The Guilt of Unions

In 1945 near the end of WWII, US President Franklin Roosevelt, on his way back from the Yalta summit, met on the cruiser USS Quincy in the Suez Canal with Kign Ibn Saud of Saudi Arabia. The meeting, prompted by Roosevelt asking how the United States had outlasted the mighty German war machine, was motivated by the fact that American oil resources fueled the enormous military buildout that went on to eclipse not only the production of Germany but also the output of all other Axis countries combined. Thinking ahead to declining American reserves, Roosevelt correctly saw and successful negotiated an alliance between the US and the kingdom that until recently has undergirded not only the industrial world’s need for energy but also America’s need for further legitimization of the US dollar in an era of large budget and trade deficits which came in the form of the ‘petrodollar.’ Growing from a population of fewer than 5 million in 1960 to over 33 million today, the home to Mecca, the birthplace of Mohammed and Islam and the center of the broader Muslim world, the Kingdom of Saudi Arabia has had mixed success in transitioning from its ancient heritage to the fabulous wealth provided by oil. It’s state oil giant – Saudi Aramco – is the world’s third largest company as measured by market capitalization, at $2 trillion, but looking ahead, with increased calls for a move away from fossil fuels and the rise of China, the kingdom looks to invest in the future while retaining its past, and hopes to maintain its central role, for good or for worse, in Middle Eastern culture and politics.

— Brought to you by —

Very special guest General Lance

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Myth of the 20th Century – Episode 255 – Saudi Arabia and the (End of the) Petrodollar

— References —

– Seven Pillars of Wisdom, Lawrence (1926)

– Why Arabs Lose Wars, Atkine (1999) – https://www.meforum.org/441/why-arabs-lose-wars

– Desert Kingdom – How Oil and Water Forged Modern Saudi Arabia, Jones (2010)

– Syria: Descent Into the Abyss, Fisk (2015)

– Petrodollar – American Political Economics, Myth of the 20th Century (2017) – https://myth20c.wordpress.com/2017/03/14/petrodollar-american-political-economics/

– How FDR Charmed a Saudi King and Won U.S. Access to Oil, Kennedy (2018) – https://www.history.com/news/fdr-saudi-arabia-king-oil

– Mohammed bin Salman: The dark side of Saudi Arabia’s crown prince, Aljazeera (2020) – https://www.aljazeera.com/news/2020/3/9/mohammed-bin-salman-the-dark-side-of-saudi-arabias-crown-prince

– Apocalypse Never: Why Environmental Alarmism Hurts Us All, Shellenberger (2020)

– Cadillac Desert – The American West and Its Disappearing Water, Myth of the 20th Century (2022) – https://myth20c.wordpress.com/2022/08/30/cadillac-desert-the-american-west-and-its-disappearing-water/

– Petrodollar Dusk, Petroyuan Dawn: What Investors Need To Know, Holmes (2023) – https://www.forbes.com/sites/greatspeculations/2023/03/27/petrodollar-dusk-petroyuan-dawn-what-investors-need-to-know/?sh=35388fa355aa

– Aramco’s Oil Production Costs Least in the World at $2.8 Per Barrel – https://english.aawsat.com/home/article/1993111/aramco%E2%80%99s-oil-production-costs-least-world-28-barrel

comparison: https://knoema.com/rqaebad/cost-of-producing-a-barrel-of-crude-oil-by-country

– IMF: Saudi Arabia Needs Oil Prices At $80.90 To Balance Budget – https://oilprice.com/Energy/Energy-General/IMF-Saudi-Arabia-Needs-Oil-Prices-At-8090-To-Balance-Budget.html

– Fossil Fuels, Our World in Data – https://ourworldindata.org/fossil-fuels

– Decouple Media – Learn About Energy and Climate – https://www.decouplemedia.org/