Imagine one morning you wake up to find out that your income has doubled. What will you do?

Oil-exporting nations have faced this question for the past year or so. And with crude oil prices likely to rise further next winter the question may become even more pressing.

The various beneficiaries of the bonanza have found different answers to the question- ranging from prudent to reckless.

But before assessing the various answers let us recall what has happened.

The conventional wisdom in January 2003 was that oil prices would stabilize at between $22 and $25 per barrel for the rest of the decade. A year later average prices had topped the $40 mark and, this month, a brief moment of uncertainty notwithstanding, seemed to be pushing towards the $70 mark.

Although, the average barrel of crude oil is cheaper today, in terms of purchasing power, than it was two decades ago the recent prices rises represent a genuine transfer of wealth from consumers to producers.

The extent of the transfer is impressive. Of the 198 members of the United Nations only 22, with a combined population of 720 million or 12 per cent of the world’s population, are net exporters. At current prices the remaining 88 per cent of humanity are transferring an extra $2.2 billion a day to the lucky minority.

But to bring the picture into sharper focus we must exclude exporters like Indonesia, Nigeria, Mexico, and Russia which have large populations- a total of 520 million- and relatively low per capita exports. This means that 18 countries with a total population of 200 million earning something like an extra $500 billion a year.

In some cases the increase has had dramatic effects. Qatar, for example, has seen its income per capita double. Kuwait has seen a projected budget deficit of 14 per cent transformed into a 12 per cent surplus. Angola expects to register its first ever budget surplus this year.

Some commentators have compared the oil bonanza to the Aztec gold and silver that briefly transformed Spain into a global superpower in the 16th century.

But the comparison misses an important point. The sudden hike in oil prices comes after nearly two decades of historically low prices during which almost oil exporters saw their real purchasing living standards decline. Thus, for some exporters the most urgent task is to bridge the poverty gap created during that period.

What are oil exporters doing with their extra money?

Some are using the extra cash to pursue goals of political power.

Russia, having recently “lost” the Ukraine and Georgia to the West, is trying to keep Byelorussia on its side with handouts, and has just bribed Uzbekistan into distancing itself from the United States. Moscow is also allocating new funds to modernizing its military machine while pursuing the war in Chechnya.

Norway, already the world’s richest nation in terms of income per head, is allocating almost the entire extra cash to its “future fund”, a kind of saving accounts for future generations after the oil reserves have ran out.

Nigeria, where 80 per cent of the population lives on less than a dollar a day, is trying to improve the lot of the poor through subsidies and job creation schemes.

In Indonesia the extra income is helping with the post-Tsunami reconstruction with the armed forces also receiving their first big cash injection since the fall of Suharto.

In Iran, the newly elected President Mahmoud Ahamdinejad has promised to spend much more on subsidies for the poor. He also says he has a 20 Year Plan which includes a massive build-up of Iranian military capabilities, especially by expanding the national arms industry. Extra income would also enable Iran to speed up its nuclear program. Last week the Islamic Majlis (parliament) allocated $2 billion for an aid package to Iraq.

Iraq itself is not doing so badly. The extra oil income enables the transitional government to speed up a number of infrastructural projects. This, in turn, could produce a better economic climate in time for general elections at the end of the year.

Saudi Arabia has earmarked an extra $50 billion in investments over the next five years while offering pay increases to public sector employees. More importantly, perhaps, the extra cash could speed up the privatization schemes that have been dormant for years, as part of the new King Abdullah Ibn Abdul-Aziz’s ambitious plans to re-launch a long sluggish economy.

Rising oil prices have boosted virtually all Arab stock exchanges towards record levels, especially in Saudi Arabia. Dubai, which has little oil, has benefited from spiraling real estate prices.

Most of the Gulf exporters, however, have increased their already substantial investments abroad, especially in the United States and Britain.

There are no reliable figures for foreign investments by the Gulf countries. Most estimates, however, cite a figure of $50 billion a year. In the case of Iran, the Chief Justice Ayatollah Mahmoud Shahroudi, estimates the value of private investments abroad at $600 billion, accumulated over the past 25 years.

At the other end of the world, Venezuela under President Hugo Chavez is using its extra cash to spread its Bolivarist message of Latin American unity and defiance against the United States. Cash handouts from Venezuela have injected some life into the moribund Cuban economy while countries like Brazil and Argentina that looked down at Chavez as a populist now treat him with the respect due to a man who has billions to play with.

In North Africa, Algeria is taking a golden shower with oil and gas revenues projected to reach the $50 billion mark this year. Part of the bonanza has been used to calm the situation in the Kabyle provinces with subsidies and hand-outs. The armed forces, having won a 12-year long war against terrorists, are also claiming a share. They are buying $8 billion worth of new tanks, helicopters, transport aircraft, and frigates from Russia, Spain, Italy, and France. But the lion’s share in Algeria’s new wealth, some $52 billion, has been allocated to massive infrastructural projects, including over 100,000 new homes over the next five years.

Libya, also in North Africa, presents a different picture. It is earning an extra $50 million every day, that is to say more than $10 for each of its inhabitants but is not spending it on anything visible. What Libya does with its money, an estimated $400 billion since Colonel Muammar Kaddhafi came to power in 1969, has always been a mystery.

The Sudan, a newcomer to the oil club, has used its newfound wealth to gain international recognition. Oil has helped bring about an end to the war in the south, and may help further stabilize the nation’s turbulent politics.

For the first time since the late 1970s, it is party time in the oil exporting countries. But it seems that few have learned the lessons of the last boom. There has been little pubic discussion of what to do with the extra cash. Nor has anyone thought of remembering the OPEC Fund, a mechanism created 20 years ago to help the poorer nations whose oil bill has doubled.

No one wants to be a party-pooper.