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Month: December 2013 Page 2 of 3

The Kingdom’s Oil: A Journey to Saudi Arabia Pt. 1

Whenever we get into our cars to go to work, get onto an airplane to travel abroad, and turn on our stoves to heat our food, we are assisting the Saudi economy. The modern world is powered by oil and natural gas, and as a result humanity’s reliance on these resources is enormous. The United States in particular is a major consumer of energy and energy resources. Saudi Arabia is one of the world’s foremost energy producers, controlling an enormous supply of oil and taking in enormous amounts of wealth from its export. Understanding the Saudi economy must first come with an understanding of the Kingdom’s oil.

To say that Saudi Arabia plays a key role in providing the world its energy supply could be considered an understatement. According to 2013 estimates, released by the International Energy Agency, Saudi Arabia is 2nd among the countries that produce the most oil, behind only Russia. Remarkably, the Kingdom produces 12.65 percent of the world’s share of oil.  In 2012 alone, the Saudis extracted up to 9.5 million barrels of oil each day. There are currently 7 major oil refineries in Saudi Arabia, collectively capable of refining up to 4 million barrels of oil a day. The majority of Saudi oil is sold abroad, producing an enormous wealth that has made the Saudi economy one of the top 25 strongest in the world. The Kingdom is also one of the United State’s primary energy suppliers, though it additionally provides other countries with a significant portion of its resources. Indeed, over 50 percent of Saudi oil is shipped to Asia, while less than 20 percent is shipped to the United States. Still, with over 20 percent of the world’s proven oil reserves, amounting to over 260 billion possible barrels, lying beneath its territory, the Kingdom will undoubtedly be one of the major oil producers for the considerable future.


Oil is not the only energy resource fueling the Saudi economy, however. A significant industry is now developing around natural gas. In 2012, the Saudi’s extracted over 10.7 billion cubic feet of natural gas per day. Most of this natural gas is used for domestic purposes, such as for producing energy and fueling a thriving petrochemical industry. Indeed, the natural gas extracted by the Saudis is turning out to be a major boon to their economy, allowing them to expand away from a largely export-based oil economy and to begin the development of chemical and petrochemical sectors.

Most of this information was provided by representatives from Saudi Aramco, the Saudi oil and natural gas company, who talked with us about the importance of energy resources to the Saudi economy. Aramco is the sole prospector, extractor, and domestic refiner of Saudi oil and natural gas; it controls a monopoly on the Kingdom’s lucrative oil business. Indeed, because of its total control over one of the world’s largest oil supplies, the company is estimated by the Financial Times to be the world’s most valuable company.

Aramco’s history began in 1933 when a conciliation agreement between the Saudi government and Standard Oil of California, which would later become Chevron, was signed that allowed the company to prospect for Saudi oil. Oil was found  in 1938 and Standard Oil shipped its first barrels abroad in 1939. Later the company brought more oil producers into the extraction process and changed its name to the California-Arabian Standard Oil. In 1944, the company was renamed the Arabian American Oil Company, or Aramco for short. The Saudi government began purchasing Aramco stock between 1973 and 1980 and, by 1980, was the sole holder of Aramco shares. As a result, the Saudi government became the company’s owner. Unlike the messy and often politically consequential nationalization of oil industries in other countries, the Saudi takeover of Aramco turned out to be a smooth transition. Aramco’s partners continued to operate and manage Saudi Arabia’s oil fields, and in 1988 a royal decree changed the company’s name again to the Saudi Arabian Oil Company, which it is known as to this day.

The Aramco representatives reinforced the importance of oil for the Saudi economy. Throughout much of the ‘oil boom,’ oil revenue was the Kingdom’s main source of wealth, and was what propelled the Saudi economy to great heights. Even to this day, Saudi oil remains a key element in the Saudi economy.  When asked about possible energy competitors, such as Iran, Iraq, and Libya, the representatives expressed optimism in Saudi Arabia’s continued dominance of the world’s oil supply. They argued that political instability in those countries has prevented them from effectively exporting oil and that, even if they did manage to export oil, the world’s increasing oil demands would still increase Saudi exports. Indeed, the representatives noted that even the United States, despite becoming more energy independent and increasing its own production of oil, is still important increasingly large amounts of oil annually.

The representatives also focused attention on other ways the Saudi oil industry has helped the Saudi economy. Expanding the oil industry, they argued, would be an effective way to deal with the widespread unemployment of Saudi youth. As many Saudis leave college with engineering or technical degrees, which are suited for oil extraction and production, the Saudi oil industry is a key source of employment.

Oil Gas Fields Map

A map of Saudi Arabia’s oil and gas fields.

However, even the Aramco representatives acknowledged that times and technologies are changing. Oil will not be a key energy resource forever, and for a country which relies so heavily upon its export, change must occur. One of their key focuses was on Aramco’s research and development efforts, which have been focused on developing cleaner oil technologies and expanding into other energy sectors. They noted that, while oil was the source of over 70% of the Saudi income in the 1980s, it is now only 30%… a number they still consider too high. To combat a future of slowing oil exports and demand, Saudi Arabia, a country with money to spend, is heavily investing in renewable energy sources such as solar power. Meanwhile, Aramco is starting to develop and expand the Saudi petrochemical industry, hoping to diversify Saudi exports and production.

When probed about environmental concerns, however, the Aramco representatives pointed out that oil is still very much a necessity right now. Oil, despite being environmentally unfriendly, brings many benefits into this world. As one representative noted, “Oil makes plastics possible, which make incubators possible.” Still, as noted earlier by Aramco’s research into cleaner oil technologies, the company feels a social responsibility to make its exports more environmentally friendly. After all, as a representative pointed out, cleaner oil drives up oil demand, a win-win for all involved.

It is clear from the presentation given by the Aramco representatives that oil is still very much a key resource in the Saudi economy, and its production and export is still what drives the economy forward. As such, understanding Saudi Arabia’s involvement in oil production is key to understanding the Saudi economy and, in turn, the Saudi state. It will be very interesting to see, as time goes by, how the Saudis respond to changing energy demands, and whether their new focus on cleaner and renewable energies will be able to power their economy as successfully as oil does today.

Introspection # 31: “Travel”

It’s quite incredible how, in the modern day, a human can travel anywhere in the world quite easily. The infrastructure our civilization has created allows for a remarkable ease and accessibility of travel. Using cars, trains, and airplanes, we have the ability to travel quickly anywhere across the world. This is a revolutionary new capability for humanity, and its effects are quite profound.

Our capacity to travel is a new phenomenon. Only a century ago, the technologies which allow for such ease and accessibility of travel did not exist or were in their infancy: the car and the airplane had just been invented. Their invention rapidly changed the character of travel and mobility. Suddenly, trips of long distance no longer took days or weeks. People and things could be transported across the country, across borders, and across the oceans in a far more rapid pace than was possible in the past. Even then, it has only been in the last half century that those technologies were readily accessible to the average person. Only in the last half century has the average person had the ability to quickly travel across the country, or across the world.

This is perhaps one of the most apparent and striking differences of the modern era from the ages of the past. In the past, traveling was accomplished by foot or by horse. Trips that are short for us, such as the morning commute, took hours to accomplish. The comforts of the car were not available, and as a result these short trips, depending on the weather and the environment, could be long, uncomfortable, or even dangerous affairs. Long distance travel was accomplished by train or by boat. Trips across the ocean, which can now be completed in a matter of hours, took days or weeks. The invention of the railroad, which suddenly made whole continents more easily accessible to people, rapidly decreased the amount of time it took to travel. It was the beginning of this new age of travel, but even then the railroad still took a considerable amount of time. As a result, for most people, the world did not extend beyond their local community. For most of history, it is predicted, the average person did not venture further than a few miles from their home.

We can see how transformative our new ability to so quickly and accessibly travel has been. Globalization, the process of deeply connecting the peoples and places of our world, was kicked into action by our new ability to travel to new, distant places. Peoples who had never explored the world or other cultures were now given that ability. As a result, the dissemination of culture, ideas, and ways of life quickly increased. In turn, the proverbial ‘distance’ between different peoples and different countries lessened. While this process has been enormously aided by the invention of the internet, which allows for that same sort of travel of ideas and cultures instantly, globalization began because of the sudden access to the world through travel.

Ease of travel has also opened massive new opportunities for the average person. The entire world literally awaits us, and we can easily access it. The exotic locales of foreign lands are no longer only experienced by explorers and dignitaries. They are available to the common tourist, and as a result the knowledge, understanding, and interest of the world by the common person have greatly expanded. By being able to personally experience different cultures, different peoples, and different lands, the average person’s perspective on humanity has changed. Traveling to distant, foreign lands revealed the many characters and characteristics of humanity, the many possible ways of live our specie’s has created. The average person is no longer isolated in place or in perspective to their local community. Our perspective on and understanding of the world has taken on a global nature.

This revolution in travel has opened up enormous possibilities for humanity, and will likely only continue to develop. Technology is propelling us across the world at faster paces. Traveling is constantly becoming safer, cheaper, and more efficient. The future of travel is likely going to be even more impressive than its current state. Should efficient, high-speed rail, such as the Bullet Train in Japan, become widespread, people can be whisked across countries and continents at breakneck speeds. Eventually, our use of flight will expand into suborbital and orbital trips, which will enormously decrease the time of travel between one point on the globe to another. Indeed, as our use of space-borne travel increases, the entirety of our planet may become accessible in as short a time as an hour or two.

The current state of travel is remarkable, and is profoundly different from how it was in the past. We now have the ability to easily and efficiently travel away from our local communities, away from our country, even away from our continent. The whole world awaits, and now, with modern travel, any person can access it. The possibilities are endless.

A Journey to Saudi Arabia

As a traditionalist, conservative monarchy thriving off the wealth made from fueling the modern world, the Kingdom of Saudi Arabia may seem to be paradoxical. Oil wealth and the realities of globalization and modernization have propelled this country, built on tribal ties and puritanical Islam, to a position of global influence. Yet while it is one of the most powerful economies in the world and the key player in Arabian geopolitics, its women are not permitted to drive or be legally independent from their men and daily life is governed by strict religious laws and customs. Saudi Arabia is thus a country at conflict with the changing character of the world around it, and with itself. Saudi culture is torn between its reverence for the traditions of the past and its reluctant acknowledgement of the pressures of the future. As a country where tradition rules everything, the liberalizing changes that come with modernity do not so easily take hold there. Indeed, the conflict between progressive modernity and Islamic tradition can be seen in the disgruntled and disillusioned individuals it produces: 15 of the 9/11 hijackers were Saudi citizens. This paradoxical nature of Saudi Arabia can only be understood by appreciating the context and circumstances of its people and culture. Only by learning about the government of the Kingdom, it’s strictly conservative Wahhabi brand of Islam and the history of its people can the current nature of the monarchy and the country truly be understood. Soon, I will have the opportunity to do so.


Starting on Saturday and lasting for 10 days, I will be traveling this fascinating land, learning about its people, culture, government, and history. I will visit the sandy deserts of Arabia, the ancient cities of Riyadh and Jeddah, bustling markets and squares, and the massive development projects started and funded by the wealthy royal family. Though this trip itself will be a fun and exciting experience for me, it will also be informational. We will be meeting with Saudi officials, businessmen, policymakers, workers, and others to learn about their way of life, their struggles and challenges, their hopes and fears, and their perceptions of the world. I will be constantly immersed in an environment that I know little about, and will be able to learn and take away so much as a result. Replacing my ignorance of this culture and country with a greater understanding is my main goal.

After all, for being a country of such strategic and political importance and having had such a long and important historical relationship with the United States, the Kingdom of Saudi Arabia’s nuances and intricacies are relatively unknown to the people in the West. For many, the Kingdom is little more than a place where we purchase our oil. Most in America do not understand the history and people of Saudi Arabia, and as such cannot hope to understand how and why they act as they do in the present day. As evidenced by our sometimes confused relationship with and foreign policy on them, an understanding and knowledge of the Saudis may even be absent in our scholars and policymakers. While many Saudis are afforded the opportunity to visit and study in the United States and in doing so learn about us, very few Americans are given a reciprocal opportunity. American ignorance of this very important and interesting country is a result.


Learning about this country, then, is of incredible importance, and spreading that knowledge even more so. Saudi Arabia, being one of our strategic allies and an increasingly significant player in Middle Eastern and global affairs, should be a focus of American policy and understanding. Our peoples are divided in culture, customs, traditions, and lifestyles, and this divide has been a source of the antipathy, ignorance, and fear that clouds the post-9/11 American mindset. Bridging those divides, and revealing the relatable and unshakable human character of the Saudi people, is thus one of the most important steps towards building a peaceful and harmonious future between our countries. Perhaps of more fundamental importance is that we, as citizens of not only the United States but the planet Earth, cannot afford to be ignorant of the other cultures living on our planet. Our country is but one of many, and our way of life is only one way of doing things. Broadening our understanding of the human experience broadens our perspective, and in turn makes us into more cultured, more learned individuals.

I leave for my trip to Saudi Arabia knowing it will be a trip of learning and understanding. I hope to contribute to a greater knowledge of the Saudi people, their culture, and their government. To do so, I will be using this blog to describe my travels and my discoveries. I hope to update it daily, describing what I have learned, where I have visited, who I have met, and providing insights into this foreign land. I expect that this trip will be not only informational, but also incredibly exciting and fun. I invite you to join me on this incredible journey and enjoy with me the sights, the culture, and the learning.

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