Shift to energy conservation causes cuts of social programs, and economic downturns—this leads to an endless cycle of instability
Amy Myers Jaffe and Jareer Elass 16 is research professor and managing director at the Climate Policy Lab at Tufts University’s Fletcher School of Law and Diplomacy, Jareer Elass is a Washington-based energy analyst, with 25 years of industry experience and a particular focus on the Arabian Gulf producers and OPEC, 01/01/2016, “War and the Oil Price Cycle”, https://jia.sipa.columbia.edu/war-oil-price-cycle // IS
The massive inflow of petrodollar revenues when oil prices are high creates disposable incomes that can be easily dispensed on regional arms races, especially since oil consuming countries like the United States are incentivized to increase arms sales as a means of solving oil import related trade deficits. Besides transferring wealth from industrialized countries to oil producers in the Middle East and North African (MENA) region and Russia (and stimulating renewed drilling for oil and gas in North America), high global oil and natural gas prices also slow global economic growth and encourage energy conservation. This causes petroleum demand to slow globally, lowering oil prices. Social and political problems in the region reemerge as oil prices recede. Regional governments have fewer resources to spend on restive populations that have become accustomed to generous handouts enabled by high oil prices. Job creation and visible social programs slow, dissatisfaction rises, and the consequences of economic downturns incite support for militants. Ensuing instability forces governments to use newly purchased arms, which ironically begins the cycle yet again, as new conflicts disrupt oil supplies.