4INTRODUCTIONboth an economic and a security threat. It is a predicament that requires
thoughtful long- term planning and sacrifice.
What forces are behind the Gulf ’s feverish demand for its chief export
commodity? Many other countries have experienced fast- growing pop-
ulation and income but never reached the levels of energy inefficiency
that characterize these six. What makes the Gulf different? Can the
region’s tribal elites tame demand without jeopardizing their control
over the state? Can the ruling sheikhs cope with the global transition to
cleaner energy?
These are the questions that drive this book. The early chapters exam-
ine the history of energy demand in the region and outline the events
and practices that have pushed the Gulf from a negligible to a world-
beating consumer of its own resources. Further chapters look at oppor-
tunities for reform not just to energy consumption but to the political
structures that have contributed to inefficiency. The closing section pro-
vides a sobering preview of the challenges facing the world’s premier
petrostates and their top export.
The central argument is that the Gulf monarchies’ political and
economic systems contain contradictory properties. One of their key
political institutions, subsidization of energy, undermines their chief
economic institution, the export of oil and gas. Over the long term, these
two crucial components of governance cannot remain in conflict. Either
the political structures will bend or the economy will yield.
Academic wisdom is that the political structures cannot bend with-
out grave consequences. Scholars theorizing about Gulf politics since the
1980s have nearly unanimously dismissed the possibility of reforming
energy subsidies, arguing that subsidies are key parts of the all- important
social contract between state and society. Citizens get cheap oil, water,
and power and in return bestow fealty upon the families who rule them.
Touch these offerings, and the whole bargain is liable to unravel.
In this book, I dispel this long- held idea. Political structures can and
must bend. Subsidies are reformable because the distortions they have
created are too big to ignore. Energy policy in the Gulf is the polar oppo-
site of the policies in place in Europe, North America, and other energy
importers of the developed world. In those places, rationalized pricing
instills in consumers a clear understanding of energy’s value. Buildings