The Rapid Growth of Domestic Oil Consumption in Saudi Arabia and the Opportunity Cost of Oil Exports Foregon, Energy Policy

Journal Article

c, Dermot Gately , Nourah Al-Yousef , Hamad M.H. Al-Sheikh . 2012

• نوع عمل المنشور: بحث
• رابط المنشور على الويب: http://www.sciencedirect.com/science/article/pii/S0301421512003114
• المجلة \ الصحيفة: Energy Policy
• رقم الإصدار السنوي: 47
• الصفحات: 57-68

مستخلص المنشور

We  analyze the rapid growth of  Saudi Arabia’s domestic  oil  consumption, a  nine-fold increase in  40 years, to nearly 3  million barrels per day, about  one-fourth  of  production. Such rapid growth in consumption – 5.7% annually, which is 37% faster than its income growth of 4.2% – will challenge Saudi Arabia’s ability to increase its oil  exports, which are relied upon in  long-term world oil  projections by the International  Energy Agency (IEA),  US  Department of  Energy (DOE)  and  British Petroleum  (BP). However, these institutions assume unprecedented slowdowns in  Saudi oil  consumption – from  5.7% annual growth historically to less than 2% in the future – allowing them to project increases in Saudi oil exports.  Using 1971–2010  data,  we   estimate  that  the  income responsiveness (elasticity) of   oil consumption is at least 1.5—using both Ordinary Least Squares regression and Cointegration methods. We  believe that continued high growth rates for  domestic oil  consumption are more likely than the dramatic  slowdowns projected by   IEA,  DOE  and BP.  This   will have  major  implications  for   Saudi production and export levels