Monday, July 14, 2008

Saudi Financial Woes?

But aren't they greedy SOBs, who are just soaking us for all they can? That's what many people believe, but when you look at the details, it's not that simple. They may have cheap gas for themselves, but not much else:

Amid oil boom, inflation makes Saudis feel poorer
By DONNA ABU-NASR, Associated Press Writer Tue Jul 8, 2:25 PM ET

RIYADH, Saudi Arabia - Sultan al-Mazeen recently stopped at a gas station to fill up his SUV, paying 45 cents a gallon — about one-tenth what Americans pay these days.

But the Saudi technician says Americans shouldn't be jealous. Inflation that has hit 30-year highs on everything else in the kingdom is making Saudis feel poorer despite the flush of oil money.

"I tell the Americans, don't feel envious because gas is cheaper here," said al-Mazeen, 36. "We're worse off than before."

While Saudis don't feel the pain at the pump, they feel it everywhere else, paying more at grocery stores and restaurants and for rent and construction material. While the country is getting richer selling oil at prices that climbed to a record $145 per barrel last week, inflation has reached almost 11 percent, breaking double-digits for the first time since the late 1970s.


Moreover, Saudis are grappling with unemployment — estimated at 30 percent among young people aged 16 to 26 — and a stock market that is down 10 percent since the beginning of the year.

Many Saudis are realizing that this oil boom will not have the same impact as the one in the 1970s, which raised Saudis from rags to riches. This time, the wealth isn't trickling down as fast or in the same quantities.

One reason is the kingdom's growing population, says John Sfakianakis, chief economist at the Saudi British Bank. In the 1970s, the population of Saudi Arabia was 9.5 million. Today, it's 27.6 million, including 22 million Saudi citizens. [...]

There's more. Read the whole thing for the many details. Food prices are rising world-wide, and it's affecting everyone, and the cost of everything.

As we debate the state of the US economy in this election year, with both the Republicans and the Democrats blaming each other for rising prices, we need to remember that what is happening isn't unique to OUR economy; there are global economic realities that affect us as well. We need to understand and be mindful of them, if we are to act wisely.


Walker said...

What surprises me is that having their own oil, results in lower gas prices. According to the Democrats, this can't be true.

Chas said...

Yes! Pelosi and crew need to explain how this is possible.