Saudi Arabia’s Black Gold: A Historical Perspective
Saudi Arabia does not have the same variety of natural resources as Russia and China, but it has immeasurable wealth. KSA is the world’s largest producer and exporter of oil.
The history of Saudi’s “black gold” dates back to 1938. The American company Standard Oil of California (Socal) received the right to explore for oil from Saudi King Abdulaziz bin Abdulrahman Al Saud in 1933. Then, in the Dammam Dome near the Persian Gulf, Socal discovered large quantities of oil. In 1939, Saudi Arabia began limited exports.
In the end of the 1940s, Socal allied with other American oil companies. It was renamed the Arabian American Oil Company (Aramco).
World War II contributed to the suspension of oil production projects. However, after its end, Saudi Arabia increased production and exports. By 1970, the country became one of the world’s largest oil exporting nations. This marked a new stage of socio-economic development.
In 1960, Saudi Arabia participated in the founding of the Organization of Petroleum Exporting Countries (OPEC).
OPEC’s main objective has become to ensure stability in international oil markets. It aims to eliminate price spikes. Saudi Arabia, as history shows, is often OPEC’s main restraining force.
Saudi Arabia’s Global Energy Influence
In 1980, the Saudi government took over full management of Aramco. After this, the company’s name was changed to Saudi Aramco. They began exploring for new fields in previously unexplored areas, discovering giant deposits of the highest quality oil.
This ushered in a new era of Saudi Arabia’s oil industry, taking the kingdom’s economy to a very high level.
Since then, Saudi Arabia has had a tremendous impact on the global energy industry.
The Kingdom, as the world’s largest producer and exporter of oil, has repeatedly compensated for shortages. They significantly increase production to avoid shortages of oil. Thanks to Saudi Arabia, the world economy has managed and still manages to avoid severe shocks. These shocks occur during rapid price rises or lack of supply.
It is worth pointing out that Saudi Arabia has other natural resources. These include gas, gold, silver, copper, tin, tungsten, nickel, chromium, zinc, lead, phosphates, iron ore, bauxite, potash ore, and even table salt. Extensive deposits have been discovered throughout the Kingdom. Some exploration projects are exploring for minerals at the bottom of the Red Sea.
The Sun: Saudi Arabia’s Solar Energy Ambitions
Saudi Arabia’s resource endowment is not limited to oil and other minerals. One of the alternative sources of energy is the sun.
The climate of the Kingdom is sunny, arid, and rainfall is negligible. For example, in the south of the country there is the largest sand desert in the world – Rub el-Khali, where it rains once a decade. However, the Kingdom receives some of the most intense sunlight globally. This amounts to 105 trillion kilowatt hours per day, which is roughly equal to 10 billion barrels of crude oil in energy terms.
Thus, Saudi Arabia, being a country of solar power, is successfully utilizing this resource as well.
The entire territory of the Kingdom is covered by a huge electricity distribution network. This network reaches various settlements. Solar power is also used in remote locations, such as on some stretches of desert roads, to provide for emergency phones and signs.
Scientists at the King Abdulaziz Center for Science and Technology (KACST) are working on projects to increase electricity generation. They are attempting to make solar energy production more economically viable. Solar energy projects in various industrial structures in Saudi Arabia are also very popular, such as agriculture.
Stay Tunned
Dear readers, in the second part of our article, we will discuss how Saudi Arabia’s natural resources influence both the domestic and foreign policies of the Kingdom. Stay with us and keep an eye on our upcoming publications.
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