1845. UNNATURALLY COOL
Models,” Journal of Energy and Development 20, no. 2 (1995); M. Nagy Eltony and
Naief H. Al- Mutairi, “Demand for Gasoline in Kuwait: An Empirical Analysis Using
Cointegration Techniques,” Energy Economics 17, no. 3 (1995): 249– 53; Paresh Kumar
Narayan and Russell Smyth, “A Panel Cointegration Analysis of the Demand for Oil
in the Middle East,” Energy Policy 35, no. 12 (2007): 6258– 65; Tarek N. Atalla and Les-
ter C. Hunt, “Modelling Residential Electricity Demand in the GCC Countries,”
Energy Economics 59 (2016): 149– 58.
- A price elasticity of −1 implies a one- to- one relationship between price and demand. Here,
I use a modest but plausible estimate of −0.3, which implies a 1 to −0.3 relationship. This
means that a one- point increase in price would produce a 0.3- point reduction in
demand. This figure lies within the range covered in the literature and represents the
lower of two estimates of price elasticity used by the IMF in a 2012 paper on Kuwait. The
formula I use to calculate demand effects is nonlinear so that it can take into account
large fluctuations in price. See Pedro Rodriguez, Joshua Charap, and Arthur Ribeiro da
Silva, “Fuel Subsidies and Energy Consumption: A Cross- Country Analysis,” Kuwait
Selected Issues and Statistical Appendix, IMF Country Report (Washington, DC:
International Monetary Fund, June 2012).
- Fouquet argues that energy systems are particularly susceptible to strong and long-
lived path dependence because of technological, infrastructural, institutional, and
behavioral lock- ins. Roger Fouquet, “Path Dependence in Energy Systems and Eco-
nomic Development,” Nature Energy 1 (July 11, 2016): 16098.
- Harold Hotelling, “The Economics of Exhaustible Resources,” Journal of Political
Economy 39, no. 2 (April 1931): 137– 75.
6. WE HAVE A SERIOUS PROBLEM
- Daniel Fineren, “Oman Oil Minister Slams Gulf Culture of Energy Subsidies,” Reuters,
N o v e m b e r 1 0 , 2 0 1 3 , h t t p : / / w w w. r e u t e r s. c o m / a r t i c l e / 2 0 1 3 / 1 1 / 1 0 / g u l f - e n e r g y - s u b s i d i e s
- Hazem Beblawi and Giacomo Luciani, “Introduction,” in The Rentier State, ed. Hazem
Beblawi and Giacomo Luciani (London: Croom Helm, 1987), 16– 17.
- Jill Crystal, Oil and Politics in the Gulf: Rulers and Merchants in Kuwait and Qatar
(Cambridge: Cambridge University Press, 1990), 191.
- Samih K. Farsoun, “Class Structure and Social Change in the Arab World,” in Arab
Society: Class, Gender, Power, and Development, ed. Nicholas S. Hopkins and Saad E.
Ibrahim (Cairo: American University of Cairo Press, 1997), 21.
- Beblawi and Luciani, “Introduction,” 16– 17.
- For a full review of rentier theory and its treatment of subsidy reform, particularly on
energy, see Jim Krane, “Stability Versus Sustainability: Energy Policy in the Gulf Monar-
chies,” PhD diss., University of Cambridge, 2014, http: //dx .doi .org /10 .17863 /CAM .5943.
- F. Gregory Gause III, Oil Monarchies: Domestic and Security Challenges in the Arab
Gulf States (New York: Council on Foreign Relations, 1994), specifically mentions state
payment of citizen utility bills in this formulation (82, 61).
