One of the things I've always wondered about when Arab countries run out of oil, and now with cheap oil, will it, at a macro level, result in lower Islamic terrorism or higher?
Argument for Lower : State sponsors, and rich individual sponsors will have fewer funds. There may be local revolutions resulting in more democratic governments.
Higher: There will be instability due to rising poverty with many people turning to radicalization and in many cases terrorism becoming the only way for poor people to support their families.
With all due respect, but this is overly simplistic thinking. You're implying that people in that region are somehow more predisposed to "terrorism" compared to people in other regions, and that due to instability, they will somehow turn to "terrorism" as the defacto way to support their families, putting aside their morals and ethics that prevent them from engaging in those actions to begin with. We've already seen what happened in the US at the slightest hint of instability (all the looting that took place in the past weeks, and in a bizarre manner, some by seemingly well off people as well).
Secondly, it's known that funding also comes from non-Arab countries, who have vested interest to see that region continue to be unstable, to further their own benefits.
It all comes down to how you ask the question. If you ask the question like this instead, the outcome is in my opinion slightly less up for interpretation:
Q: "What happens when a badly governed country, already ripe with corruption and tendencies of sectarianism and local warlords, loses its only real source of income and the economy collapses?"
> There may be local revolutions resulting in more democratic governments.
If we are to entertain this hypothesis, why has this not happened already in the general area? There have been plenty of chances, not only in the Middle East but also in war-torn countries in Africa. The answer in my mind is that armed forces are already concentrated in the hands of the corrupt, and in an environment where surplus is a generation away, power will corrupt the uncorrupted.
When state power collapses, the economy grinds to a halt and the most basic necessities of life can no longer be counted on, in a country that also already has armed para-military groups and tendencies toward sectarianism and warlord leadership, the outcome is predictable: it's civil war, and untold suffering.
Argument for Lower : State sponsors, and rich individual sponsors will have fewer funds. There may be local revolutions resulting in more democratic governments.
Higher: There will be instability due to rising poverty with many people turning to radicalization and in many cases terrorism becoming the only way for poor people to support their families.