Saudi Arabia is the world’s largest oil producer with ten million barrels out of the 89 million consumed each day on Planet Earth. The consequences of this country having to import oil would be disastrous for our world economies.
This scenario could actually take place in less than two decades, according to Citigroup as Bloomberg and Grist report. Indeed, half of the electricity produced in the kingdom comes from oil and the demand is increasing rapidly.
This is explained by the massive subsidies given by the Saudi Aramco to local power companies that pay around $10 per barrel.
This is not exactly surprising once we know that oil production peaked as early as in 2005 and that it may have overstated its oil reserves by 40%.
So to curb local consumption, the Kingdom and its rich oily neighbors should first and foremost stop subsidizing oil, develop massively alternatives and as you can imagine : efficiency.
Saudi Arabia has recently unveiled a massive – the largest I should write – plan to develop solar. It is also planning to build nuclear reactors. But all this won’t matter if they keep on subsidizing local oil consumption as they are currently doing.
This raises the question of why they are doing it ? Giving $80 billion dollar per year to its population is a huge gift the King is giving. Why so ?
More importantly on a global scale : who could sell Saudi Arabia oil ? Indeed, it is most certain that its neighbors will be confronted to the same situation…
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Back to the other nations of Asia, Americas and Europe, this is another serious reason to stop our oil binge and develop more efficient vehicles and houses.
Luckily, we could even get rid of oil for these as we shall see in my future review of Reinventing Fire, from the Rocky Mountain Institute. So stay tuned