Oil is too important and sweet to ignore in favor of other sources of energy. Cordesman (2004, p. 15) elucidates that the national significance and importance of oil in oil exporting countries of the Middle East is only possible under relatively democratic governance structure. In fact, countries like Qatar and Saudi Arabia that exercises relatively democratic governance with proper regulations for the distribution of revenue from oil enjoys significant development. Unfortunately, the majority of countries in the Middle East experience leadership that are opposite those of Qatar and Saudi Arabia.
Consequently, bad oil politics drain and prevent revenues from oil from reaching all citizens. The entire effect is increased poverty, widening the gap between rich and poor, increased criminality and rebellion, and retarded development. One reason that Middle Eastern countries succumb to the negative development in spite of the richness in oil relates to the overdependence in oil that results to a phenomenon economists refer to as “ resource curse. ” This economic phenomenon refers to the inverse association between the abundance of natural resource and growth (Haddad 2011, p. A close and analytical look at many Middle Eastern countries can lead to the conclusion that despite the huge oil potential, the countries experience negative growth and development.
Many Middle East countries greatly depend on the oil industry and have failed to explore alternative revenue generating activities. Even though the dependency on oil might be due to the dry climatic conditions of the region, it has been economically unviable for the countries to focus on oil alone. It is due to dependency on oil that the countries suffer great impacts every time global prices for crude oil drop.
Such slumps in global oil prices increase the rate of borrowing by most of the Middle East countries due to strategies by region’ s powers to reduce international supply to cause a shortage and subsequently increase oil prices
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