The Oil Industry In Saudi Arabia

1015 Words5 Pages
The oil problem is a subject that has mostly been approached from the importers point of view, where most of the available information analyses the impact of oil prices on the economies of the importing nations (Taher and Bandar, 177). However, there has not been much focus on the impact of the rise or fall of oil prices on the economies of the oil exporting countries. Additionally, the world has largely focused on the environmental effects of oil and oil products \ that creates the need for replacement of oil consumption with clean energy consumption. In this matter, the impact that the increased green energy consumption would have on the oil-dependent economies has been ignored. Saudi Arabia is a country whose economy is largely dependent…show more content…
However, this belief might not be true, due to the increasingly growing relevance of both the private sector and the non-oil sectors in the country in the last few decades. The non-oil GDP has been increasingly growing for Saudi Arabia, such that the country had already managed to grow its private sector to account for 70% of the non-oil GDP by 1987 (Taher and Bandar Hajjar, 177). This is an indication that the country stands a chance of growing its economy through other private non-oil industry economic activities, owing to the fact that the government strictly controls the oil industry in Saudi Arabia. Saudi Arabia has increasingly been expanding in the creation of the private sector importance in the country, through increased trade freedom ratings while the management efficiency in the government has been improving over the years. Oil export revenue account for 90% of Saudi Arabia’s total export while at the same time accounting for 80% of the government revenue and budget (Forbes, n.p.). Therefore the government whose largely depends on the oil revenues, while the private sector is working toward growing the other sectors so they can make good contribution into the country’s economy. This simply means that the country has the necessary economic growth environment to push its economy into more…show more content…
The USSR was a major oil producer throughout its history, until the oil industry for the country collapsed in the early 1990s (Tverberg, n.p.). The USSR oil exportation started declining in the 1980s due to the decline in the oil prices, resulting in the rise of the consumption and production of other energy sources such as nuclear, coal and natural gas (Tverberg, n.p.). Since then, USSR’s economy has recovered to a larger extent, and currently Russia has a relatively wealthy economy compared to many countries globally. This historical example serves to show that there are still other avenues that are open for Saudi Arabia economy to prosper even with the increased expansion of green energy. According to the 2007 statistics, Saudi Arabia generated 10% of the country’s GDP from industrial manufacturing outside of the petroleum industry, while the petroleum industry contributed 55% of the country’s GDP (Hamman, 296). Additionally, other sectors outside the petroleum industry in the Saudi Arabian economy contributed to offering 6% of the total employment within the economy in 2007 (Hamman, 296). This serves to indicate that the country has an economic potential outside of the reliance on the

More about The Oil Industry In Saudi Arabia

Open Document