The UAE is fortunate to have a Plan B for oil

The UAE has an alternative plan with its diversification, but that can't be said for other economies around the world amid the oil price slump.

PARIS // As I prepared to travel to Paris for the 21st edition of the Conference of Parties (COP21) climate talks, I made an announcement on social media in hopes of meeting more people attending the event.

What I didn’t anticipate was that the response I received wasn’t related to renewable energy, but rather oil.

Most of my old classmates are either working in the oil patch or rely on a family member who is.

Most would think that I was from Texas, based on that statement, but actually, there are many areas in the US that depend heavily on the revenue from the hydrocarbon industry.

In my home state of Mississippi, jobs in the energy and energy-related subsectors pay an average annual salary of more than US$63,000, according to the Mississippi Energy Institute. This is nearly 90 per cent higher than the average private sector wage in the state at about $34,000.

So it’s understandable why so many might choose to work in this industry. It also goes back to a family tradition where fathers and grandfathers were working rigs decades earlier.

“My husband lost his job in September, and unfortunately, the oilfield was our way of life,” my former classmate wrote to me. The 34-year-old mother of four lives in Mississippi with her husband, who was forced to look for a new career path.

“Driving a log lorry isn’t what we had hoped for in life, and starting over in a new career at 40 is really hard,” she said.

The US department of labour issued a report that revealed unemployment figures for the mining and extraction industry, which includes oil services, jumped to 80,000 last month, up from 32,000 last year.

A round of layoffs and pay reductions happened at the end of September, with another hometown man urging oil hands to have a backup plan. “To all my friends that are still working in the oil patch, please be ready to have a Plan B because it’s not over yet,” he posted.

“I was laid off back in March,” said the former Halliburton employee. “I worked as a consultant so I knew the risk, but I never thought it would get this bad.”

With that post came a flood of testimonials from others facing the same cuts.

Yet the oil price slump that has been going on for more than a year has affected many places, including the Arabian Gulf.

The IMF head, Christine Lagarde, warned Gulf finance ministers last month in Qatar to diversify their economies from oil and gas as the GCC is projected to post a combined budget shortfall of $180 billion this year.

One of the answers would be to slash fuel subsidies. And one way to offset this could be to increase the use of renewable energy.

At Opec’s meeting on Friday in Vienna, the group discussed the negotiations happening in Paris. Opec said that climate change, environmental protection and sustainable development are a “major concern for us all”.

The UAE, specifically, has led the way with the change in its pricing that has led to a reduction in fuel subsidies as well as economic diversification featuring more renewable energy on its agenda. But the question remains: is the rest of the Gulf prepared with its own Plan B should the oil market continue to be volatile?

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