Major oil companies are already turning themselves into ''energy companies,'' meaning that they are also dealing in natural gas, solar heating and alternative power sources. The Stone Age came to an end not for a lack of stones, and the oil age will end, but not for a lack of oil,'' he said in an interview with Reuters this month. Rather than invest their oil wealth in diversified industries and high technology, most oil nations have allowed their economies to stagnate while the rest of the world has grown. They have failed to adequately privatize their inefficient public sectors or expose themselves to international competition. Energy resources tend to force up a country's exchange rate and make other sectors of the economy uncompetitive.
Oil quickly becomes addictive, making it increasingly difficult to diversify.
But much of the problem is due to the misspending of oil money on extravagant weapons systems and lavish projects that do not help ordinary people, as well as massive corruption. Economic reforms, if any, have been slow and hesitant, and weak private sectors have lacked the dynamism to integrate in the global economy. For countries like Saudi Arabia, Iran, Iraq and Indonesia, which have ''squandered trillions of dollars,'' Mr. Wihbey said, it may be too late to make the radical economic and political changes that are necessary. Venezuela, which has also failed to restructure its economy, seems to be aware of what lies ahead and is aggressively wringing the maximum out of high oil prices while the going is still good. It is possible to beat the Dutch disease, as demonstrated by Norway and Canada, which are both soundly investing their oil wealth.