<Why UK Natural Gas Prices Will Move North of 100p/Therm This Winter The Oil Drum DrumBeat: June 25, 2008>

129 comments on Nigeria – The Significance of the Bonga Offshore Oil Platform Attack

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econoutlook on June 24, 2008 - 12:24pm Permalink | Subthread | Parent | Comments top

I can't remember where I read about it, but hasn't the per capita income in Saudi Arabia declined precipitously over the past 15 years despite oil expansion? I wish I could remember where I read about it, because it was a good article on how the concentration of wealth had the potential to increase social tensions. This would give more incentive for people to explore extremist groups and perpetuate the cycle.

EDIT: Here is some info on the per capita income piece. It doesn't delve into the ramifications, but it's interesting.

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research24 on June 24, 2008 - 1:41pm Permalink | Subthread | Parent | Comments top

Yes, but its mainly due to importation of labor which is breeding like rabbits and creating a lot of uneducated youth that doesn't fit in. The locals are doing better than ever.

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FMagyar on June 24, 2008 - 9:52pm Permalink | Subthread | Parent | Comments top

Yes, but its mainly due to importation of labor which is breeding like rabbits and creating a lot of uneducated youth that doesn't fit in.

Isn't that a mite haughty of you sir? Even if it is a bit cheeky of the imported labor to engage in acts of procreation and such. Of course since they lack your erudition they would not understand why one might call you an arrogant xenophobe of an effete snob, now would they?

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Gwydion on June 25, 2008 - 11:47am Permalink | Subthread | Parent | Comments top

That might be so, but the link between income and population growth rate is well established. Rich people don't have as many children.

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karlof1 on June 24, 2008 - 6:00pm Permalink | Subthread | Parent | Comments top

While not the same, I posted an average per capita GDP figure of $22,080 yesterdaay on another site, which was a rise Y/Y. This site shows estiamted 2007 Saudi per capita income at $20,700. Wikipedia provides a conflicting figure and this little historical context:

In the 1990s, Saudi Arabia experienced a significant contraction of oil revenues combined with a high rate of population growth. Per capita income fell from a high of $11,700 at the height of the oil boom in 1981 to $6,300 with in 1998.[25] Recent oil price increases have helped boost per capita GDP to $17,000 in 2007 dollars,[26] or about $7,400 adjusted for inflation.

This item gives 2006 per capita income as SR55,216 or US$14,725 at current exchange rates. Juan Cole also has an item at his blog about current Saudi conditions, to which I posted the comment mentioned above.

The population is likely to top 30Million this year, while oil sales alone will likley top 1/2 Trillion.

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memmel on June 24, 2008 - 9:10pm Permalink | Subthread | Parent | Comments top

To put this in perspective the GDP of the state of Calififornia is 1.7 Trillion.

http://en.wikipedia.org/wiki/Economy_of_California

Per capita personal income was $38,956

Population of California is 36 million.

http://quickfacts.census.gov/qfd/states/06000.html

Total Saudi GDP is 1.1 trillion.
http://en.wikipedia.org/wiki/Economy_of_Saudi_Arabia

Per Capita oil usage for California is 18 barrels a year or 1.7 mbpd.

http://www.statemaster.com/graph/ene_pet_con_percap-energy-oil-consumpti...

If I was doing the economic planning for the Kingdom I would want the oil prices to at least double or triple over the current prices. And if I was also aware of the mature nature of the oil fields and rising consumption I would be shooting for a final price 5-10 times the current price with a diversified petrochemical industry using the majority of the remaining oil and NG as feedstocks with fertilizer and plastics being major exports. The assumption is that production from Ghawar and the other old fields will pretty much collapse over the coming few years leaving Saudi with long term production levels between 6-3 mbpd and internal consumption around 3-4 mbd and a population between 40-60 million.

Outside of the price projection I'm using to figure out how much money Saudi needs to inject in its economy to bootstrap a more general one based on value add finished products and probably light manufacturing the Saudi's are actually taking all the right steps to reach the goal of a oil centric but diversified economy. My expectation for production may be pessimistic but they have to even with the current production estimates see oil at least double in price to transform their economy. Triple is quite reasonable. 5-10 times is needed if Ghawar is potentially on the verge of collapse in production because of water problems with horizontal wells.

Also one would think the goal is a much higher per capita income approaching 100k with a large slave work force. Take your pick on projections but its a safe bet that KSA will never increase production to encourage a lower world oil price.

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karlof1 on June 25, 2008 - 3:25am Permalink | Subthread | Parent | Comments top

I agree with your assessment, Memmel. As shown by my post, just trying to get basic figures to inform others isn't easy. The news bit by al-Jazerra posted at Juan Cole's blog linked above I found very interesting, which I tried to set forth in my comment at his site. Too many people are ignorant of the very complex challenges Saudis face, internally and externally, with the very rapid population growth being #1, IMO. Their whole oil and gas biz should be manned and managed indigenously, and its armed forces should be the equivalent of Israel, but Saudi fails on both accounts. Include food security, and the Saudis have a very steep hill to climb. Then as you mention, there's the need to produce value-added petrochmeical products, and to prepare for the day when the feedstocks slow to a drip. Ideally, there'd be a dynamic allowing the Middle Eastern countries to solve their shared problems in a cooperative manner. The Gulf Cooperation Council is the nascent vehicle providing that dynamic, and it now includes Iran, but they have a long road ahead and need to start by eliminating the Imperial presence and its divisive influence ASAP. Just that sort of alliance is the US and UK's worst scenario. The GCC should bury the Carter Doctrine in a very explicit fashion. Abdullah is probably the most independent Saudi King to date. Time will tell how erudite he is.

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129 comments on Nigeria – The Significance of the Bonga Offshore Oil Platform Attack

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