Influential members of the nation's political ranks are calling for cuts in oil production, not increases as the U.S. has asked for.
"The price of oil under ground is actually higher than its current market price because it will become a unique commodity by time and demand will continue to rise because of a steady growth in the world's population," Marri told Alriyadh.
"The level of oil production in Saudi Arabia must be linked to the country's actual development and financial needs not to market prices and the need of foreign consumer. It is not wise to sap this resource just to satisfy the demand of foreign markets. Therefore, we need to revise our oil production policy before it is too late. Preserving our oil reserves is better than investing our financial surpluses which could lead to inflation."
You see, some Saudi's are smart enough to prefer to hold their oil in the ground, rather than worthless paper currencies in the bank. If the Crown Prince does not handle this astutely, he might meet his own end at the wrong end of a sword. For years, no soul living in the Kingdom, or the Oil dependent West, was willing to state the obvious - "The Emporer Has No Clothes" - THERE IS NO REPLACEMENT FOR OIL. That the West's silly claim - "if Oil went too high the efficient markets would bring on alternatives to Oil" - was some EXCELLENT propaganda but when put to the test failed quickly and utterly.
(The funny thing is, I will STILL get 3 calls this week from friends and clients about something they saw on T.V. proclaiming a car that runs on water and gets 35 miles to gallon and goes from 0 to 60 in 6.3 seconds and has a chick magnet bigger than yours... and then I have to pop their bubble with: "Well, if that's true, why didn't oil fall to ZERO in the markets today?")
Sorry, I am back. Saudi Arabia, perhaps soon just Arabia, holds the world's economy in its hands. When, not if, the House of Saud falls, no one will hold what is left of the world's economy in its hands.
Mentatt (at) yahoo (d0t) com
4 comments:
Ah, but there is a downside to this direction, a direction not entirely unexpected to those familiar with petro-geologist Jeffrey Brown's Export Land model.
"My grandfather rode a camel. I drive a Mercedes. My son flies a Learjet. His son will ride a camel." - Arab saying
The downside was alluded to in your title, concerning the fall of the house of Saud.
Saudia Arabia is a unique nation, a land named for it's rulers, rulers put in power by Western oil men in order to pacify the land and give someone stable with whom they could negotiate. In order to mollify those who were not of the house of Saud, a deal was made such that oil revenues were shared (unequally, naturally) with the populace, a devil's bargain that turned a desolate, inhospitable, and nearly deserted land capable of supporting only a handful of tribal goat herders into one of the wealthiest, most prosperou, most stable nations on earth. Most citizens received so much from this windfall that they didn't even have to work, which was good since there were few jobs outside of construction (e.g. the Bin Laden family) and oil work, keeping the latent turmoil of the reactionary Wahabist population in check.
But over time, the population grew faster than the revenue, and the House of Saud itself grew to some 300,000 members, each taking a huge chunk of the pie. The end result was that individual Arabian oil revenue checks have been shrinking for decades, and the populace is growing restless. The Sauds have been playing a dangerous game for ages, sitting atop a volcano, which is why historically they attempt to placate the west with one breath, and their own people the next.
When the house of Saud can no longer adequately bribe its own populace sufficiently to mollify them, Arabia will become yet another radical Islamic middle eastern basket case, civil war will likely break out, and oil exports will plummet further, exacerbating the problem for both the populace and their foreign customers (us).
In short, the more they cut back, the more they stoke the fires of their own destruction. But given the supply situation, they have little choice in the matter.
Quote: "The price of oil under ground is actually higher than its current market price because it will become a unique commodity by time and demand will continue to rise because of a steady growth in the world's population," Marri told Alriyadh."
Speaking in more abstract terms, the real question every intelligent human should contemplate arises out of the conflict between our desire to live indefinitely in a world of finite resources: How much economic value should be attached to our children's ability to produce petrochemicals out of crude oil in let's say 100 years?
People who complain about the high cost of renewable energy (solar, wind, etc) are either plain stupid or, if that is not the case, simply do not care about the future of our children.
Fallout is absolutely correct by pointing out that the coming resource scarcity is the greatest investment opportunity of the century. It could mean the difference between life and death.
Robert S.
Thank you for your comments.
Non capitalist/investor types refer to me as a prophet of "doom and gloom".
I am no such thing.
This new environment is the greatest opportunity for a "have not" to become a "have" since Moses was a boy - and "haves" to become "have nots". This is truly a 2 way street with most folks going the wrong way.
The house of Saud's days are numbered - once this kind of thinking makes its way into the public arena there is no stopping it.
I look forward to America bringing 'democracy' to THAT country too!
But wait a moment - hasn't the USA been selling them lots and lots of the latest armaments? Hmmm...
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