Oil importing nations have long treated Saudi Arabia as an infinitely deep well of crude oil supplies. In 2005, Matt Simmon’s book Twilight in the Desert did much to call attention to the possibility of diminishing production from the desert kingdom’s aging wells. More recently, cables released by wikileaks highlight the possible overstatement of Saudi oil reserves. Excellent commentary and links to detailed information covering these issues can be found in a recent post on The Oil Drum.
What much of this discussion ignores, however, is that oil exports from Saudi Arabia depend on more than just production — they are a function of both production and internal consumption. This post will focus on the existing trends of energy consumption within Saudi Arabia and how they will impact future exports, whatever future production levels may be.
Long Term Trends
Consumption of energy within a nation is dependent upon the interplay of population, standard of living and energy efficiency of the economy. Of the three, only population can be measured and reported in simple, uncontroversial units: “# of persons”. It seems obvious but it bears stating explicitly that “In an industrial society, more people implies more energy.” This growth paradigm is of course the fundamental axiom of our current financial and economic systems.
Figure 1) from the Gas Trends databrowser shows Saudi Arabia’s rapid growth from a population of 5 million in 1965 to 25 million in 2010. The large influx of foreign workers seen in the late 70′s has been trending downward since 1980 with a large exodus seen in 1990-91 during the first Gulf War. Natural growth has slowed somewhat with total fertility rates dropping from 5.0 births per woman in 1995 to 2.9 births in 2005. Yet the population is still projected to reach 27 million in 2015 and 32 million in 2025.[1] At that point the Saudi population will be larger than the combined populations of Australia and New Zealand.
 Image: Oil Drum |
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