ADDRESSING A euphoric summit of oil-producers in 1973, when the price of a barrel of oil rocketed from less than $3 to more than $10 within 10 weeks, Saudi oil minister Sheikh Ahmad Zaki Yamani warned his colleagues: “The Stone Age didn’t end because of a shortage of stones, and the oil age won’t end because of a shortage of oil.”It was a lone, but sober voice that autumn in Tehran, where the power-drunk heads of the Organization of Petroleum Exporting Countries (OPEC), led by the Iranian shah, wanted to see prices double again ‒ to $20 a barrel.What the forum did back then – Yamani put his foot down and won – is beside the point. What matters is that the Harvard-educated technocrat understood already then that the more oil would be used as a weapon, the more its victims would treat it as an enemy, and ultimately lead to its defeat.Forty-three years on, petro-power is a Middle Eastern relic and an economic myth.Oil’s plunge over the past two years from more than $100 per barrel to just over $40 – and at one point this year $29 – bears far-reaching industrial, financial and strategic implications for the entire global economy, but most fatefully for the Arab world.The Arab countries entered their current civil wars as the world’s most stagnant economies, immobile societies and pre-industrialized workforces, according to the UN Human Development Reports. Oil’s demise will intensify this malaise.Industrially, the crisis of Arab oil is driven by the rise of fracking, a technique that extracts shale hidden in rocky geological layers. Since being licensed by American lawmakers and regulators, this method already has generated enough oil to make the US a net exporter of crude. This is in addition to the previous industrial reaction, in the 1980s, when OPEC’s intimidation pushed the West to seek new oil deposits, which it found in British and Norwegian waters, while also slashing consumption – first by cutting power usage, then by shrinking vehicles, and finally by using wind, sun, water and nuclear power as alternatives to fossil fuels.Financially, all this created an oil glut that was not offset even by momentary shocks, such as the Iraq invasion of Kuwait in 1990. Prices did rebound the following decade as the Chinese and Indian middle classes expanded dramatically, raising demand for cars, roads and factories, all of which spurred demand for oil. However, the breakneck growth of the Asian economies has since slowed, reducing demand for crude even as shale’s emergence reinvented supply.Now it is clear that oil’s depreciation is neither cyclical nor circumstantial; it is structural, and apparently irreversible, as other oil buyers plan to frack, most notably China.Oil’s loss of market appeal was best illustrated by the commodity markets’ general indifference to last year’s deal over Iran’s nuclear program. Though the Islamic Republic owns the world’s fourth-largest oil deposits, prices plunged well before this blocked treasure’s release seemed imminent.And when its return did become a foregone conclusion, it failed to accelerate the depreciation that was already underway.The political implications of all this cannot be exaggerated.First, OPEC is but a shadow of its former self. The cartel that in the 1970s bullied superpowers, rattled markets and intimidated drivers from California to Tasmania is now a scarecrow; no one in the entire world fears this Vienna-based outfit, which in recent weeks has proven unable to agree on anything.The Japanese, for instance, whose lack of oil once made them see energy as their strategic Achilles’s heel, are presently far more concerned about their aging population and the deflation of their currency now that they can get as much oil as they want, and from a variety of suppliers, most notably Russia, which originally was on the other side of the Cold War divide. Second, America no longer sees the Middle East as vital for its prosperity.Washington’s mental retreat from the region, underscored by its indifference to Egypt’s arms purchases in Russia and its toleration of Syria’s gas attacks on its citizens, reflects a feeling that the Middle East is no longer as crucial to America as it once was. Consequently, Arab governments now feel a kind of geopolitical abandonment they had not previously known.Economically, oil’s demise spells disaster for all of OPEC’s members on three continents, because they all shared a shortsighted overreliance on easily earned petrodollars. Most notable in this regard is Venezuela, an OPEC co-founder, which despite owning the world’s largest oil deposits and being inhabited by only 30 million people, has become a social time bomb fusing inflation, shortages, unemployment, emigration, and street riots.With the notable exception of Indonesia, an industrialized net importer of oil, the OPEC member best built to sustain oil’s demise is Iran, for two reasons.First, whatever the markets now give Tehran will be more than it got while being hit by international economic sanctions.Second, unlike all other Middle Eastern oil producers, Iran has a sizable manufacturing sector, most notably a car industry that comprised a tenth of its economy prior to sanctions, and which is likely to now return to prominence.That is why the OPEC dynamic of 1973 is ironically being reversed, as Yamani’s successors were the ones demanding a production cut while the Iranians were the ones resisting, and ultimately stymieing, the Saudi quest. Iran uses oil not only as a financial instrument, but also as an industrial propeller.That cannot be said of its Arab rivals, led by Saudi Arabia.The oil glut’s impact on the Saudi economy is harsh, as the kingdom itself now openly admits.Because it exports hardly anything other than oil and charges no income tax, Riyadh’s plunging revenue last year forced it to reach for its foreign-currency reserves, from which it skimmed 16 percent, or $116 billion. Even so, spending was so much higher than income in 2015 that the Treasury ran a budget deficit of $98b., which adds up to a staggering 15 percent of GDP.The sense of crisis in Riyadh is such that Finance Minister Ibrahim Al-Assaf said the government will impose a five percent value-added tax, and Deputy Crown Prince Mohammed bin Salman, widely seen as the kingdom’s de facto ruler, said the government will impose additional taxes on luxuries, tobacco and sweet drinks.This is on top of cuts last fall in subsidies for water, electricity and gasoline, the retail price of which was hiked 50 percent, from 60 to 90 cents per gallon.In fact, Mohammed unveiled, on April 25, an ambitious plan titled “Vision 2030” aimed at bracing for the post-oil era, while bravely predicting that “by 2020, we will be able to live without oil.”The plan includes selling on the stock exchange up to five percent of Saudi Aramco, the kingdom’s oil company. The prince calculated that the secretively run company – presumably the world’s richest – is worth “2-3 trillion dollars,” and that the initial public offering, therefore, will generate Riyadh an instantaneous 100 billion dollars at the very least.In addition, the blueprint eyes massive development of tourism by raising the current annual arrival of eight million Muslim pilgrims to 30 million, and by producing locally “over 50 percent of military purchases.”The extent to which this vision will shape the future remains to be seen, but as far as the present is concerned, the plan and its much-publicized presentation are proof of a growing sense of Saudi panic as the petrodollar’s golden era draws to a close.The plan’s weaknesses are glaring.The quest to instantaneously cure the unfolding financial crisis by a sudden infusion of an IPO’s quick returns smacks of the easy money mentality that has animated the kingdom’s conduct since 1945, when it struck its oil-for-defense deal with US president Franklin D. Roosevelt.Similarly, the assumption that today’s number of pilgrims can be nearly quadrupled within 15 years sounds like wishful thinking, and this is before assessing the limited purchasing power of the prospective influx, which will likely be lower than that of average non-Muslim tourists.The desire to shift most of Saudi Arabia’s military consumption to local production is impractical, at best. Saudi Arabia has not used the years when it was flowing with petrodollars to industrialize. To manufacture things as sophisticated as military jets, radars, gunships and tanks, the Saudis will have to start the way everyone else who ever industrialized started. Like Victorian England and Meiji Japan, they will first have to get shepherds, housewives and subsistence farmers to sew shirts, weld pots, stitch shoes and assemble chairs.SUCH A transition, however, will potentially ignite a kind of social mobility the Saudi royals dread. Millions of workers who earn steady incomes while acquiring professions and being judged by performance are prone to climb financially and eventually challenge the blue-blooded elite that runs the kingdom. Fear of such mobility is what has made the Saudis, over the years, import some nine million, mostly non-Arab, foreign workers.Then again, with all its flaws, the plan will likely generate at least some change in Saudi Arabia itself as it braces for the post-oil era. That cannot be said of the Arab world as a whole, for which oil’s downfall is not a crisis, but a catastrophe.The oil glut is catching the Arab world just when it is beset by huge crises of identity and cohesion. The identity crisis is about the demise of postwar Arab nationalism. The multiple civil wars across the Arab world underscore the failure of post-colonial Arab nationalism. The Arab world’s rearrangement along religious and tribal fault lines means that oil has failed to unite the Arabs, and may now, in fact, divide them.The division’s focal point is in Iraq, which was blessed with the world’s fifth-largest oil deposits, only slightly less than Iran’s. By chance, two-thirds of the country’s oil lies in the Shi’ite south, one third in the Kurdish north, and none in the Sunni west. That means the Kurds now preside over oil deposits equal to about a tenth of the Sunni Arab countries’ combined deposits, while the Shi’ite Arabs and their Persian allies collectively own about half as much fossil fuel as their Sunni rivals.This means that besides the problem of its depreciation, oil is in no position to retrieve the Middle East from the political abyss where it is currently trapped. Not only are Middle Eastern oil producers disunited, they feed the region’s multiple civil wars: the war machine of Syria’s Bashar Assad is financed by Iran’s oil revenues; his enemies are fed by Saudi Arabia’s oil riches; Islamic State is financed by oil it found on both sides of the Syrian-Iraqi border; Libya’s many warring antagonists are living off Muammar Gaddafi’s inheritance, and Yemenis are wasting their own limited mineral wealth, as well as that of some of their Saudi and Iranian sponsors.Chances that these budgetary priorities will change anytime soon are low. Last year, the Saudis spent $81b. on arms, which is 60 percent more than Russia, or 12.9 percent of its GDP ‒ more than any other country in the world. The Saudis’ “Vision 2030” plan mentions no spending cuts at all, least of all on defense.Where cuts did surface is foreign aid. In February, Riyadh said it was discontinuing a $4b. grant to the Lebanese army, blaming it for taking the wrong side in the Syrian conflict. It is an unconvincing explanation.Unlike Hezbollah, the American-backed Lebanese military has stayed away from the Syrian war. A more likely reason for the Saudi move is its declining oil revenues.A five-year Saudi-aid package to Egypt comprising $22b. worth of oil supplies and development projects was festively announced during King Salman’s visit to Cairo in April. Yet its prospects of being delivered as promised are questionable. And, even if it is, Arab oil wealth is no longer poised to reinvent Arab history by spreading education, sowing prosperity, igniting mobility, and inspiring peace.Such talk abounded in the heady days of the Oslo Accords, more than 20 years ago.All of that era’s Arab leaders are long gone, as are the stability they forced, the unity they faked, and the petro-power that they scattered to the winds.