Oil Energy in Saudi Arabia:

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Saudi Arabia’s Economic Revolution Research Paper In a world of growing demand for energy and soaring oil prices, the Saudis have nothing to worry about; Saudi Arabia’s oil reserves account for more than 25% of the world’s total and its natural gas reserves are forth in the world (after Russia, Iran and Qatar). However, as we describe below, the Hashemite Kingdom faces some great economic challenges which call for attention. Introduction Saudi Arabia is the largest country in the Middle East. It is an absolute monarchy, ruled by HM King Abdullah bin Abdul Aziz al-Saud (since King Fahd’s death in 2005) and sees the Koran as the primary source of law. It is quite a dominant player in the international field, mainly due to its weight in IPAC and the global energy market and through its cooperation with both the U.S. (e.g., in the war with Iraq) and the Arab League. The national currency is the Saudi riyal (SR), which is pegged to the US dollar at US$1 = SR3.745. Saudi Arabia’s GDP was 379,476.7 Million USD in 2007, which places the Saudi economy at the world’s 25th place, with 4.7% GDP growth (ranked 133rd in the world and 2PP lower than in 2005). Although total population grows fast, as we further discuss below, the Saudi’s 2007 Per Capita GDP (9,227.81 USD) was ranked 35th in the world by the International Monetary Fund. Not surprisingly, oil exports accounted for 40% of GDP. The Saudi economy is still heavily dependent on oil production and related industries (e.g. refineries and petroleum industries). The financial sector is also quite developed, partially because banks do not pay taxes. Saudi Arabia is an infertile land and water resources are limited. Agriculture accounts for a very small fraction of the economy; almost half of agricultural products are imported. However, the major economic challenge Saudi Arabia faces today is the enormous unemployment
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