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It's a big problem for them. In the case of Saudi Arabia, it's the combination of oil production ceiling vs population, that is almost guaranteed to be the Kin
by adventured 8y ago
It's a big problem for them.
In the case of Saudi Arabia, it's the combination of oil production ceiling vs population, that is almost guaranteed to be the Kingdom's undoing. Their population growth is slowly unsettling their stability by debasing the per capita well-being. This has resulted recently in record unemployment and a struggling economy.[1] The record youth unemployment in particular is very concerning in a region where that can lead to severe destabilization and the formation of revolutionary groups (desperate youth seeking change). Their oil reserves in 1990 were similar to today, except now they have twice as many people and oil's outlook is getting more dim by the year. In 1990 they had a mere 16m people, in ~2035 they'll have 48m people dividing even fewer oil resources than in 1990.
Unlike, say, Russia, which has a fixed population (net unchanged in 30 years), Saudi Arabia has rapid population growth and is almost entirely dependent economically on subdividing those oil resources per capita (in one form or another). Their efforts to diversify the economy have failed repeatedly and wealthy developed nations are less interested in doing business with them than at any other time in decades. They've lost 1.5 million expat jobs in just a few years, and haven't been able to replace them with new domestic jobs.[2]
Saudi has to figure out how to produce eight million (or more) jobs in just roughly 15 years, when so far they've demonstrated they can hardly produce any net new jobs at all (for Saudis). And these can't be just any jobs, they need to match the present relatively high expectations for a standard of living that Saudis have. If they fail at that vast job creation requirement, the Kingdom is going to fall into violent revolution in some manner.
[1] https://www.reuters.com/article/saudi-unemployment/saudi-unemployment-stays-at-record-high-as-companies-struggle-idUSL8N1WY6OK https://www.reuters.com/article/saudi-unemployment/saudi-une...
[2] https://www.bloomberg.com/news/articles/2019-04-03/as-expats-leave-saudi-arabia-no-one-is-replacing-them-chart https://www.bloomberg.com/news/articles/2019-04-03/as-expats...
- mikekchar 8y agoI think the point is that they will likely destabilise long before they run out of oil. The price/demand/Saudi's share of OPEC's allowance will mean that the dire economic situation that you describe will play out no matter how much oil they have left. Whether that's true or not, I don't know, but that's what I understood from the OP's post.
- martinpw 8y agoAnother factor is that the rapid population growth combined with subsidised oil prices means their own population uses a large and increasing amount of its own production - around 1/4 of total production is already consumed domestically, some even burned to generate electricity. That ratio is likely to keep rising with population growth and resistance to any attempts to reduce subsidies, so even if production remains flat, exports will decline. This chart is a few years old already but shows over 3m barrels/day being consumed internally by 2014, must be significantly higher by now: https://www.theglobaleconomy.com/Saudi-Arabia/oil_consumption/ https://www.theglobaleconomy.com/Saudi-Arabia/oil_consumptio...