Oil Politics in Saudi Arabia

Oil Politics in Saudi Arabia

Introduction

Saudi Arabia, formally known as the Kingdom of Saudi Arabia, has an estimated population of 25 million residents; 20 percent of residents are non-Saudis. By land area, it is the largest country in the Middle East and the third-largest Arab country. With its dominant presence in politics, religion, and oil production, Saudi Arabia establishes rich social networks. With a continually growing economy, attention to Saudi Arabia is growing fast around the world. It is a required passage for investors in the oil industry, as its land holds a large percentage of the world's oil supply (Ross, 2001). The king and the royal family have strong political ties that keep its male citizens compliant, its women restrained, and its non-Muslim citizens quiet.

In contrast to more narrow economic analyses of oil, where the focus lies on the price formation and the conditions under which the “right” price for this nonrenewable resource can be obtained, political economy of oil studies the conditions and consequences of the production, appropriation, distribution, and consumption of oil (and oil-related products) by taking into account social relations of power (at local, regional, and global scales), cultural codes of consumption, institutional structures of surplus extraction, and ecological impacts of human activity. In this sense, again in contrast to economics of oil, political economy of oil is decidedly interdisciplinary—moving beyond economics, it draws upon political science and international politics, sociology and cultural studies, geology and geography, and ecology. This paper is focusing on oil politics in Saudi Arabia.

Discussion

Saudi Arabia ranked first in the world in reserves (currently disputed by Venezuela), and oil exports. The oil industry generates about 40% of GDP and 80% of export earnings.

The organizational structure of the industry

Dominant position in the oil sector of Saudi Arabia occupies a state-owned Saudi Aramco, carries out exploration, production, transportation, processing and sale of crude oil. In the field, of petrochemical company holds key positions in SABIC (70% of the shares owned by the state, 30% - private shareholders). In the oil sector, of Saudi Arabia are also represented such big foreign companies such as ExxonMobil, Shell, Chevron Texaco, etc. The country has a system of subsidies for domestic oil and oil products, which are among the lowest in the world.

The main indicators of the industry

As of 2010 oil reserves in Saudi Arabia amounted to 36.1 billion tons, equivalent to 19.8% of world reserves. Total in the country is open about 100 oil fields and on the 8 largest accounts for over half of all domestic stocks. Since 1989, oil reserves in Saudi Arabia have not changed. Oil is a political weapon. The U.S. government knows very well. U.S. cheap oil was considered in the past as "a right". If oil prices seemed too high, USA contacted with Saudi Arabia to increase production. Saudi Arabia worked this way for many years. However, the current problem is that not even the country with oil simpler, cheaper, and world's largest reserves, can solve the world ...