Oil and Saudi Arabia – Part 2

Just before I began to study energy economics, which was around the time of the first oil price ’shock’, the Saudi Arabian oil economy was being programmed by its foreign ’owners’ (which included Exxon, Texaco, Standard Oil of California, and Mobil) to produce 20 Mb/d of oil. Exactly how that figure was reached is unknown to myself, however given the extremely low cost of producing oil in Saudi Arabia at the time, certain academic economists had no difficulty accepting that in the light of the existing and the expected price, 20 Mb/d was an appropriate profit maximizing quantity for the government of that country.

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