The transition from fossil fuels to alternative sources of energy is going to require major adaptation for everyone. For countries like Saudi Arabia, with an economy based on oil production, the transition is likely to be particularly intense. This concise and informative Wendover Productions video explains Saudi Arabia’s history, how recent events have influenced oil prices, and what Saudi Arabia will have to do to cultivate economic activities that don’t rely on oil.
Saudi Arabia has benefited from about 80 years of high oil demand.
In 1932, tenacious Arab tribal leader Abdulaziz bin Abdul Rahman Al Saud created the modern Kingdom of Saudi Arabia. Though he had no solid evidence, Abdulaziz believed the country was rich with oil, and in 1938, preliminary drilling showed that he was right. His new kingdom was desolate, dry and somewhat undeveloped, but the “single largest proven oil field on earth” lay just below the surface.
The discovery of oil brought peace and prosperity to Saudi Arabia, and the citizenry was happy to accept the absolute power of their monarchy as long as the Saudi government plied them with subsidies, housing and infrastructure. The year 2000 brought a massive uptick in oil prices. Saudi Arabia enjoyed a tripling of its GDP and was courted by international businesses. Growth seemed “endless and effortless” until 2008, when oil prices became brutally volatile.