This blog is intended to go along with Population: An Introduction to Concepts and Issues, by John R. Weeks, published by Cengage Learning. The latest edition is the 12th (it came out in 2015), but this blog is meant to complement any edition of the book by showing the way in which demographic issues are regularly in the news.

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Monday, November 7, 2016

Middle East Oil Futures: Saudi Arabia and Egypt

Saudi Arabia has the worlds' second largest known oil reserves (second to Venezuela), but it is finite and expected to last another 70 years, based on current estimates as reported by Bloomberg:
The nation’s wealth is based mainly on oil, with crude sales accounting for 75 percent of total export earnings, according to the prospectus. 
The country is seeking funds to shore up public finances that have been hit by the drop in oil prices to about half their 2014 levels. At the same time, the kingdom plans to wean itself off dependence on oil for state revenue by selling part of its state oil company to help develop industries including auto manufacturing and technology.
To be sure, The Economist is not all that sanguine about the ability of the Saudis to diversify the economy, but without a dramatic increase in the price of oil, they have to do something to keep their style of patronage of the population government going. The population of Saudi Arabia is currently estimated by the UN Population Division to be 32 million and the UN projects an increase over the next 70 years (the life of the oil reserve) to 49 million. But that number in 2086 is based on a projected drop in fertility to well below replacement level. Is that possible? Yes, but is it probable? It will require significant changes in the status of women in Saudi society. In the meantime, 37 percent of the Saudi population is under the age of 20 and expecting help from the government.

Nearby, Egypt needs oil but doesn't have any of its own and just today Saudi Arabia announced that it was stopping its shipments of oil to Egypt.
Saudi Arabian Oil Co. halted shipments of oil products to Egypt indefinitely, Egyptian Oil Minister Tarek El-Molla said, forcing the Arab world’s most populous nation to buy fuels on world markets at higher cost.
This is going to hurt and of course could lead to new rounds of destabilization in Egypt, whose population is already 93 million, but is projected to increase to 193 million in 70 years, even with a projected drop in fertility to replacement level. In the meantime, 42 percent of Egypt's population is under the age of 20 and they are not getting much help from the government.

1 comment:

  1. A juicy link for my favorite demographer: