Reuters reports: The world may have to live on a lot less Saudi Arabian crude towards the end of this decade as rampant internal demand eats into oil exports and the kingdom’s alternative energy plans may prove too little too late.
The top crude exporter is already burning more than 10 percent of its output in power plants on hot summer days. Meanwhile huge fuel subsidies, which have helped sedate Saudi social unrest throughout the Arab Spring, are exacerbating a demand boom that is lapping up the world’s largest oil reserves.
Faced with ever increasing quantities of its biggest export earner being consumed at home, Riyadh is banking on a massive nuclear plant building programme to drastically reduce oil use from around 2020, with solar power bridging the gap.
But that may not be quick enough to avert a supply crunch by the end of the decade for a world economy still hooked on abundant Saudi crude.
“Domestic consumption has been growing very fast as a result of rapid demographics, steady economic growth and heavy subsidies, with the latter leading to excess demand,” said Ali Aissaooui, head of economic research at Arab Petroleum Investments Corporation in Saudi Arabia.
“With the ongoing turmoil in parts of the region, social demands are featuring prominently on top of governments’ policy agenda. In this context phasing out subsidies to rein in excess demand growth has become extremely tricky,” he told Reuters.
“Excess demand could affect the capacity of some countries, such as Saudi Arabia, to maintain the spare capacity needed to provide flexibility to the global oil market.”
Thanks to huge subsidies, which the International Energy Agency (IEA) warned last week encourage waste, Saudi energy demand has been growing much faster than its non-oil economy in the last few years, while the rest of the world has become more efficient in its energy use.
According to analysts at Riyadh-based Jadwa Investment, oil demand in the kingdom rose by 22 percent between 2007 and 2010, out pacing the Chinese oil demand growth rate despite China’s economy expanding almost three times faster.
If they turn the ladies loose to drive to the mall, then they will burn more oil. On the other hand, the ladies will perhaps be less available at home, and population pressures may ease a bit. Interesting dilema.
Perhaps it’s time to rev up the fears of Saudi oil becoming scarce that were prominent in certain financial rags last year, that the Saudis have been fudging their numbers for their oil reserves for years. I haven’t seen the official numbers, but the papers I saw claimed that the figure for reserves has remained unchanged while the numbers for production and use have gone up for decades. Secondary recovery has its limits, too.
Found one of the articles at http://agorafinancial.com/reports/OST/OST_OilHoax11010.php?code=EOSTL122&o=59232&s=60782&u=47004822&l=79913&r=Milo —from January 2010
They claim the Saudi’s have actually increased the claimed reserve figure even though they have never reduced the reserves to reflect the amounts of oil removed.
Quote:
For 16 years, from 1979 through 2005, they’ve claimed they own 260 billion barrels of proven oil in the ground. The figure never goes down, even though they pumped out 46 billion barrels during that period.
These speculators and financial finaglers may be snake oil salesmen, but they’re smart snake oil salesmen. It wouldn’t be unknown for oil companies and oil nations to lie…I worked in oil exploration most of my working life and truth is a very scarce commodity in that business.