Saudi Arabia Confronts Its Oil Dependence

Saudi Arabia is the world’s leading exporter of oil. Yet it is also a country that is in the midst of an ambitious drive to end its dependence on oil revenue as the foundation of its national economy. Saudi Arabia’s effort to economically diversify follows a decade of oil market volatility that has added to a host of economic and political challenges faced by the ruling Al Saud family. Looking ahead, the global effort to move away from fossil fuels, and address climate change, could make Saudi Arabia’s overreliance on oil ever more risky. 

David Rundell, former Chief of Mission at the American Embassy in Saudi Arabia and author Vision and Mirage, Saudi Arabia at the Crossroads, explores the kingdom’s efforts to diversify away from oil. Rundell also discusses Saudi Arabia’s perspective on the global effort to decarbonize, and America’s tense relationship with its longtime energy ally.

Full Transcript

Andy Stone: Welcome to the Energy Policy Now podcast, from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone.

Saudi Arabia is the world’s leading exporter of oil. Yet, it’s also a country that’s in the midst of an ambitious drive to end its dependence on oil revenue as the foundation of its national economy. Saudi Arabia’s effort to diversify its economy follows a decade of oil market volatility that has threatened that economic foundation and added to a host of challenges faced by the ruling Al Saud family. Looking ahead, the global effort to move away from fossil fuels and address climate change is likely to make Saudi Arabia’s overreliance on oil ever more risky. On today’s podcast, we’re going to explore how a changing outlook for fossil fuels may impact Saudi Arabia and its role in the global energy market.

My guest is David Rundell, former Chief of Mission at the American Embassy in Saudi Arabia and author of a recent book that examines the kingdom’s reforms. David will explain Saudi Arabia’s steps to diversify its economy. We’ll talk about the kingdom’s influence as the swing producer in the global oil market, on the global effort to decarbonize, and about the implications of America’s increasingly tense relationship with its long-time energy ally. Alright, David, so you have an interesting background. You worked with the State Department in the Middle East for 30 years. A large portion of that time at the American embassy in Saudi Arabia. And you’ve written a book titled Vision or Mirage: Saudi Arabia at the Crossroads, that explores the past century of Saudi Arabian history and the kingdom’s current efforts to address political and economic challenges. And I guess most notably for our conversation today, the country’s dependence on oil as the background of its economy. So could you explain that dependence, the dependence of the Saudi state on the oil sector, to get us started?

David Rundell: Yeah, the Saudi state is very heavily dependent upon the revenue that it obtains from exporting primarily oil, although also to some extent natural gas and petrochemicals. And this has in the past contributed– depends on the year and the price of oil– but somewhere around 85% of the state’s budget. So the budget is heavily dependent on oil, but it is more significant than that in that the entire economy of Saudi Arabia is very much different than a normal economy, in which case the people produce things and the government then taxes them. In Saudi Arabia, the government does not tax the people and instead gives them a large amount of services and welfare state options. So it is in fact a strange place in a number of ways. Not only is it probably the last strategically important real monarchy on the planet politically, but economically it is a distributive state rather than a productive state. By which I mean that the government distributes wealth rather than the people, most of them, producing it. So from both of those positions or both of those angles in terms of the country’s GDP, which, as I say, is fed largely by the state pumping out the oil revenues to the people and by the state’s revenues itself, it’s heavily dependent on the price of oil.

Stone: Well, in the last decade, we’ve really seen how that over-dependence on the single commodity to fund the government, oil, has created problems for the kingdom. Can you talk about that reliance and the risk of that reliance for the kingdom’s economy?

Rundell: Clearly, to be dependent on one crop or one product is not desirable. If that’s a commodity that has a price, it varies significantly over time. Most people think that the Saudis are always getting rich from oil. That, in fact, is not the case. There was a period– it’s hard to believe, but basically between 1980 and the year 2000, they ran a budget deficit and an increasingly large budget deficit. People remember the two oil shocks of the 1970s. They remember 1973 and they remember 1979. The first dealing with the Arab-Israeli war and the second one dealing with the Iranian revolution. In both of those cases, there was a huge uptick in oil and a windfall profit for the Saudis. During the early eighties, they attempted to keep the price high by restricting production. But that did not work because the other members of OPEC at the time all cheated. So they found themselves in the first part of the eighties, reducing their own production dramatically. And then after about 1986, they just said, forget it, we’re not going to carry the load for everybody else in OPEC. And they just opened the taps and the price did collapse. So really then they had a major, major, deficit. By the year 2000, 100% of their national debt, the money the government had borrowed was at 100% of GDP, and that’s when you start seeing yellow lights flashing. At least most people think that. Some people perhaps today are coming up with different theories. But in general, I think one should not. I think once you get to 100% of your GDP as your national debt, people start taking notice. So they were in a difficult situation. King Abdullah actually at the time went on TV and said the party’s over. We’re going to have to start changing the way we do things around here.

Stone: That was internal TV to the Saudi people?

Rundell: Yeah, to the Saudi people. That was in 2000, roughly. And then as if by magic, effectively what happened was China began to grow very rapidly and the price of oil went up again dramatically. And you can look at a chart and see how oil prices change. But basically, the Saudis were out of the woods and all of a sudden they started making a lot of money again. And interestingly, this is a more of a historical note, but King Abdullah first of all, the first thing he did, rather to the annoyance of many Saudis, was pay off the debt. He practiced countercyclical economics exactly the way your textbook says it should be done and not the way that we do it in the United States these days. So he paid off the debt and the debt got down to something ridiculous, like 5% of GDP, which most economists would say is actually too low. They’d actually say you need something more than that. But any event, before he started spending money, he paid off the debt. So then we come to the next time that prices really began to go through the floor– and they varied from time to time. But the next time they had a real problem was around 2014 and they started going into another tailspin economically. And this time they didn’t want to count on their good luck to bail them out. And so when King Salman took the throne, took over when his brother King Abdullah died, then they implemented Vision 2030, which was very specifically intended to reduce their dependence on oil.

So that is the plan that they’ve been now working on for seven years. And I think that was a wise decision. I think they decided, look, we’ve been lucky before, but we might not be lucky in the future. And who knows what’s going to happen to the demand for oil in the future. So let’s be careful and cautious and let’s try and wean ourselves to some extent. And they can’t really do it completely, but wean themselves to some extent off of oil. I think there’s another factor that needs to be mentioned there, and that is that while oil provided the government’s revenue and government spending provided the underpinning for the economy and for GDP growth, oil and money being spent from oil did not really create a lot of jobs and employment was becoming an issue for Saudis as well. So it was not simply we need to wean ourselves from oil so that we can– or we need to diversify, I would say, that’s probably a better way to look at it because oil is going to remain important to the Saudi economy, but they want to diversify so it’s not the only important thing. And one major reason for that, even if the oil price went up and they had plenty of money, that wasn’t really creating jobs and that was a problem. So there was a point where everybody could not work for the government, which is what they had done more or less in the past.

Stone: I think it’s a very interesting point that you bring up in your book on this, that even the private sector in Saudi Arabia, which is not particularly large, is really dependent on the oil revenue because the government is the major market for a lot of products and services. So it’s governments using oil revenue to pay for the private sector. So it’s very interesting. You just talked about population and jobs. It’s high unemployment, you’ve got a growing young population that needs to be employed, you’ve got a growing royal family. And then you have this history of volatility in the oil price that was throwing the kingdom’s economics into real chaos. In regards to this Vision 2030, what are the key points of that plan in particular as they relate to the country’s energy sector?

Rundell: Well, Vision 2030 is very elaborate. It’s many pages. It has many subsections. Each of those subsections has its own subsections. It has very detailed, key performance indicators. Literally hundreds, probably thousands of consultants have worked on coming up with the plan and now on devising ways to implement the plan. It involves both economic and social issues. But in a nutshell, from an economic point of view, its goal was to balance the budget and reduce dependence on oil while creating jobs. So I think those would be the three things that it wanted to do and it has, in fact, succeeded to a rather surprising extent in all of those things. For example, there is now a significant effort, a serious effort to expand industries other than oil. The first one, the simplest one, of course, is petrochemicals, which in some ways you could argue is just a derivative. Well, first of all, it was refining. And then secondly came petrochemicals. And now is coming in manufacturing based on the plastics which are being made in the petrochemicals. So they are attempting to move downstream in the hydrocarbon chain, but they’re also developing a mining sector, a rather robust mining sector. Actually, they have quite a lot of world class of amounts of phosphate from which you can make fertilizer. And they are becoming a major player in global fertilizer.

They are expanding their gas, which is also hydrocarbon, but they didn’t do much with gas before. And in addition to phosphate, they also have bauxite. And so they can make aluminum. Aluminum is very energy intensive, and therefore they have the cheap gas which they can use to smelt their aluminum. So they’ve built a continuous process for aluminum, everything from mining it, to refining it, to smelting it, to rolling it. And they did this with Alcoa. So they did that. They’re attempting to make a tourism industry, which was essentially a religious tourism industry, by which we mean the Hajj. They have a monopoly in that there’s only one Mecca. And all Muslims, which is about one quarter of the world’s population, are supposed to go there once in your lifetime. And I would imagine even Disneyland, of which there’s only two really, or maybe three if you count the one in Europe, but everybody in the world is not obliged to go to Disneyland once in their lifetime. Many people would like to, but they aren’t obliged to. But in any event, should they have this captive audience for Mecca and they are expanding that dramatically, their capacity to provide hospitality for those people. But they’re also attempting to build a tourism industry that relates to what we call normal non-religious tourism. So they’re working out a healthcare sector, which that’s a little bit less unique. Perhaps everybody wants to have a healthcare sector, but they’re expanding that.

So there’s a variety of things that they’re trying to do to diversify away from oil. The other thing that they tried to do, though, in terms of diversifying the government revenue, was that they actually introduced taxes and cut subsidies for the first time. And that was really dramatic. That was, I would say, a shock to many Saudis that all of a sudden they had to pay taxes. Now, they don’t have an income tax, but they have what we would call a sales tax, a VAT tax. And they implemented that very quickly and it went into effect and people are paying it now. And then they put it up. I think right now it’s like 15%. It’s not insignificant. They also began to reduce the subsidies that people had been getting. People had effectively been getting free electricity, free water, very, very inexpensive gasoline. And they began to bring all that more into line with normal world prices. Still, it’s subsidized. And they put in place special mechanisms for people who were poor. So to some extent, there was a means-tested event. So those are some of the changes in the fiscal of dynamics of what Vision 2030 was attempting to do and what it’s actually done. And they have succeeded. They managed to balance the budget and they have managed to reduce the amount of government revenue, the percentage of revenue that comes from oil. That number you have to be clear, though, is a very volatile number.

Stone: I want to get into this issue of the energy transition and Saudi Arabia’s general role in it. It’s interesting that you talked about the pricing of oil. Saudi Arabia’s primary goal in the oil market is not necessarily to keep oil prices high, but to keep oil prices stable, to limit the incentive for other countries to kind of go away. When oil pricing is volatile, it’s bad for Saudi Arabia, but it’s also bad for the market.

Rundell: That’s absolutely correct. That in the past, and by that I mean the last 40 years, the Saudis have placed stability in the market long term over short-term profits. And the reason for that is that they have a lot of oil. They want oil to remain a significant part of the global energy mix for the foreseeable future. This is different than many members of OPEC who have limited amounts of oil, and want to make as much money as fast as they can while they can. So the Saudis have a very different, much more long-term perspective. They realize and they have learned from experience that if oil prices become too high or too volatile, people will begin to look for alternatives. If the oil price is too high, what will happen? Well, number one, people will start drilling for oil in places that they had not done before and that are expensive. And the clear example of that was the last time in the seventies when oil prices went up. That was when people started going to Alaska. That was when people started drilling in the North Sea. So like any economic dynamic, if the price goes up because there’s a limited supply, the people will try to increase the supply. So that doesn’t help them. The second thing, though, which will happen is people will begin to insulate their houses. People will begin to drive electric cars. People will look for ways to not have to use oil. So, again, that doesn’t help them. So they have had a long-term policy of trying to maintain stable and reasonable oil prices. When we say reasonable oil prices, basically they would like to make as much money as they can without damaging global economic growth.

They don’t want to drive the world into a recession. If the world goes into recession, they know very well that demand for oil will go down. So they walk a fine line of trying to– they’re not a charity. Their country depends on their ability to make money off selling oil. So they want to make as much money as they can in the long term, but they’re sensitive to the fact that being too greedy would, if you will, kill the goose that laid the golden egg. So that is their attitude and has been for a long time. I think it’s also important to remember that from a political point of view, and this is very different, I just went over the economic factors. Now let’s look at the political factors. Saudi Arabia is a large country in a very volatile and not a very friendly neighborhood. They actually were attacked by Egypt in the seventies. Now they have tensions with Iran and they are not a military power. They have relied on powerful friends to defend them. And what has made them worth defending is their ability to provide oil and to maintain stability in the market. And so here is the point I’m making, is that no country in the world and no private oil company maintains 2 million barrels a day of spare capacity. The Saudis do this. Most of the time it’s one and a half, 2 million barrels, it depends on how much they’re using, but they try to maintain a large buffer stock. That buffer costs them literally tens of billions of dollars to create. They have to drill the wells and then they just put the pipelines down and then they just shut it in for a rainy day.

Stone: That’s essentially their overhead, their extra overhead.

Rundell: It’s their reserve.

Stone: You could call it.

Rundell: Yeah. If Exxon did that, the chairman of Exxon would be looking for a new job. The stockholders would be very upset that he spent all this money– or the president of Exxon, that he spent all this money and then he’d just shut it all in for a rainy day. But the Saudis do that. And I want to be clear that that is a political decision, not an economic decision. And that is what gives them their true leverage in energy markets. It’s not that they have a lot of oil. It’s not even that their oil is cheap, which it is. It’s very inexpensive to produce oil in Saudi Arabia. And the last commercial barrels of oil produced in this planet will probably come from Saudi Arabia or one of the neighboring countries there because it’s just substantially cheaper and easier to move than oil in pretty much everywhere else. But those are not the key factors that give them a seat at the table in global politics. What gives them that seat is their ability to put a large volume into the market quickly when, for example, there is a hurricane in the Gulf of Mexico, or there is a strike in Nigeria or Venezuela, or when there is a war in the Middle East, or quite honestly when the United States says, you know what, we’re going to put a sanction on Iran and we’re going to take Iranian oil off the market. Well, normally that would cause a price spike if all of a sudden a major producer like Iran was taken off the market. But the Saudis say, okay, we’ll step in and fill in the gap. Of course, they’re happy to do that because they’re going to make some money. But the reality is that they can do that and if there was nobody around who could do that, then we would have to be a lot more circumspective about who we were putting sanctions on without wanting to create major inflationary problems for ourselves.

Stone: Well, that’s a very interesting point that you’re bringing up right there. So the United States has more domestic oil production because of the Shale Revolution than it’s ever had in the past, meets more domestic demand with domestic production. Yet the Saudis are politically very important to whatever administration happens to be in power in the United States because as the swing producer, the Saudis can to some extent determine what the price for oil and gasoline is eventually going to be. The connection there, even though the United States has moved away, the political connection is still very strong over oil.

Rundell: That’s a very important point. And it’s one that I think is very often misunderstood in the American media. The United States has become what you could, or it was for a while anyways, and it’s not so much today. But it was and could be energy neutral in the sense where we’re not dependent on imported oil and gas. However, that’s not the case for the rest of the world. And oil is traded on a global market. So unless we decided that we’re going to ban the export of oil from the United States, and we’re going to put some kind of rules down that say nobody who produces oil in the United States can ever sell it anywhere outside the United States, which theoretically, I suppose we could do. But we’ve never done that really in a significant way. Unless we really did that, we would always have the global price reflected in the price that we would pay at home. And that’s the simple point. So just while we’re producing our own oil, the fact is if the global price went up we would that be affected. And also just to add one last caveat there. If the global oil price went through the roof and let’s say we did somehow manage to say, right, well, that’s too bad for Germany, they’re going to pay $150 a barrel now, but we still have Texas, so we’re going to still keep paying $40 a barrel. The reality is that the rest of the world would go into a recession even if we didn’t, and we trade with the rest of the world. So even if we still kept our own energy costs low, it would be better for us. But we would still be impacted by surging energy prices that drove the rest of the world into a recession. So the idea that we are somehow now divorced from global energy markets and the Saudis role in those markets is misinformed.

Stone: Now looking ahead, I want to talk a little bit about the dependence on fossil fuel, fossil fuel markets. The world is moving to reduce its dependency on fossil fuels. It’s interesting, the CEO of Saudi Aramco, the state oil company in Saudi Arabia, has expressed very little concern, at least publicly, about the global demand for oil. But I want to ask you here, as the world does move to reduce its dependency on fossil fuel, how have the Saudis reacted?

Rundell: Well, Andy, there are a lot of people who would question that assumption, and I’m probably one of them. It’s very almost cliche to say that the world is moving away and certainly California is moving away. But 87% of the people on this planet did not sign up for the sanctions against Russia. Eighty-seven percent of the people in this world. Now, in terms of GDP, over half of the global GDP signed up, which is Europe, the United States and our key allies in Asia. But most people in the world did not, and most people in the world are not likely to be driving a Tesla anytime soon. So if you go to India and if you go to China, there are still a lot of people walking, riding bicycles, riding motorcycles. It’s going to be a very long time before they have an electric charging point. So I agree with the Saudis that this idea that the whole planet is going to transition away from the demand for oil, look, the Saudis don’t believe that. They don’t believe that. That’s why they are increasing their production. They are quite confident that demand for oil in Europe and the United States has probably plateaued and will decline. But that’s not the future of the planet. And I am very familiar with the arguments that I hear from those people, because I live out here in the Middle East and I go to India and China.

They claim with some accuracy cheap energy comes– at this moment, the cheapest energy comes from hydrocarbons. You in the West got rich burning coal and now oil and gas. And you want us to stay poor because of your climate change beliefs, and we’re not prepared to do that. They actually use the term climate colonialism. You see that in the press out here. Climate colonialism. The West is trying to keep us poor by making us all go green. Now, I’m not saying that’s right or wrong. I’m just saying that it’s a very dubious assumption to assume that global demand for oil is going to go down any time. And I would just confirm that even the International Energy Agency doesn’t think oil demand is going to go down in the next decade. And there are very green outfits. So that’s my first point. I’m very skeptical that global demand is going to go down or certainly collapse any time soon. The second point, though, and that’s part of it, the Saudis are increasing their production capacity; however, the Saudis are also very much on board with the green energy. They don’t think oil’s going away, but they’re more than happy to develop green energy and they are playing a big role in how that’s happening. And they’re spending a lot of money to develop their wind power, to develop particularly their solar power, and interestingly enough, to do research in their research institutes, which are still quite young but increasingly effective, to come up with more ways to better utilize solar and wind.

And why wouldn’t they? Because they say, well, you don’t like oil? No problem, we have plenty of sun. And more to the point, we’ve got plenty of desert where nobody’s going to get upset if we put solar panels. So they’re definitely into the solar energy game. And a big part of Vision 2030 is to increase the amount of energy that they get from solar, which from their point of view is both free and more to the point, everything that every bit of electricity they produce from solar is one more bit of oil or gas that they can export to somebody else. So they’re very happy to expand solar and they’re even trying to figure out how– this is quite amazing. They’re figuring out how to smelt their aluminum using solar power rather than the natural gas, which is what they are using now. So they’re very much on the green train, if you will. And the other part of it is that they’re also very interested in nuclear power. They’ve spoken to the Russians, to the Chinese, and to the Koreans about building peaceful nuclear reactors for them to get electricity. So they are pragmatists. They are not saying we’re 100% A, B or C, they’re saying we’re going renewables, we’re going nuclear, and we’re going to maintain our hydrocarbons.

Stone: Well, Saudi Arabia has, as you did mention a minute or two ago, is looking to get, I think, half of its electricity from renewables by the end of I think it’s this decade. And just last year, Saudi Arabia opened its first utility-scale wind and solar farms towards that goal. Now, going back to the issue of Saudi Arabia’s reaction to the global effort to reduce use of oil, I agree, obviously, as you say, there are a lot of places in this world where oil is going to be in demand.

Rundell: China is building coal-fired power plants every day.

Stone: Yeah. That’s all happening.

Rundell: So I just take exception when people say the global effort.

Stone: Okay, so let me step in on that point. So there is something happening. The scale and the time frame is always in question. But last year around Glasgow, the Saudi oil ministry asked that phrases calling for urgent and accelerated climate mitigation action be removed from the United Nations’ Comprehensive Climate Assessment Report. Saudi Arabia was not alone in that. Australia, Japan, and others also were involved in that. Saudi Arabia also has a $10 billion circular carbon economy fund.

Rundell: That’s true. Yeah, that’s right.

Stone: Which is looking for ways to create, I guess, low carbon oil, sequester carbon from oil production.

Rundell: And also this green hydrogen.

Stone: So Saudi Arabia does see something happening here and they are reacting on some point.

Rundell: Oh, yeah. No, no, no, that’s true. I take exception to the assumption that everybody is on this train.

Stone: That’s one thing. But the other thing is the Saudis are reacting to something happening.

Rundell: Yeah, the Saudis are on the trend. [Crosstalk].

Stone: It means that they see potentially a threat there.

Rundell: I’m not sure they see a threat as much as they see an opportunity. As I just said, they say if we can figure out how to make energy from sun power, that would be great for us. So they’re not denying that there is value.

Stone: Let’s go to a potential second issue here, which is a pivot to Asia. We delayed today’s recording by about a week or a week-and-a-half because there were reports that Chinese President Xi Jinping was going to visit Saudi Arabia as his first visit outside of China since the beginning of COVID. That has not happened. Xi will be going to a different meeting at Shanghai Cooperation Organization meeting later this month. But as China has grown and potentially the United States’ need, at least immediate need, for Saudi oil decreased, has there been a shift in relation to the United States, China, and other countries? What can you say there?

Rundell: Absolutely. There has been. This is part of a shift that is taking place as we sit here. Since the collapse of the Soviet Union, the world has operated on an essentially unipolar system in which the United States was the unquestioned hegemon, and we were pretty much able to do what we want and tell people in many respects what to do. Those days are very rapidly coming to an end. The world is becoming a multipolar place. The ability of the United States to dictate to other people is diminishing. And many people in the United States still seem to be unaware of that. The most relevant example here is the president of the United States going to Saudi Arabia, asking them to produce more oil, and then for the first time in my memory for the Saudis to say no thanks. The Saudis have developed a relationship with China. China is their biggest customer. Let me say that again. China is the biggest customer of Saudi Arabia for oil. So, whereas we in the West are always worried about the supply of oil, the Saudis are always worried about demand. They do think what would happen if all of a sudden nobody wanted oil? What would happen to us? Well, right now, the people who are buying their oil are the Chinese. And so they have a very strong trade relationship with China.

The second part of this new alignment, if you will, and I think the term we could use is there used to be people were aligned or nonaligned. And now I think there are more people who are multi-aligned. So this doesn’t mean that the Saudis are breaking their relationship with the United States, but it certainly means that they have other relationships which they consider to be just as important. And one of those is with Russia. King Salman and his son and his other son, who was the oil minister, they have engineered something called OPEC+, which basically brought Russia into OPEC. And they now have coordination with the Russians in energy markets. Russia and Saudi Arabia are by far the two biggest producers in OPEC. There are lots of other members, but many of them are almost insignificant. Taken together, they can all be important, but each one independently, they don’t rival Saudi Arabia or Russia. So the answer is yes, very definitely. Saudi Arabia’s relationships have become far more diverse politically and economically than they were 10, 15 years ago, or really even five years ago.

Stone: David, let me ask you a final question here, and I want to jump back to Vision 2030 for a moment. So Vision 2030, again, is looking to diversify the Saudi economy, ultimately build the private sector, diversify the sources of income for the government. There’s a lot of pressure.  A young population, it’s extremely large. It’s going to be looking for jobs. The public sector cannot provide all of those jobs. And the oil sector or the oil industry in Saudi Arabia cannot fund all of those jobs. Now, if Vision 2030 does not for some reason succeed or is only partially or insufficiently successful, do you see a destabilization of the country over time? And what would that mean for global energy security and stability? And I know this is a big crystal ball question, but just interested in your thoughts.

Rundell: Well, the second part of it is not a crystal ball question. If the monarchy in Saudi Arabia became unstable and collapsed, it would not be replaced by the Canadian parliament. It would not be replaced by a liberal, democratic, secular regime. It would certainly be replaced. And anyone who knows about Saudi Arabia would concur with this. The people who would take over would be exactly like what happened in Afghanistan now or in Iran. So the collapse of Saudi Arabia and the collapse of the Saudi monarchy would be bad news for the West. It would be very bad news for Israel, that’s for sure. So we do not want to see destabilization in Saudi Arabia. I think we did learn our lesson that [inaudible] happened in Iran was bad enough. So do I think that the failure of Vision 2030 would lead to destabilization? Well, I don’t think that that’s likely to happen at the moment, because I think enough of Vision 2030 is already succeeding that that’s probably not going to happen. This Vision 2030 has been pretty radical and parts of it have already succeeded. You said, what if it doesn’t completely succeed? I think it’s almost a given that it will not completely succeed by 2030. It should have been called Vision 2050. So to answer your question, I don’t think the country is less stable today. I think it is going through a transition which you could argue– and this is my last thing to say– that anything that’s changing as rapidly as Saudi Arabia is perhaps inherently you could argue it’s unstable. But I would argue that the direction they’re trying to go is one towards stability. And it looks like they’re going to make enough progress to keep it that way. And we should be worried if it doesn’t go that way.

Stone: David, thank you very much for talking.

Rundell: All right. Take care.

Stone: Today’s guest has been David Rundall, former Chief of Mission at the American Embassy in Saudi Arabia. Thanks to listening to the Energy Policy Podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. If you like the show, please subscribe through your favorite podcast app and leave us a message and a rating. We appreciate and look forward to your feedback. And for more energy policy insights, visit the Kleinman Center’s website. Our address is Kleinmanenergy.upenn.edu. Thanks for listening to Energy Policy Now and have a great day.