Energy

Riding the Camel

By Ryan McGreal
Published August 12, 2005

Saudi Arabia's long-term prospects are terrible. The royal family has clustered around the oil spigot and proliferated like bacteria around a deep-sea sulfur vent. The local birth rate is extremely high, but the environment is still a desert and has very little carrying capacity without massive infusions of energy to produce fresh water and food.

At the same time, the government's love/hate relationship with extremists has tremendous potential for blowback. Even as the Saud family relies on U.S. support, it also relies on keeping the Saudi people as ignorant and jingoistic as possible, and religion, particularly fundamentalist religion, can be an effective way of keeping the public focus away from domestic political issues.

The various leaders of the umbrella movement called al-Qaeda know that a major failure in Saudi Arabia's oil producing capacity would simultaneously a) hurt the Western economy, b) undermine the Saud family, and c) send a powerful, public message to the United States. As such, Saudi Arabia is always at risk for terrorist attacks, and that pressure is only going to go up as oil prices continue to rise (increasing both the symbolic and economic impact of a supply disruption).

At the same time the risk of terrorism increases, the massive Ghawar oilfield is also at incresing risk of a collapse in output some time soon. The available evidence is that Aramco has been mismanaging it for years and has resorted to pumping in millions of gallons of seawater a day to keep the oil flowing. Production won't peak and then decline steadily; it will drop off precipitously.

The other wells don't have anything like the same capacity, so when Ghawar goes belly-up, Saudi Arabia will cease to be the pre-eminent player in the oil game. In fact, Saudi Arabia has already lost the capacity to operate as the world's swing producer, since it is currently producing oil at full capacity.

Once Saudi Arabia ceases to be a major player, expect the al-Saud family's grip on power to slip away and the region to be plunged in political chaos, famine, and civil war. A lot of people will flee or die as the desert reclaims the oasis.

There's a saying in Saudi Arabia:

My father rode a camel. I drive a car. My son rides in a jet airplane. His son will ride a camel.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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