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This article gets a critical point wrong. The absolute worst thing that could happen to Saudi Arabia is that they continue to have a high birth and population e

This article gets a critical point wrong. The absolute worst thing that could happen to Saudi Arabia is that they continue to have a high birth and population expansion rate. The source of their biggest threat in regards to social unrest, is that they can't afford to placate their massive population expansion since ~1980. Their population has tripled since roughly 1982 and they have no traditional economy to support that what-so-ever, it's all oil dependent. The worst thing that could happen is that you double that population again rapidly, against a relatively static output of oil and while having still not developed a traditional economy to support the new population. It's a pretty simple equation. N oil production divided between Z population. Every year that goes by that their population increases and their oil production doesn't keep up, that oil money gets thinner per capita. Boosting the population doesn't boost their economy much (such that doing so enables them to better provide for an aging population), as they have practically no conventional economy. That's fundamentally why their budget requirement for the price of oil just keeps going up. It's at least ~$80 per barrel now that they need to balance the budget [1], so it's nearing a state of becoming permanently impossible to fulfill their budget demands. Soon it'll be $90, then $100. They've increased their population by 1/4 in roughly the past decade. That's far too fast of a population expansion rate based on the structure of their economy. What they actually need is population contraction, desperately. That oil economy is now trapped in hell with US shale production always acting as a price & supply counter that makes it impossible for Saudi to gain ground. The EIA output estimate for the US for 2018 as recently as three years ago was roughly two million barrels per day of production lower than what it actually turned out to be. In one form or another, that's largely coming out of the pocket of OPEC+ (OPEC + Russia). US shale supply will never stop pressing against the price & supply of oil and the US is rapidly ramping up its export capabilities. If the Saudis cut to firm prices, US supply takes it up and takes their price gains away (which may take months or years to fill out depending on the macro situation). Saudi will expand their population by another 12-15% in the next decade, against this disastrous economic scenario. The outcome is obvious, they won't be able to placate the burgeoning population and over time it'll rip the kingdom apart. If you cut their population in half right now, they'd struggle to build a traditional economy big enough to put under it in time before there's an oil crisis in the kingdom. As it is, they appear doomed to an inevitable civil war or revolt of some sort. [1] https://www.spglobal.com/platts/en/market-insights/latest-news/oil/121818-saudi-arabia-needs-84-b-oil-price-to-balance-2019-budget-analysts-warn https://www.spglobal.com/platts/en/market-insights/latest-ne...

mukundmr 8y ago
Saudi Arabia has always had a history of sectarianism and uprisings like the 1970 Qatif Uprising[1]. While they can deal with their internal problems, I am hoping that without oil funding, Wahhabism will calm down elsewhere. [1] https://en.wikipedia.org/wiki/1979_Qatif_Uprising https://en.wikipedia.org/wiki/1979_Qatif_Uprising
- ReptileMan 8y ago
  With all of the region in chaos (to which KSA is contributing) the chances of uprising turning into long civil war are not negligible.
Theodores 8y ago
You are right in that the article doesn't discuss what is going on with not just U.S. shale oil but also how U.S. oil can be sold on the global market rather than be exclusively for the domestic market as used to be the case. For Saudi Arabia the deal with America is that the House of Saud get to stay in power in exchange for the oil, it is that simple. If there is this 'uprising' that you speak of then it will be Uncle Sam's job to put it down. The original deal goes back to the time when Britain was supposed to have Iran and the U.S was supposed to have Saudi Arabia. On the back of this deal the Saudi 'Royal Family' have built some myth of entitlement to the throne and being a proper 'royal family'. It is an illusion, there is no legitimacy there. So long as they wear the 'traditional' outfits and keep the 'traditional' laws nobody is going to see that the emperor has no clothes. I don't get the impression that there is any type of organisation against this so-called 'royal family' with a class of people clued up as to how to live in a non-feudal society. They are far from socialist, mere serfs in an offshoot of empire, relatively rich because that is where the oil comes from. They never had industrial capitalism, they went straight from sand and a bit of tourism revenue to the monster of finance capitalism, trickledown economics and everything that the IMF demands. Because of the oil they do get a few empty gifts from the system such as cheap petrol. For decades those dollars have flowed back to the West in arms sales. To an extent this clawing back of the money has also happened with luxury goods too. So the serf-grade workers of Saudi Arabia are doubly screwed, when this imaginary 'uprising' happens and they impose a government that 'shares the wealth' they will find it has all been spent on underground aircraft hangars and bits of paper that are allegedly investments in the Western stock market. My favourite fact regarding oil is how it all went wrong in the 1970's with the oil crisis. What only a careful reading of the Wikipedia article tells you is that the US increased grain prices 300% to pay for Vietnam. This was bad news for the OPEC countries, places like Iran had kind of got used to affordable wheat. This wheat had kind of covered the U.S. balance of payments for oil imports before Vietnam, so it had been a happy arrangement. Our history tells the 1970's oil crisis very differently, forgetting the wheat price hikes. As the article states the government can make quite a few concessions, e.g. women driving, allowing people to go to the theatre, that sort of thing. They can buy off those that might resent how things are going by these concessions yet still keep a tight grip on the deal which is essentially oil for arms and food.

mukundmr 8y ago

Saudi Arabia has always had a history of sectarianism and uprisings like the 1970 Qatif Uprising[1]. While they can deal with their internal problems, I am hoping that without oil funding, Wahhabism will calm down elsewhere. [1] https://en.wikipedia.org/wiki/1979_Qatif_Uprising https://en.wikipedia.org/wiki/1979_Qatif_Uprising

ReptileMan 8y ago
With all of the region in chaos (to which KSA is contributing) the chances of uprising turning into long civil war are not negligible.

Theodores 8y ago

You are right in that the article doesn't discuss what is going on with not just U.S. shale oil but also how U.S. oil can be sold on the global market rather than be exclusively for the domestic market as used to be the case. For Saudi Arabia the deal with America is that the House of Saud get to stay in power in exchange for the oil, it is that simple. If there is this 'uprising' that you speak of then it will be Uncle Sam's job to put it down. The original deal goes back to the time when Britain was supposed to have Iran and the U.S was supposed to have Saudi Arabia. On the back of this deal the Saudi 'Royal Family' have built some myth of entitlement to the throne and being a proper 'royal family'. It is an illusion, there is no legitimacy there. So long as they wear the 'traditional' outfits and keep the 'traditional' laws nobody is going to see that the emperor has no clothes. I don't get the impression that there is any type of organisation against this so-called 'royal family' with a class of people clued up as to how to live in a non-feudal society. They are far from socialist, mere serfs in an offshoot of empire, relatively rich because that is where the oil comes from. They never had industrial capitalism, they went straight from sand and a bit of tourism revenue to the monster of finance capitalism, trickledown economics and everything that the IMF demands. Because of the oil they do get a few empty gifts from the system such as cheap petrol. For decades those dollars have flowed back to the West in arms sales. To an extent this clawing back of the money has also happened with luxury goods too. So the serf-grade workers of Saudi Arabia are doubly screwed, when this imaginary 'uprising' happens and they impose a government that 'shares the wealth' they will find it has all been spent on underground aircraft hangars and bits of paper that are allegedly investments in the Western stock market. My favourite fact regarding oil is how it all went wrong in the 1970's with the oil crisis. What only a careful reading of the Wikipedia article tells you is that the US increased grain prices 300% to pay for Vietnam. This was bad news for the OPEC countries, places like Iran had kind of got used to affordable wheat. This wheat had kind of covered the U.S. balance of payments for oil imports before Vietnam, so it had been a happy arrangement. Our history tells the 1970's oil crisis very differently, forgetting the wheat price hikes. As the article states the government can make quite a few concessions, e.g. women driving, allowing people to go to the theatre, that sort of thing. They can buy off those that might resent how things are going by these concessions yet still keep a tight grip on the deal which is essentially oil for arms and food.