Believe it or not, running out of oil is not the Saudis’ worst fear.
Not even close.
Would you have cause to worry if you were sitting on 262 billion barrels?
(Granted, we’re assuming the Saudis aren’t cooking the books, and that most of their future production is of much lower quality than what they were pumping decades ago… That particular problem isn’t unique to Saudi Arabia.)
The Saudis aren’t losing sleep over production, either.
If nothing else, they boast the world’s greatest spare capacity.
It all depends who’s doing the talking, but the general consensus is that the Saudis can pump out an additional 2 to 3 million barrels per day to about 12 million barrels per day.
But that’s it.
And the number of countries that can actually increase oil production make up a very short list…
The Saudis’ Worst Fear
We may have celebrated the birth of the planet’s 7 billionth inhabitant earlier this week, but you can bet there were people who took the announcement as less than happy news…
Population growth is actually the thing the Saudis fear most.
The country’s population has grown nearly 18% since the turn of the 21st century, and the trend does not bode well:
Along with their vast oil wealth, oil demand is sure to follow:
In 2010, Saudi Arabia consumed approximately 2.4 million barrels per day.
Sounds like a drop in the bucket when you consider the fact that their Ghawar oil field produces twice that amount…
As is usually the case, the devil is in the details.
The country’s oil demand has jumped 50% over the last seven years. During that time, population grew less than 8%.
Truth is the Saudis are becoming just as addicted to crude as we are.
And at this rate, they will need three million barrels per day to stay afloat.
In order to make up this demand, the Saudis will be forced to cut into their exports.
The Saudis have lost the title of the world’s largest oil producer. Russia’s production was in excess of 10 million barrels per day last year. The Saudis only averaged 9.7 million bbls/d during the same period.
Imagine how the world will be begging for Saudi oil when the rest of the planet’s reserves are tapped out…
Enjoy your weekend,
Keith Kohl
Editor, Energy and Capital
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