Saudi Aramco Is the WeWork of Energy with Pulled IPO(bloomberg.com)
bloomberg.com
Saudi Aramco Is the WeWork of Energy with Pulled IPO
https://www.bloomberg.com/opinion/articles/2019-10-21/saudi-aramco-s-pulled-ipo-shows-it-s-the-wework-of-energy
224 comments
During my time at University I've only met two Saudi students who were there to work hard and honestly learn. Great people both academically and personally. The rest of them passed by cheating and seemed to mostly be there to scam free college $ from their government.
If this small sample represents the best of their country they are fucked. They are in for some hard times.
If this small sample represents the best of their country they are fucked. They are in for some hard times.
There's a simple explanation for this which doesn't require stereotyping all Saudis as lazy: the students you met, who studied abroad, were from wealthy families who could afford to send their children internationally. Why work hard when you can have a good time for four years before rolling home to a cush job? It's the same with the rich in the USA. Unless the kids find a specific passion they mostly just fuck around. I personally know several rich kids from American families who do this, and float around between half-assed jobs for their 20s and 30s.
At the same time, Saudi is also a country that is basically dependent on expats. You've labours who are mainly from South Asia (who are treated like shit, btw) and majority of the technical/exec jobs are held by expats as well. If you were to take all the expats away tomorrow, there's no way that country is able to self sustain. I spent 5-6 years in Saudi Arabia growing up and if you have ever lived there, you know this is true.
Spent 2 years there as one of the tech expats you spoke of, and you are 100% right. The country runs on expats paid with oil money.
Nah, it's more likely than not that they are from family of average means who are being offered a cushy package by the government to study abroad and keep them out of the country for a few years until they grow past the more rebellious age.
>The rest of them passed by cheating and seemed to mostly be there to scam free college
Oh boy here I go ... I am a student at KAUST (their flagship university with an endowment in billions), I would say that the ratio of students who take it seriously vs. the ones who just fool around is 1 out of 10, and I'm being generous. I once called out some guys for partying (drunk maybe?) while at our office space and was basically told (by a mid-level exec. nonetheless) to deal with it or they would kick me out if I kept 'complaining'. No one is accountable for their actions, research quality and personal integrity are mostly an afterthought. If you point out something that is wrong you immediately get ostracized and even get some benefits removed (with some bullshit excuse). This feels like a modern version of the Stanford prison experiment, people endure it mostly because the pay is good but it is pretty clear that this thing is going nowhere. I would honestly have left if it weren't for the great relationship I developed with the professor I work with, but I just want to finish quickly and get out of here.
To the guys running the show (I know they monitor HN as well): you really need to sit down and rethink if this attitude will help you survive in the post-oil era, because I don't think it will ...
Oh boy here I go ... I am a student at KAUST (their flagship university with an endowment in billions), I would say that the ratio of students who take it seriously vs. the ones who just fool around is 1 out of 10, and I'm being generous. I once called out some guys for partying (drunk maybe?) while at our office space and was basically told (by a mid-level exec. nonetheless) to deal with it or they would kick me out if I kept 'complaining'. No one is accountable for their actions, research quality and personal integrity are mostly an afterthought. If you point out something that is wrong you immediately get ostracized and even get some benefits removed (with some bullshit excuse). This feels like a modern version of the Stanford prison experiment, people endure it mostly because the pay is good but it is pretty clear that this thing is going nowhere. I would honestly have left if it weren't for the great relationship I developed with the professor I work with, but I just want to finish quickly and get out of here.
To the guys running the show (I know they monitor HN as well): you really need to sit down and rethink if this attitude will help you survive in the post-oil era, because I don't think it will ...
I had a similar experience with a Saudi student who left Saudi Arabia because he was concerned about what if any future he would have in a country where he felt most people just wanted an easy government job that they would get via connections and etc. He felt even if people suddenly decided to work, there simply weren't opportunities / the education system did not prepare them.
He was a good guy and hard worker, despite his and my very different views on some things we could understand / respect each other. He just wanted to be someplace where people worked hard too.
He was a good guy and hard worker, despite his and my very different views on some things we could understand / respect each other. He just wanted to be someplace where people worked hard too.
this was my experience in college as well, but i didn't really put the pieces together until i had the same experiences in my professional life.
there were those who were competent, wanted to be hands-on, and who were clearly very motivated and interested in getting things done. they were the minority. the rest were... shall we say, not workhorses.
there were those who were competent, wanted to be hands-on, and who were clearly very motivated and interested in getting things done. they were the minority. the rest were... shall we say, not workhorses.
[deleted]
I have the exact same feeling/thoughts. They spend a few decades not sharing any of the oil profits, and suddenly they want our cash for a promise (Aramco, everything-Softbank invests in). Especially on the oil business, the sooner it dies out the better it will be for the planet (climate change) and humanity (wars, civil unrest).
I will leave on the side the political (dictatorship) factor.
I guess that manipulating oil price to hurt Russia and Venezuelan, also took a bite of Saudis wallet.
I will leave on the side the political (dictatorship) factor.
I guess that manipulating oil price to hurt Russia and Venezuelan, also took a bite of Saudis wallet.
"I have the exact same feeling/thoughts. They spend a few decades not sharing any of the oil profits ..."
This is a very simplistic (and incorrect) view of the economic relationship between the United States and S.A.
First, the majority of Saudi oil is sold to Europe and Asia (not the United States) but it has always been denominated in US dollars - regardless of the purchaser. This enormous demand for US dollars in global trade that need not be related to the US at all has been to our great favor.
Second, a tremendous amount of the US dollar surplus that SA generates is immediately recycled back into the hands of US industry - specifically, military industry. SA is a ready buyer of whatever new technologies our military industrial complex produces and we are paid a great sum of money for this military partnership.
You personally may not be sharing in the profits but a tremendous economic benefit is realized by the United States and her technical and military industries.
This is a very simplistic (and incorrect) view of the economic relationship between the United States and S.A.
First, the majority of Saudi oil is sold to Europe and Asia (not the United States) but it has always been denominated in US dollars - regardless of the purchaser. This enormous demand for US dollars in global trade that need not be related to the US at all has been to our great favor.
Second, a tremendous amount of the US dollar surplus that SA generates is immediately recycled back into the hands of US industry - specifically, military industry. SA is a ready buyer of whatever new technologies our military industrial complex produces and we are paid a great sum of money for this military partnership.
You personally may not be sharing in the profits but a tremendous economic benefit is realized by the United States and her technical and military industries.
Very simplistic because I have a few minutes. The balances and (mostly political) use of Oil in the world makes it a perfect tool for manipulation. Plus the fact that we now (as a species) can accelerate the shift to cleaner energetic sources (sun-wind-waves)(not completely, yet) means that I find it odd to give some dictators a few more billion €¥$£ because they want to continue being a dark page in human history's and they need funding to continue in their bloody isolation.
For me it is the political aspect of interfacing with such "Powers". UK, USA, Russia had cause more pain and blood that anyone else in the last few centuries. I cannot forget this. But they have (mostly) cleaned up their act (some less than others).
As for the military industry, allow me to believe in a "Star Trek" humanity than a 'we got bigger-better-badder guns than you' future. Arms race benefit the weapons dealers and the warmongers, not the people who get burned by the napalms.
These are hugely complex discussions that are caused and causing many issues on different domains/areas. It may be too simplistic, but let's end energy dependency, let's make more schools, and education will pave the road for a better future.
For me it is the political aspect of interfacing with such "Powers". UK, USA, Russia had cause more pain and blood that anyone else in the last few centuries. I cannot forget this. But they have (mostly) cleaned up their act (some less than others).
As for the military industry, allow me to believe in a "Star Trek" humanity than a 'we got bigger-better-badder guns than you' future. Arms race benefit the weapons dealers and the warmongers, not the people who get burned by the napalms.
These are hugely complex discussions that are caused and causing many issues on different domains/areas. It may be too simplistic, but let's end energy dependency, let's make more schools, and education will pave the road for a better future.
Last year, the US bought more than all of Europe. Asia is still the big buyer tho
https://www.washingtonpost.com/world/2019/09/16/who-buys-sau...
https://www.washingtonpost.com/world/2019/09/16/who-buys-sau...
> I guess that manipulating oil price to hurt Russia and Venezuelan, also took a bite of Saudis wallet.
Not really; Saudi Arabia has the highest quality and cheapest to extract oil sources in the world. They absolutely can afford to manipulate oil prices because they know with absolute certainty that their operational costs will be lower than other countries.
They have trillions of dollars invested globally. Problem is that equity is turning into a suckers' game and they want shareholders to be left holding the bag now that green energy is about to kneecap the oil industry. No thanks!
Not really; Saudi Arabia has the highest quality and cheapest to extract oil sources in the world. They absolutely can afford to manipulate oil prices because they know with absolute certainty that their operational costs will be lower than other countries.
They have trillions of dollars invested globally. Problem is that equity is turning into a suckers' game and they want shareholders to be left holding the bag now that green energy is about to kneecap the oil industry. No thanks!
They can’t afford to manipulate the market effectively, they may have the lowest production costs but they’ve already spent / allocated the profits.
Indeed. That idea that they can manipulate the market easily is based on some data they have only access. I forgot a paper I saw one month ago speculating on the true capacity of SA production... The 11 billion baril per day is not a truly verified number. Beside, Aramco "is thought" to be financing all the rich life of the more than 4k princes in SA. So imagine the finances and budgeting of Aramco. It's though to be a hellish of...
Can anyone help me out in understanding how green energy is going to kneecap oil? I know the costs have gone down some, but iirc total oil energy produced/consumed is still orders of magnitude higher. Additionally, the margins on oil are still wide enough to absorb a lot of competition from wind, geothermal and solar.
IPO is the search for the final bag holders. It's been that way for years now.
Well, not really. That's a broad overstatement. Sure, for hype US tech companies but there are small companies without ridiculous over-pricing that use it to fund their growth as it was originally supposed to. But I agree that when the owners want to IPO it is often because it's beneficial time for them to sell (valuation is high vs the perceived risks). Or some VCs want to dump their stocks. Yet had you taken part in say Facebook's IPO that was considered over-hyped and held onto your stocks you would have made massive returns so, it's not all smoke and mirrors.
It's an economic time bomb that the USA is happy to prop up. So the bomb will be defused for way longer than you think to maintain the status quo.
It’s rapidly becoming in the interests of US fossil fuel companies to let the oil price spike so they can reap massive profits. The status quo is massively changing due to fracking.
EDIT: Look at this graph of US net imports of oil (etc). The bottom of the graph is zero. We are perhaps months away from being a net exporter. There are caveats, like the fact that the new oil (light) the US produces is not the oil (ie Heavy) that US refineries are optimized for, but this is temporary. Refineries can and will be retooled. Saudi Arabia cannot take the position of the US as primarily a customer (vs competitor) of oil for granted. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=m...
EDIT: Look at this graph of US net imports of oil (etc). The bottom of the graph is zero. We are perhaps months away from being a net exporter. There are caveats, like the fact that the new oil (light) the US produces is not the oil (ie Heavy) that US refineries are optimized for, but this is temporary. Refineries can and will be retooled. Saudi Arabia cannot take the position of the US as primarily a customer (vs competitor) of oil for granted. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=m...
That's an amazing graph. The other side of the same story is the US production of oil:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W...
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W...
It's up about 40% since 1985? That seems really low. Population is up 33% since then.
Yes. US oil production fell from around 1971 until the fracking boom took off in 2008. Remember when everybody talked about Peak Oil? That's where it came from.
https://www.eia.gov/todayinenergy/detail.php?id=37416
Check this additional article out... really shows the growth in exports and its global impact.
https://www.eia.gov/todayinenergy/detail.php?id=35352
https://www.eia.gov/todayinenergy/detail.php?id=35352
That's a poorly representative chart of the current situation. That data is from 2017, showing that exports hit 1.1 million barrels per day.
Here is what it looks like now (hit 3.1 million barrles per day in June):
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M...
And this:
Sept 12: "Booming shale production helped the United States briefly overtake Saudi Arabia and Russia to become the world's top oil exporter for the first time earlier this year. US exports of crude topped 3 million barrels per day in June, according to the International Energy Agency, pushing its total oil exports to nearly 9 million barrels per day."
https://www.cnn.com/2019/09/12/investing/us-oil-exports-saud...
Here is what it looks like now (hit 3.1 million barrles per day in June):
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M...
And this:
Sept 12: "Booming shale production helped the United States briefly overtake Saudi Arabia and Russia to become the world's top oil exporter for the first time earlier this year. US exports of crude topped 3 million barrels per day in June, according to the International Energy Agency, pushing its total oil exports to nearly 9 million barrels per day."
https://www.cnn.com/2019/09/12/investing/us-oil-exports-saud...
US is also running a similar deficit, 2 time bombs.
Saudi Arabia has no economy except for fossil fuels. They've been trying for decades to build an alternate economy and every initiative has failed. The situations aren't remotely similar.
The US controls the global reserve currency, is the world's largest economy, has a $65k GDP per capita, is a massive manufacturing economy (#2 behind China), is by far the world's leading technology economy, and has 2x the wealth of the next closest nation (China). That reserve currency is presently under zero threat from other currencies in terms of being replaced. Why does that matter? It gives the US the ultimate financial weapon for dealing with its federal debt. It's a special position no other nation has.
Currently the US is paying about the same rate for its new debt as Greece and Italy. The Fed can continue to gradually press that lower until the point where the US is issuing zero yield debt as in the case of Japan. That means the US can - fortunately or unfortunately - afford to take on a lot more debt yet. Most likely 2x GDP or more, before there is a serious problem.
If more aggressive debasement becomes necessary, the US owns about 35-38% of all the world's wealth, and has 40% of all the world's millionaires. The US is adding wealth faster than any other nation, and was responsible for adding ~55% of all the world's new millionaires in the prior year. That wealth, along with the massive US income base, represents the Fed's room for debasement to deal with the debt (inflating it away in one form or another). US output per capita is about 2.5x higher than Saudi Arabia.
Saudi Arabia has none of those advantages.
The US controls the global reserve currency, is the world's largest economy, has a $65k GDP per capita, is a massive manufacturing economy (#2 behind China), is by far the world's leading technology economy, and has 2x the wealth of the next closest nation (China). That reserve currency is presently under zero threat from other currencies in terms of being replaced. Why does that matter? It gives the US the ultimate financial weapon for dealing with its federal debt. It's a special position no other nation has.
Currently the US is paying about the same rate for its new debt as Greece and Italy. The Fed can continue to gradually press that lower until the point where the US is issuing zero yield debt as in the case of Japan. That means the US can - fortunately or unfortunately - afford to take on a lot more debt yet. Most likely 2x GDP or more, before there is a serious problem.
If more aggressive debasement becomes necessary, the US owns about 35-38% of all the world's wealth, and has 40% of all the world's millionaires. The US is adding wealth faster than any other nation, and was responsible for adding ~55% of all the world's new millionaires in the prior year. That wealth, along with the massive US income base, represents the Fed's room for debasement to deal with the debt (inflating it away in one form or another). US output per capita is about 2.5x higher than Saudi Arabia.
Saudi Arabia has none of those advantages.
Seems they would be a decent candidate to try out UBI and see if in practice it works.
They’ve got wealth and they have lots of underemployed and unemployed.
They’ve got wealth and they have lots of underemployed and unemployed.
Seems like the worst candidate to see if UBI works in practice - due to the very specific political, cultural and economic climate in Saudi Arabia, UBI failing or working well won't be any indicator whatsoever about UBI's viability in another country.
It seems scarily close to the justifications sought for communism/socialism. The usual excuse is that it didn’t work because it was not implemented correctly in Russia, North Korea, China, Cuba, Venezuela... etc. etc.
> UBI failing or working well won't be any indicator
I haven't commented on UBI itself at all. I'm simply pointing out that lessons learned in Saudi Arabia hardly carry over anywhere else. Not sure which part is scary.
I haven't commented on UBI itself at all. I'm simply pointing out that lessons learned in Saudi Arabia hardly carry over anywhere else. Not sure which part is scary.
You are saying that if UBI fails in Saudi Arabia you can’t extrapolate the failure in any other country. And it’s exactly the same thing that people say to defend communism. They assert that communism failed because: “Russia seems like the worst candidate to see if communism works in practice - due to the very specific political, cultural and economic climate in Russia, communism failing or working well won't be any indicator whatsoever about communism's viability in another country.”
They already do have a benefits system in place that includes cash payouts to low and middle income families, plus bonuses for state employees (70% of Saudi nationals), stipends for students, tax breaks on home purchases, etc.
Is it set up as a UBI and is it proving itself, will it remain sustainable?
Honest question: Does it matter?
The current iteration is called the Citizen's Account program. But if it were called Saudi Basic Income, Saudi Social Security, or Saudi Protection Net, wouldn't the net impact be the same -- a scaled system of cash payouts for low and middle income citizens to support basic living expenses?
The current iteration is called the Citizen's Account program. But if it were called Saudi Basic Income, Saudi Social Security, or Saudi Protection Net, wouldn't the net impact be the same -- a scaled system of cash payouts for low and middle income citizens to support basic living expenses?
The name might not matter but the post you responded to asked if it was set up as a Universal Basic Income, which does matter.
One of the claims UBI-backers make is the fact that giving everyone the same amount of money will be much simpler and require much less bureaucracy than income-based welfare schemes. So, I get my $1k this month, you get your $1k, the homeless guy under the bridge gets his $1k, Bill Gates gets his $1k, etc.
One of the claims UBI-backers make is the fact that giving everyone the same amount of money will be much simpler and require much less bureaucracy than income-based welfare schemes. So, I get my $1k this month, you get your $1k, the homeless guy under the bridge gets his $1k, Bill Gates gets his $1k, etc.
A reliable income that you're entitled to might lead to very different behaviour than a contingent programme.
It matters so much.
Do you mean having the regime throw as few crumbs as necessary to the population just to avoid a dictatorship overthrow?
Perhaps what people need is not money but the political power to decide what they want to do with their common wealth (which could be UBI, of course).
Perhaps what people need is not money but the political power to decide what they want to do with their common wealth (which could be UBI, of course).
Maybe but I can see how it could actually end up in “give it all to us right now” which obviously would short circuit the whole idea.
I'm as lefty-socialist as they come, but we have to be careful because UBI schemes can also look like the UAE -- which has created an upper class of "citizens" who receive a generous stipend and an undocumented underclass of people with no rights.
Stateless refugees are a big problem today, and climate change is going to create a lot more of them. Jewish people were the group left stateless in the nationalist period after WWI, and we all know what happened there. If no country is willing to protect the rights of people whose nations deem them "problematic", UBI won't matter because there is still going to be an underclass that doesn't officially have rights and can be persecuted. You can then just cram all your political opponents into that box and watch fascism happen.
Stateless refugees are a big problem today, and climate change is going to create a lot more of them. Jewish people were the group left stateless in the nationalist period after WWI, and we all know what happened there. If no country is willing to protect the rights of people whose nations deem them "problematic", UBI won't matter because there is still going to be an underclass that doesn't officially have rights and can be persecuted. You can then just cram all your political opponents into that box and watch fascism happen.
[deleted]
UBI is nonsense socialism campaigning for the votes of the uninformed
"We'll just give everyone money. Nobody will demand more and the promise of more money won't become the key election issue as governments directly try to buy off their citizens for votes. Nothing can go wrong."
Huh why would you do that!
"AI!"
It's like a comedy but it's not actually funny, just full of clowns.
"We'll just give everyone money. Nobody will demand more and the promise of more money won't become the key election issue as governments directly try to buy off their citizens for votes. Nothing can go wrong."
Huh why would you do that!
"AI!"
It's like a comedy but it's not actually funny, just full of clowns.
While the tone of your post is a little rough, I am curious to see if any of the readers here agree that UBI isn't a great idea for our current society
I for one don't understand how it won't cause mass inflation. Every reason I read for why it won't is usually along the lines of "we did an experiment with 100 people, it turned out great!"
100 people != the population of a country
I for one don't understand how it won't cause mass inflation. Every reason I read for why it won't is usually along the lines of "we did an experiment with 100 people, it turned out great!"
100 people != the population of a country
I've always thought about it this way.
A car factory in 1950 employed so many people to make X cars. The factory of today employs far less people to make the same amount of stuff. Up until now we've all bought every increasing quantities of stuff so we've been able to absorb that extra productivity.
What happens then if our capacity to consume extra stuff is met? Or what happens when some proportion of the populace is now unemployed due to automation. They're kind of 2 sides to the same coin. Once consumption capacity is met, productivity increases just lead to increasing unemployment.
Of course you could leave them to rot. Or you could distribute the benefits of increased productivity to everyone.
Are we there yet? No, but we're using more resources than we should so we should probably hope that we reach that limit sooner rather than later.
So to answer your question, there wouldn't be extra inflation, because there wouldn't be extra consumption.
A car factory in 1950 employed so many people to make X cars. The factory of today employs far less people to make the same amount of stuff. Up until now we've all bought every increasing quantities of stuff so we've been able to absorb that extra productivity.
What happens then if our capacity to consume extra stuff is met? Or what happens when some proportion of the populace is now unemployed due to automation. They're kind of 2 sides to the same coin. Once consumption capacity is met, productivity increases just lead to increasing unemployment.
Of course you could leave them to rot. Or you could distribute the benefits of increased productivity to everyone.
Are we there yet? No, but we're using more resources than we should so we should probably hope that we reach that limit sooner rather than later.
So to answer your question, there wouldn't be extra inflation, because there wouldn't be extra consumption.
> So to answer your question, there wouldn't be extra inflation, because there wouldn't be extra consumption.
Andrew Yang's campaign states he believes that the UBI he is proposing will boost the economy because people will spend it. That's definition of consumption, right? Increased spending?
Andrew Yang's campaign states he believes that the UBI he is proposing will boost the economy because people will spend it. That's definition of consumption, right? Increased spending?
>I for one don't understand how it won't cause mass inflation.
America already gives away vast sums of money to various people and programs, over $2 trillion annually. UBI is just a way of saying, "here's your share, spend it how you wish".
America already gives away vast sums of money to various people and programs, over $2 trillion annually. UBI is just a way of saying, "here's your share, spend it how you wish".
From what I understand it, UBI (as proposed by Andrew Yang) will give a lot who are not receiving any money whatsoever (from any government programs) income they didn't necessarily need.
aka, he is proposing to give both impoverished people and billionaires UBI
aka, he is proposing to give both impoverished people and billionaires UBI
And then people will vote in parties whose position is ever increasing of the dole and it's a swift race for he socialist bottom.
A pipe dream that doesn't actually reflect human behaviour just the inclinations of some to demand others' things while calling them greedy.
A pipe dream that doesn't actually reflect human behaviour just the inclinations of some to demand others' things while calling them greedy.
If you are redistributing money not creating it how by definition will it create inflation. The same money is chasing the same goods and services.
UBI isn't a redistribution scheme, it's meant to be that everyone gets money, regardless of need. Obviously if a government takes away $1000 and "gives" you $100 back, that's no different from your perspective to no UBI and slightly lower taxes.
UBI as suggested can't possibly ever work without being massively inflationary. It is indeed economic nonsense.
UBI as suggested can't possibly ever work without being massively inflationary. It is indeed economic nonsense.
The secret is that its by design. The purpose is to create socialism, step by step. You have to start with a universal welfare system that then creates economic crisis, which justifies anything government economic policy in the name of protecting the welfare of the people.
There are 3 kinds of people who espouse UBI. The dishonest political swindlers, the misled, and those who would vote for anyone who promises them money.
Wait until you find out how many support UBI and no immigration control.
There are 3 kinds of people who espouse UBI. The dishonest political swindlers, the misled, and those who would vote for anyone who promises them money.
Wait until you find out how many support UBI and no immigration control.
The design tension is this: current welfare recipients get a range of help from the government, each administered separately. In addition, because it cuts out for every dollar earned it creates a very high marginal tax rate, creating a local maximum. However, middle class welfare is a very real thing, and the problem with UBI is it allows the government to entrench itself with even more aspects of a persons life.
I agree with you and, at the same time, I don't know what we'll do when everything gets automated.
Take care of people.
Manufacturing is just like farming, except delayed. How many people are needed to plant and harvest a huge field?
Manufacturing is just like farming, except delayed. How many people are needed to plant and harvest a huge field?
There will never be a time when everything is automated.
The same thing the telephone operators and horse farriers did.
Die unemployed while the next generation enters the workforce with training for the new class of jobs?
"Cutting spending may not be politically possible because it's buying peace. Official unemployment rate is less than 15% but it's estimated that only less than half of working-age Saudis hold jobs or actively seek work."
Obligatory Syriana clip:
https://www.youtube.com/watch?v=hWeMpaC4VeA
Obligatory Syriana clip:
https://www.youtube.com/watch?v=hWeMpaC4VeA
It's hard to imagine this won't collapse into some terrible middle eastern war. If they can't cut "dividends" to their stakeholders, they get really angry and there's a war. Or they sell the company, burn through the money, make people angry and there's a war. A war with generations of wealth before it could turn out to be pretty large.
Heh heh quite audacious to demand over-price for a company which only business is selling fossil fuels. I mean it isn't really a field that has great future prospects. And they know as well as the rest that without diversifying and sharing the risk it will be tremendously damaging to their economy once the renewables start really kicking in and pushing fossil fuel out of the regular use.
With quick look at their wikipedia page their P/E number with 1.1 trillion valuation is about 10. With 2 trillion it would about 20 which is quite insane if that's what they are asking. It's always these people who have distorted view of reality that seem the most damaging to this world. Worked for Steve Jobs maybe but I think in the end, he had a pretty good perception of the technology market.
Yeah, well. Good luck selling that thing. Can't really be a surprise for them that people aren't jumping out of their pants to buy Aramco stock. I think it would be a hard sell even with the 1.1 trillion valuation. Saudi-owned fossil fuel company. A dream investment.
With quick look at their wikipedia page their P/E number with 1.1 trillion valuation is about 10. With 2 trillion it would about 20 which is quite insane if that's what they are asking. It's always these people who have distorted view of reality that seem the most damaging to this world. Worked for Steve Jobs maybe but I think in the end, he had a pretty good perception of the technology market.
Yeah, well. Good luck selling that thing. Can't really be a surprise for them that people aren't jumping out of their pants to buy Aramco stock. I think it would be a hard sell even with the 1.1 trillion valuation. Saudi-owned fossil fuel company. A dream investment.
My prediction would be that fossil fuels will be about as important in twenty years as they are today.
The green energy revolution is wishful thinking, people really want it to be true and it distorts their expectations.
I also suspect that oil prices will remain low because of fracking and that Aramco is really hedging against that, not green energy.
The green energy revolution is wishful thinking, people really want it to be true and it distorts their expectations.
I also suspect that oil prices will remain low because of fracking and that Aramco is really hedging against that, not green energy.
Oil is half the value of Saudi Arabia. The other half is US support. Since WWII the deal has never changed: cheap oil in exchange of military support.
Saudi deals are effectively backed by US.
And a country like Saudi, whose fortune solely depends on exports, can't bend the rules of trade and contract too much. It is very easy to sanction.
Kashoggi is what killed the project MbS had with this money (the futuristic city NEOM, read about it, that was interesting). MbS had spent a lot of resources painting himself as a progressive reformist, ready to make KSA evolve out of the charia law.
That killing put him back down the scale of dictators. He admit it made his project lose at least 10 years and that it was unsellable right now.
Saudi deals are effectively backed by US.
And a country like Saudi, whose fortune solely depends on exports, can't bend the rules of trade and contract too much. It is very easy to sanction.
Kashoggi is what killed the project MbS had with this money (the futuristic city NEOM, read about it, that was interesting). MbS had spent a lot of resources painting himself as a progressive reformist, ready to make KSA evolve out of the charia law.
That killing put him back down the scale of dictators. He admit it made his project lose at least 10 years and that it was unsellable right now.
Your using logic to answer a question that is normally one of emotion.
A single non elected ruler is going to make decisions on whim not process. As long as there is one unchecked person, you can basically be assured that unpredictability will be the norm.
A single non elected ruler is going to make decisions on whim not process. As long as there is one unchecked person, you can basically be assured that unpredictability will be the norm.
I think both the freedom of kings and the accountability of elected officials are being exaggerated. Both are constrained by the game they're playing and both have much freedom to make bad decisions. Government power, regardless of the type of government, only exists as a result of the consent of the people. Any kind of government uses much of that power to manipulate that consent into whatever their desires may be and they all have great but limited success.
The statement is self defeating. Absolute power is playing far less "a game" for the continuted hold of power than is elected. You're right that people generally do whatever it is they think they can get away with, but simply put a king doesnt asnwer to anyone so he is more likely to act in self interest than someone who needs to please others.
There is an accountability, both international as we saw here, and domestic which we likely won’t see unless it becomes overwhelming. A monarch who loses support of their people is not long for the role either. Just as one who loses support of their international benefactors. Yes they may get away with more of these “domestic” matters than might a democratically elected leader but that doesn’t mean much in the long run. Just look at Venezuela. Maduro won’t be around forever.
There’s no such thing as absolute power in the realm of governance.
There’s no such thing as absolute power in the realm of governance.
Absolute power doesn't mean that you can act with impunity.
Mohammad bin Salman must retain the support of the heads of the army, secret police, and such or he will be replaced.
The Dictator's Handbook[0] discusses this topic in detail.
The Rules for Rulers[1] is an 18 minute video that summarizes some of the principles of the book.
[0] https://en.wikipedia.org/wiki/The_Dictator%27s_Handbook
[1] https://www.youtube.com/watch?v=rStL7niR7gs
Mohammad bin Salman must retain the support of the heads of the army, secret police, and such or he will be replaced.
The Dictator's Handbook[0] discusses this topic in detail.
The Rules for Rulers[1] is an 18 minute video that summarizes some of the principles of the book.
[0] https://en.wikipedia.org/wiki/The_Dictator%27s_Handbook
[1] https://www.youtube.com/watch?v=rStL7niR7gs
Julius Caesar was accountable to quite a few knives, so many French were accountable to the guillotine, and generally there is always a threat to be accountable to a revolution or usurper which with absolute power are all too frequent. Those just being the most dramatic and memorable forms of accountability.
There is no such thing as absolute power even in an absolute monarch. Power is paid for in one currency or another.
There is no such thing as absolute power even in an absolute monarch. Power is paid for in one currency or another.
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KSA leaders have been more predictable than American presidents.
International rules are set up so that people have incentives to follow them.
Any leader, elected or not, may decide to nationalize and confiscate assets in his country. There are consequences to that and they are pretty serious.
If you own assets that get confiscated in KSA, depending on how your organization is set up, you can get judges to seize KSA assets in another country.
It does happen: https://www.businessinsider.com/hedge-fund-elliott-capital-m...
International rules are set up so that people have incentives to follow them.
Any leader, elected or not, may decide to nationalize and confiscate assets in his country. There are consequences to that and they are pretty serious.
If you own assets that get confiscated in KSA, depending on how your organization is set up, you can get judges to seize KSA assets in another country.
It does happen: https://www.businessinsider.com/hedge-fund-elliott-capital-m...
> A single non elected ruler is going to make decisions on whim not process.
power corrupts; absolute power corrupts absolutely
power corrupts; absolute power corrupts absolutely
An important aside here is that the US shale oil revolution now means that the US can produce oil domestically at similarly cheap prices.
KSA is actively losing its leverage. MbS might not have those ten more years for his project.
KSA is actively losing its leverage. MbS might not have those ten more years for his project.
> An important aside here is that the US shale oil revolution now means that the US can produce oil domestically at similarly cheap prices.
Perhaps, but certain politicians like Elizabeth Warren would like to end that soon.
"On my first day as president, I will sign an executive order that puts a total moratorium on all new fossil fuel leases for drilling offshore and on public lands. And I will ban fracking—everywhere." https://twitter.com/ewarren/status/1170070887887986690
Some analysis: https://www.wsj.com/articles/prospect-of-president-warren-sp... (paywall)
https://www.cnn.com/2019/10/17/business/elizabeth-warren-oil... (not paywall)
Perhaps, but certain politicians like Elizabeth Warren would like to end that soon.
"On my first day as president, I will sign an executive order that puts a total moratorium on all new fossil fuel leases for drilling offshore and on public lands. And I will ban fracking—everywhere." https://twitter.com/ewarren/status/1170070887887986690
Some analysis: https://www.wsj.com/articles/prospect-of-president-warren-sp... (paywall)
https://www.cnn.com/2019/10/17/business/elizabeth-warren-oil... (not paywall)
Good. We need to stop subsidizing fossil fuels.
Banning something strikes me as a very heavy-handed way to stop subsidizing it. Why not stop the subsidies without banning it?
Calls such as this one to "stop subsidizing" fossil fuels are not an honest exhortation to accomplish the limited objective stated. They are rhetorical, placed here to distract from the inconvenient geopolitical impacts of the proposed policy, and muddy the water with some sort of quasi-excuse that doesn't really do a great job of excusing. (But if you're talking about it, you've at least distracted people from the fact that the Warren plan sending more money to the Saudis).
There is a balance. If we stop the economy to stop all fossil fuels, that would be one solution, but then we would lose R&D support for the next step in our economic revolution.
This concept has always been a bit misleading- we're still importing light / sweet crude from places like Saudi Arabia since it is cheaper to refine (to EPA requirements). We're just exporting more heavy/sour oil and natural gas to offset it.
The only way we'd realistically be self sufficient would be a WWII type scenario in which EPA regs and emissions control were suspended due to some national security requirement.
The only way we'd realistically be self sufficient would be a WWII type scenario in which EPA regs and emissions control were suspended due to some national security requirement.
The large increases in US oil production is in the Permian Basin and the Bakken Shale, which both produce light crude. Some of this is exported, as most refineries in the US are designed to process heavy crude. California refineries generally are set up for lighter crude (historically a lot of Alaskan crude) and has been hit with higher oil prices due to the recent loss of Saudi production.
>designed to process heavy crude
Yes, because historically, that's what the US produced. The refining and transport infrastructure takes time to modify and catch up to the new markets, (especially after Warren Buffet and Obama's back room deals to the benefit Union Pacific RR).
California is set up for lighter crude because it has even higher costs and stricter environmental regs than the US standard, but the same premise applies. It's still cheaper for them to import the more expensive light/sweet than to refine heavy/sour from LA or Mexico or Colorado.
Yes, because historically, that's what the US produced. The refining and transport infrastructure takes time to modify and catch up to the new markets, (especially after Warren Buffet and Obama's back room deals to the benefit Union Pacific RR).
California is set up for lighter crude because it has even higher costs and stricter environmental regs than the US standard, but the same premise applies. It's still cheaper for them to import the more expensive light/sweet than to refine heavy/sour from LA or Mexico or Colorado.
Except shale oil is light/sweet. Where we have excess refining capacity it heavy/sour, because of cutbacks with Venezuelan oil. Right now we're running out of capacity on light/sweet processing and may need to start exporting it.
I didn't mean to imply that it wasn't. Just that "net exporter" doesn't necessarily mean that we've stopped importing from frenemies.
You have it backwards: Saudi produces heavy / sour crude whereas fracking produces light / sweet crude. And fracking has (so far) been completely or almost completely limited to the US and Canada.
Well, I oversimplified, but I see how it looks on hindsight. But my point is that the market is complicated, and net-exporter doesn't necessarily mean self-reliant.
1) Saudi produces a range, including primarily heavy / sour, but because they and their Asia customers have lax environmental standards, whatever light / sweet product coming from or through Saudi Arabia tends to be traded to a western country with strict environmental standards. Because of the US (historically) having an excess of heavy, the US could export that heavy in exchange for a lesser amount of light, and still come out ahead after taking into account cost of refining.
2) Fracking produces mostly gas and light crude, yes, but North American production until the most recent boom was mostly the moderate to heavy sour product, (North Alaska, Alberta sands, Gulf of Mexico, pre-shale Texas). The shift is causing the existing infrastructure to be repurposed in sometimes unexpected ways, from pipeline reversals (ho-ho) to underused heavy refining / cracking capacity, to changes in trading partners.
3) Re: fracking limited to US and Canada- That's (mainly) due to cost of extraction taking into account permitting and compliance. It's a result of political policy more than technical ability or what proven reserves are available.
Other countries either: 1) don't need to use new fracking methods, as it's cheaper to use traditional extraction methods, or 2) don't use new fracking methods because they're regulated to the same extent (or more) as traditional extraction methods, which still makes it relatively cost prohibitive. The US and Canada just happen to be in a regulatory "sweet spot" where new-style fracking makes economic sense.
1) Saudi produces a range, including primarily heavy / sour, but because they and their Asia customers have lax environmental standards, whatever light / sweet product coming from or through Saudi Arabia tends to be traded to a western country with strict environmental standards. Because of the US (historically) having an excess of heavy, the US could export that heavy in exchange for a lesser amount of light, and still come out ahead after taking into account cost of refining.
2) Fracking produces mostly gas and light crude, yes, but North American production until the most recent boom was mostly the moderate to heavy sour product, (North Alaska, Alberta sands, Gulf of Mexico, pre-shale Texas). The shift is causing the existing infrastructure to be repurposed in sometimes unexpected ways, from pipeline reversals (ho-ho) to underused heavy refining / cracking capacity, to changes in trading partners.
3) Re: fracking limited to US and Canada- That's (mainly) due to cost of extraction taking into account permitting and compliance. It's a result of political policy more than technical ability or what proven reserves are available.
Other countries either: 1) don't need to use new fracking methods, as it's cheaper to use traditional extraction methods, or 2) don't use new fracking methods because they're regulated to the same extent (or more) as traditional extraction methods, which still makes it relatively cost prohibitive. The US and Canada just happen to be in a regulatory "sweet spot" where new-style fracking makes economic sense.
I have been reading about that deal on Matt Levine newsletter from time to time and I have always wondered who is going to trust the Saudis on this. The country is a kingdom, not a parliamentary kingdom but a traditional one where the king really decides everything, oil is the only thing that counts in that country so presumably the king decides everything about oil there and the whole government machine works towards that goal. There is no independent judiciary, no freedom of press, nothing - how the shareholders could believe that they have any control over the enterprise, how could they even believe that they are not lied about even the most basic information (especially now after the Khashoggi killing). Not mentioning the taxes - the kind always can change the taxes if he needs some more money or just thinks that the investors get too much - so what would be the deal here? The investors give money to the king, and the king gives them something back if he wants, when he wants?
I know that the Saudi Arabia rich families can be compelled to buy shares - but outside of the country?
But maybe I am silly because I have the similar thoughts about investments in China enterprises. But even that is on a completetly different level.
I know that the Saudi Arabia rich families can be compelled to buy shares - but outside of the country?
But maybe I am silly because I have the similar thoughts about investments in China enterprises. But even that is on a completetly different level.
As an aside, I've been reading the Matt Levine newsletter over the last few days, and I've really enjoyed it. Does anyone have any recommendations for other good newsletters of this kind?
Not a regular newsletter, but you might enjoy Byrne Hobart's essays on Medium:
https://medium.com/@byrnehobart
https://medium.com/@byrnehobart
Stratechery is another good choice.
I really like IEEFA (Institute for energy economics and financial analysis)
It’s mostly an aggregation of multiple sources, but they often have their own reports: http://ieefa.org/
It’s energy and finance related, focusing on the economics of energy globally & renewables.
It’s mostly an aggregation of multiple sources, but they often have their own reports: http://ieefa.org/
It’s energy and finance related, focusing on the economics of energy globally & renewables.
US troops and aircraft carriers protect saudis from neighbour nations (Iran, Iraq, etc.) and ensure that the kingdom is safe.
I am sure saudi king will not dare to piss off american investors, otherwise arab spring in KSA would have happened already
I am sure saudi king will not dare to piss off american investors, otherwise arab spring in KSA would have happened already
I wish I had a link, but I recall hearing on Recode/Decode that they would threaten to give their money to competitors if they didn’t accept funding.
Doesn’t really answer your question, but it did sound like not everyone was happy with Softbank rounds.
Doesn’t really answer your question, but it did sound like not everyone was happy with Softbank rounds.
the king always can change the taxes
Yes. That's always struck me as the central problem. Outside investors have a claim on Aramco's earnings power, until they don't. Since you don't really get meaningful voting rights, you could end up with a certificate that's comically irrelevant to the way Aramco's governance (and money flows) really work.
Yes. That's always struck me as the central problem. Outside investors have a claim on Aramco's earnings power, until they don't. Since you don't really get meaningful voting rights, you could end up with a certificate that's comically irrelevant to the way Aramco's governance (and money flows) really work.
Investing in any company carries some risk that the whole thing is a sham and it blows up in your face. There's probably a bit more risk in Saudi Arabia, but a democratic system and impartial courts didn't stop Worldcom from lying about basic information and being taken from its stockholders.
Sure there is risk, Wordcom - at least the management went to prison - do you think the king would go to prison in this case?
But on a more fundamental level it is not even a sham, a sham would mean that one side breaks the rules - but what are the rules here when the king can just change the taxes if he wants.
The king could get dead, BTW, depending on what happened after that.
[deleted]
I think this definitely would (have?) been an issue, and "priced in," at least to some extent.
OTOH, it's not just rule of law that might restrain the king. It's not in his best interest to cause a run/devaluation of shares in his kingdom's wealth.. in some senses in the crown. International corporate capitalism 1.0 was long-lived and happened while kings still had power... parliaments or not. It's not impossible Aramco could find some equilibrium.
Anyway, even just internal Saudi money could amount to a lot. A little bit of international billions would help boost their trust. I think it comes down to execution mostly, whether or not it happens.
Couldn't ask for a better time, macro-finance-wise.
OTOH, it's not just rule of law that might restrain the king. It's not in his best interest to cause a run/devaluation of shares in his kingdom's wealth.. in some senses in the crown. International corporate capitalism 1.0 was long-lived and happened while kings still had power... parliaments or not. It's not impossible Aramco could find some equilibrium.
Anyway, even just internal Saudi money could amount to a lot. A little bit of international billions would help boost their trust. I think it comes down to execution mostly, whether or not it happens.
Couldn't ask for a better time, macro-finance-wise.
I swear a few weeks ago I was reading the usual media outlets talking the prospect of this IPO up at the same time. Now this. It feels to me like someone got fed a line.
Edit: wait, the head of Aramco is now a Softbank director? What on earth is going on there?
Edit: wait, the head of Aramco is now a Softbank director? What on earth is going on there?
Saudis put something like 45 billion USD into one of the 100 billion + Softbank funds. You get a director seat for that kinda money...
Time will tell if that's all they got for their money.
Just a reminder that when the Saudis needed cash, they locked some of their richest families in a luxury hotel and "pressured them" until they handed over around $100bn in what was labelled an anti-corruption drive.
If VisionFund 1 goes under, losing $45bn is going to make Masayoshi Son really quite unpopular with the Saudis.
If VisionFund 1 goes under, losing $45bn is going to make Masayoshi Son really quite unpopular with the Saudis.
Unpopular enough to invite him to an embassy for a discussion?
I see what you did here. Although they would never dare do this to Son.
It's not a secret but it's been under reported that one reason that softbank money was so wastefully spent was because there was a gusher of it coming from S.A.
Do investors know 1) how much oil can be extracted at what levels of cost and 2) how much royalties and taxes will the company have to pay to the Saudi government in the future?
Current cash flow based on current costs, levels of production and royalty/tax payments are largely irrelevant.
Seems risky to me.
Current cash flow based on current costs, levels of production and royalty/tax payments are largely irrelevant.
Seems risky to me.
Indeed - Saudi Arabia is expected to hit peak oil roughly between 2010 and 2030 - and there are suspicions that the downslope is going to be harder than the growth half, as they've reportedly been massively using water injection to increase production.
So this could (have) be(en) just their way to dump the company for the maximum amount of money while the getting was still good.
So this could (have) be(en) just their way to dump the company for the maximum amount of money while the getting was still good.
When someone gives you a 20 year range and half of it is already passed and they can't narrow it down more they're probably making it up as they go aong.
You realize that this is pretty much what happened with conventional peak oil ?
https://www.nationalgeographic.com/news/energy/2010/11/10110...
(Confirming in 2010 that we hit peak conventional in 2006.)
It takes years to confirm this kind of data...
And we don't even have access to Saudi oil data, the best we can do is something like this :
https://www.sciencedirect.com/science/article/abs/pii/S09204...
> Results show OPEC peak oil in 2028 at a production rate of 18.85 Gb/year and ultimate reserves of 1271.24 Gb.
https://www.nationalgeographic.com/news/energy/2010/11/10110...
(Confirming in 2010 that we hit peak conventional in 2006.)
It takes years to confirm this kind of data...
And we don't even have access to Saudi oil data, the best we can do is something like this :
https://www.sciencedirect.com/science/article/abs/pii/S09204...
> Results show OPEC peak oil in 2028 at a production rate of 18.85 Gb/year and ultimate reserves of 1271.24 Gb.
What does it say when the royal family and 200 sheiks attempt to cash out of a business that pumps oil at $5 a barrel?
I work in oil and gas and it’s widely considered that with or without the IPO that Saudi is screwed. Huge unemployed population (higher than official stats, of course),reliance on oil demand that will be diminished in 20-30 years and severely declined in 100, a huge welfare program to keep the unemployed folks happy that keeps their budget balanced at $80 oil prices (prices are at $50-$55 now and will probably stay there for a long time barring any very serious political events or Elizabeth Warren banning fracking). To top it off they literally have a ruling family that decides everything.
Calling Aramco the "WeWork of energy" is a bit of a stretch. Yes, the company has problems; yes, it's been navigating the capital markets poorly; but at the end of the day, it's an oil company that says it's an oil company. There isn't any category-gaslighting or a charismatic CEO who bamboozles VCs with utopian yoga-babble. Aramco is just an authoritarian state-owned oil company with all the issues that come with that territory, and this article and its headline strike me as facile clickbait.
And they are extremely profitable, unlike WeWork.
https://www.nytimes.com/2019/04/01/business/saudi-aramco-pro...
https://www.nytimes.com/2019/04/01/business/saudi-aramco-pro...
https://i.imgur.com/11EVBte.jpg
Basically, there's going to be a dip in the worldwide demand for oil, and with the permian basin coming online, we can satisfy much of the world's demand for plastics and lubricants. Makes sense that they would try to get a last hurrah out there.
Basically, there's going to be a dip in the worldwide demand for oil, and with the permian basin coming online, we can satisfy much of the world's demand for plastics and lubricants. Makes sense that they would try to get a last hurrah out there.
[deleted]
paywalled https://archive.is/nIc96
Where did the made up title for the HN post come from?
While catchy, that line is neither the title, byline, or even a sentence from the article.
EDIT: Ha! A search for the article shows the original title. So either Bloomberg is feeding clickbait titles purely to Google or they switched it after it went live. New title is "Saudi Aramco Needs to Get Realistic About Its IPO".
While catchy, that line is neither the title, byline, or even a sentence from the article.
EDIT: Ha! A search for the article shows the original title. So either Bloomberg is feeding clickbait titles purely to Google or they switched it after it went live. New title is "Saudi Aramco Needs to Get Realistic About Its IPO".
Bloomberg usually has 2 or more titles for it's articles. It's been doing this for at least a decade. It's most pronounced or visible when you use the Bloomberg terminal. You'll notice what they show 1 cohort (terminal users) is usually very different than web users.
I'm guessing it's some sort of long running A/B experiment. They must have great data on how to write attention grabbing headlines.
I'm guessing it's some sort of long running A/B experiment. They must have great data on how to write attention grabbing headlines.
Tabloid journalism complete with testing clickbait headlines.
The Bloomberg articles are generally garbage, the domain should really get a penalty. They used to be fairly great, but there were some management shifts at Bloomberg News and it never was the same after that.
It's always useful to read the URL, they can change the title but are often reluctant to change the URL :)
It's politics. Iran and Russia against the us and Saudi. The US has been keeping the price of oil low to cripple the other side since they are primarily oil economies.
The attack on saudi oil facilities and tankers, and this sort of whisper campaign, are supposed to put pressure on saudi and drive the price of oil up for Russia and Iran so they can afford more foreign intervention.
The attack on saudi oil facilities and tankers, and this sort of whisper campaign, are supposed to put pressure on saudi and drive the price of oil up for Russia and Iran so they can afford more foreign intervention.
"drive the price of oil up for Russia and Iran so they can afford more foreign intervention"
please diversify your sources of propaganda
please diversify your sources of propaganda
please, pay attention to the history of iran's actions in the middle east and the long russia-iran-syria alliance. No need to look at propaganda when you know history.
The alliance is since the time of the Greater Armenia and the source of the propaganda that I mentioned is even older. BTW, Iran is not independent for the last few centuries.
Oddly, the HN title is the <title> tag, but not the headline actually shown on the website.
wayoutthere(12)
As the article says they're very different things. The world's most profitable company vs one of the biggest loss makers. I don't blame the Saudis for trying it on with the valuation. If people won't buy at $2tr then drop it a bit - same as selling a house or anything else.
Saudis have been running budget deficits 4 - 5 percent of the GDP year after year. Might hit 7 percent this year.
Cutting spending may not be politically possible because it's buying peace. Official unemployment rate is less than 15% but it's estimated that only less than half of working-age Saudis hold jobs or actively seek work.
Foreign exchange funds provide buffers but their net foreign assets are gradually eaten away if oil price don't recover.