Saudi Arabia’s Great Run Seems Headed for Trouble
This article gets a critical point wrong. The absolute worst thing that could happen to Saudi Arabia is that they continue to have a high birth and population expansion rate.<p>The source of their biggest threat in regards to social unrest, is that they can&#x27;t afford to placate their massive population expansion since ~1980. Their population has tripled since roughly 1982 and they have no traditional economy to support that what-so-ever, it&#x27;s all oil dependent. The worst thing that could happen is that you double that population again rapidly, against a relatively static output of oil and while having still not developed a traditional economy to support the new population.<p>It&#x27;s a pretty simple equation. N oil production divided between Z population. Every year that goes by that their population increases and their oil production doesn&#x27;t keep up, that oil money gets thinner per capita. Boosting the population doesn&#x27;t boost their economy much (such that doing so enables them to better provide for an aging population), as they have practically no conventional economy.<p>That&#x27;s fundamentally why their budget requirement for the price of oil just keeps going up. It&#x27;s at least ~$80 per barrel now that they need to balance the budget [1], so it&#x27;s nearing a state of becoming permanently impossible to fulfill their budget demands. Soon it&#x27;ll be $90, then $100.<p>They&#x27;ve increased their population by 1&#x2F;4 in roughly the past decade. That&#x27;s far too fast of a population expansion rate based on the structure of their economy. What they actually need is population contraction, desperately.<p>That oil economy is now trapped in hell with US shale production always acting as a price &amp; supply counter that makes it impossible for Saudi to gain ground. The EIA output estimate for the US for 2018 as recently as three years ago was roughly two million barrels per day of production lower than what it actually turned out to be. In one form or another, that&#x27;s largely coming out of the pocket of OPEC+ (OPEC + Russia). US shale supply will never stop pressing against the price &amp; supply of oil and the US is rapidly ramping up its export capabilities. If the Saudis cut to firm prices, US supply takes it up and takes their price gains away (which may take months or years to fill out depending on the macro situation).<p>Saudi will expand their population by another 12-15% in the next decade, against this disastrous economic scenario. The outcome is obvious, they won&#x27;t be able to placate the burgeoning population and over time it&#x27;ll rip the kingdom apart.<p>If you cut their population in half right now, they&#x27;d struggle to build a traditional economy big enough to put under it in time before there&#x27;s an oil crisis in the kingdom. As it is, they appear doomed to an inevitable civil war or revolt of some sort.<p>[1] <a href="https:&#x2F;&#x2F;www.spglobal.com&#x2F;platts&#x2F;en&#x2F;market-insights&#x2F;latest-news&#x2F;oil&#x2F;121818-saudi-arabia-needs-84-b-oil-price-to-balance-2019-budget-analysts-warn" rel="nofollow">https:&#x2F;&#x2F;www.spglobal.com&#x2F;platts&#x2F;en&#x2F;market-insights&#x2F;latest-ne...</a>