Burning oil to keep cool the hidden energy crisis in

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Unformatted text preview: atham House and Paul Stevens, Senior Research Fellow for Energy at Chatham House and Emeritus Professor at Dundee University, 12-11, [“Burning Oil to Keep Cool The Hidden Energy Crisis in Saudi Arabia,” The Royal Institute of International Affairs, Chatham House, www.chathamhouse.org/publications/papers/view/180825] E. Liu Even if a country is justified in using more energy per capita and more energy per unit of output than others on the basis of the conditions described above, one would still expect its efficiency to improve over time. Figure 7 shows that this is not the case for Saudi Arabia. Between the oil price hikes of the 1970s and the global financial crisis in 2008–09, GDP per unit of energy increased in the oil-importing countries, but declined or stayed level in the oil-exporting ones: Saudi Arabia, Iran, Malaysia and Nigeria. On this measure, Saudi Arabia’s decline in energy efficiency is dramatic . Because the international price of oil has a distorting effect on the GDP of countries that depend on oil exports, we have also included a calculation based on Saudi Arabia’s non-oil sector GDP, which shows that the efficiency of this sector was roughly the same as for the United States in 1975 but has declined in almost inverse proportion to that of the US ever since.16 In fact this is in line with a regional trend. A World Bank report estimates that energy consumption has risen faster in the Middle East and North Africa (MENA) than in any other region since 1980.17 Between 1990 and 2005 MENA’s energy intensity increased by 14%, which was 60% above the OECD average and 40% above the global average. The report concludes that ‘high energy intensity is used, cautiously, as a sign of possible energy inefficiency’.18 229 Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Impact – Saudi Economic Instability 230 Oil DDW 2012 1 Dependence on oil prevents diversification – That leaves Saudi Arabia vulnerable to oil swings Lahn, Research Fellow for Energy and Development at Chatham House and Stevens, Senior Research Fellow for Energy at Chatham House and Emeritus Professor at Dundee University, 11 Glada Lahn, Research Fellow for Energy and Development at Chatham House and Paul Stevens, Senior Research Fellow for Energy at Chatham House and Emeritus Professor at Dundee University, 12-11, [“Burning Oil to Keep Cool The Hidden Energy Crisis in Saudi Arabia,” The Royal Institute of International Affairs, Chatham House, www.chathamhouse.org/publications/papers/view/180825] E. Liu Moreover, in the ideal resource-dependent development model, earnings from the depletable resources are directed towards sustainable investment, so that by the time the resources themselves are exhausted (or no longer have value on global markets) the country has compensated for any environmental damage and derives its standard of living and growth from other economic activities. Oil money has stimulated other areas of the economy in Saudi Arabia, with remarkable growth in the petrochemicals, construction and fi...
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