The Oil Age Journal

Abstract

This paper examines some of the underlying reasons for the problems in Syria that have contributed to the struggle in that country, and which in turn led to war.

In 2013 an article by Dr Nafeez Ahmed, Director of the Institute for Policy Research & Development, highlighted three key contributors to Syria’s difficulties. These were peak oil, climate change and pipeline geopolitics. In this paper we look briefly at the issue of Syria’s drought, and then present data and charts relating to Syria’s peak in oil production, and the financial consequences of this.

First we look at data on Syria’s oil production, exports and consumption. Since 1980, against a backdrop of steadily rising domestic oil consumption, the country’s oil production rose to a peak in the mid-1990s, and then started to fall off fairly steadily due to limited resources; until collapsing following the arrival of the ‘Arab Spring’ in the country and the subsequent oil embargo, and loss of government control of the Eastern oil fields. That the post-peak oil production fall-off was due to resource limitation is shown by the country’s history of oil discovery, which is evident from the evolution of country’s oil industry ‘2P’ oil reserves data (and, as usual, not evident from the public-domain ‘1P’ data).

The paper then relies on mainly IMF data to examine the financial implications of the country’s peak in oil production. Data are presented from 2000 to 2010, the latest date for which an IMF assessment was available. Charts are shown of Syrian government revenue vs. expenditure. Oil revenue over this period was largely flat, with decline in oil exports being roughly offset by the increase in the price of oil; while significant increases in government revenue came from increases in tax rates and in transfers from public enterprises. Other charts illustrate the composition of oil revenue, government expenditure by category, and defence expenditure vs. oil revenue. The paper also examines data on the country’s oil and current account balance, inflation, population growth, and reduction in fuel subsidies.

Though there are many reasons for the disintegration of Syria, this paper shows how Syria’s declining oil production and increasing oil consumption impacted negatively on the government budget, and led to tax increases and reduction of subsidies; factors which almost certainly contributed to increasing public dissatisfaction, and to Syria’s ‘Arab Spring’. It is necessary that the world wakes up to the problem of peaking oil production. If countries with high per-capita oil consumption could embark on a transition away from oil this would help reduce future conflicts and wars.

[Note: This is an adapted and expanded version of a September 2015 article posted by the author on his website: http://crudeoilpeak.info.]

 

Mushalik, M. (2015) Syria’s Peak Oil weakened Government finances ahead of the Arab Spring in 2011. The Oil Age 1 (4) 1-18

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