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The Increase of Arab Oil Consumption and the Absence of Renewable Energy Projects

An IMF [study] has recently pointed out that the consumption of petroleum products in the Gulf states has increased at an annual rate of 5% since 2003, almost equal to that experienced in China in recent years.

The fuel consumption in all the Gulf states has increased without exception, but registered the highest levels in Saudi Arabia, rising from about 1.916 million barrels/day in 2004 to about 2.204 million barrels in 2007, and in Iran, where it rose from about 1.482 million barrels/day in 2004 to about 1.833 million barrels/day in 2007.

“The Organization of Arab Petroleum Exporting Countries” (OAPEC) previously published similar information about the large annual increase in the consumption of petroleum products in all Arab countries, and not just the Persian Gulf states.

The Increase in Consumption of Petroleum Products

There are many reasons for this phenomenon at the global level, including rising standards of living, and the support for domestic prices by the states through the sale of petroleum products at relatively low prices, which increases their consumption. There are several ways to address this phenomenon:

First, though the Arab region is among the world’s largest areas in terms of production and export of crude oil, it does not help to overlook the damage resulting from the high rate of oil consumption, and at relatively low prices. This is quite similar to what was reiterated in the past on the flaring of gas, when some used to ask: What is the harm in that as long as the oil-associated gas does not cause any additional costs? Today we know, though it is too late, that we had burned, and in some areas we even continue to burn, millions of dollars worth of associated gas daily. The high quantities in today’s consumption of petroleum products, due to their relatively cheap price, entail a cost that we will pay in the future, when the production will be scarce or when it ends.

Second, it is very possible to develop local integrated alternative energy programs, but this will not materialize, as is currently the case, by advertising huge isolated programs. This is especially true in the case of solar energy, where legislation is required [in each Arab State] that would require the installation of equipment to store solar energy on the roofs of houses and residential buildings everywhere. In addition, the construction of factories for these solar heaters at reasonable prices is also needed so that no additional burdens will be imposed on the citizens. These are not difficult or new proposals, since they were successfully implemented by Cyprus years ago without any significant government subsidy. The purpose of these solar heaters is to provide hot water throughout the year, without the need for electricity, which in recent years began to be severely interrupted in many Arab countries.

Third, it is also possible to develop programs to produce electricity from nuclear energy for peaceful purposes that would provide savings in the use of fuel oil and even natural gas, which can be exported to international markets. The main function of this nuclear power is to secure the provision of electricity to more than one Arab country. This is actually possible, since the Arab Fund for Economic and Social Development has [previously] financed an important project for an electricity link between the Arab World’s East and West countries and brought it into being.

The time has come to develop Arab human resources specialized in the nuclear energy field, especially after we have become surrounded by ambitious countries that possess nuclear weapons and threaten the existence and independence of some of our countries. It is a kind of a failure [on the Arabs' part] to totally neglect this sector, especially the achievement of the necessary expertise, the least of which is for peaceful use.

Fourth, the construction of subway trains in major cities to save gasoline and diesel consumption, not to mention the savings in time and protection of the environment, as well as the building of railways in the states with large territories to transport goods and raw materials.

It is noteworthy that [certain] Arab states have started to implement such programs, though some of them were late to do so. The important thing is to adopt integrated programs for the use of renewable energies in the Arab countries, and not to waste time as we have done so far by talking about the preparation for a diversified economy that does not depend on oil revenue alone.

*The author is a writer specialized in energy.

al-Hayat, London, February 10, 2008. The article originally appeared in Arabic and excerpts from the article were translated by the staff of www.memrieconomicblog.org.

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