prize for an extended discussion of this). 3) WWII. The economic climate from 1930 - 1945 was not one of what we consider conventional growth markets. Initially the problem was the Great Depression, during which global economic activity contracted markedly. Then came the command economy of WWII. In the aftermath, the US was both the sole oil and economic power left standing. 4) By the time other countries were establishing themselves as substantial consumers of oil, the US itself had begun importing oil from Saudi Arabia. I'm not aware of formal economic treatments of this, though it strikes me that the US experience was significantly different from that of, say, Argentina, Saudi Arabia, or even Russia / the USSR.