With the world’s second-largest oil reserves, Saudi Arabia is hardly running out of oil. Yet on April 25 the kingdom announced a plan to make its economy hum along on other sources of wealth. And if that were not bold enough, the deadline for this transformation is equally plucky.
“By 2020, we’ll be able to live without oil,” said Deputy Crown Prince Mohammed bin Salman who, at age 31, runs the country’s economy and, by the way, idolizes Steve Jobs.
There may be a lesson in this Saudi audacity, especially for other countries that own ample natural resources but have somehow mismanaged them. The lesson is this, at least from Prince Mohammed’s perspective in his design of the plan: Don’t focus on the problems but rather on the opportunities.
Saudi Arabia has plenty of problems that could paralyze it. For starters, low oil prices and overspending have severely depleted its foreign reserves. Surrounding wars and homegrown terrorists worry it. Nearly a third of its youth are jobless.
Simply throwing solutions at such problems has not worked very well. The new plan instead takes a radical approach. It envisions a new society and a financial security based on creating opportunities.
These include setting aside as much as $2 trillion of the country’s oil wealth in a fund for private investment, both abroad and at home. Women will be given incentives to enter the workforce (although they currently are barred from driving). And non-oil industries, such as mining and tourism, will be boosted as will small- and medium-sized enterprises.
At the least, the plan represents a welcome change in approach from the global campaign to end a carbon-based economy and head off drastic climate change. Instead of merely trying to break the world’s dependency on fossil fuels, countries must also create new possibilities for citizens and businesses.
Many leaders have tried to make this point. After the April 22 signing of a new international climate change pact in New York, US Secretary of State John Kerry criticized those who said the pact does not go far enough. “The power of this agreement is the opportunity that it creates,” he said. “The power is the message that it sends to the marketplace. It is the unmistakable signal that innovation, entrepreneurial activity, the allocation of capital, the decisions that governments make, all of this ... is what is going to define the new energy future.”
This less fearful approach may be paying off. Last year, the world saw more investment in clean energy than in oil and gas.
As two energy experts, Steven Chu and Arun Majumdar, wrote in a 2012 article in the journal Nature, the era of oil will not end because of a lack of oil. “The Stone Age did not end because we ran out of stones,” they stated. It ended when alternative options opened for humanity.