No, Not NEOM Nor Even Women Can Save Saudi Arabia and its Monarchy from Peak Oil and Collapse

You know things have taken a turn for the desperate when women have started to drive. Or rather, when they're about to start driving in Saudi Arabia.

Although repeated efforts over the years to allow Saudi Arabian Miss Daisies to drive themselves haven't managed to budge things in the slightest, it's nonetheless a bit ironic that the sole country in the world that doesn't allow women to drive automobiles is also the country sitting on the greatest amount of (easily accessible) reserves of the stuff that makes those vehicles go vroom. Strangely enough though it's not as if women are completely repressed in the kingdom built upon sand, what with women allowed to become lawyers, doctors, engineers... and jet airplane pilots. That all being so, it's hard to imagine any other reason for why women shouldn't be allowed to drive wingless vehicles (in a time and place where they're nearly impossible to function without) than to provide a leash upon women's necks for the all-male monarchy, clerics and their acolytes.

Surprisingly enough though the "inconvenient" restriction from Happy Motoring beset upon women is soon to be lifted, what with a royal decree read live on TV in September stating that come June 2018 Saudi Arabia will be ushered into the 20th century via women's permission to join men and cows in the quest to equally belch our way towards an overheated climate. Fantastic this surely is for our soon-to-be Saudi Arabian sisters in bovinity, but is this fine example of equality inherently an occasion for celebration?

Yeah, maybe not.

While the expected crowd of cornucopian-minded activists – that fail to realize that the world doesn't revolve around the West but rather around energy – have denounced the decree as "cosmetic reforms" and "little more than a public relations stunt designed to cement this notion of the Saudi regime as the liberator of women", nothing could actually be further from the truth. Because in reality there's one reason and one reason only why the Saudi Arabian monarchy has decided to "mend its ways", that being nothing more than the fact that it's expensive to not let women drive.

Since women who are restricted from driving automobiles can't just wait around on their husbands/fathers/brothers/sons to drive them to and from work or to do a simple errand, the citizens subjects of Saudi Arabia are forced to employ nearly a million and a half foreign workers (60% of the kingdom's domestic workforce) to work as chauffers in order to drive around Miss Saudi Arabian Daisy.

With those million and a half or so chauffers requiring individual families to fork over $500 of their own money per month as well as food and accommodation, the cumulative $10bn or so in remittances (most of which are sent to the Philippines, where most chauffers hail from) are a huge drain on not only Saudi Arabian families but the Saudi Arabian economy as well.

Until recently this detriment to Saudi Arabia's coffers hadn't been much of a problem for the rulers of the oil-rich kingdom themselves, but thanks to the 2015 crash in oil prices black gold hasn't been bringing in anywhere near the amount of foreign currency as it used to, leaving Saudi Arabia in the mind-boggingly absurd position of tumbling towards bankruptcy (which according to a 2015 estimate by the International Monetary Fund would occur by 2020 if the situation didn't change).

With the price of oil having crashed from $114 in 2014 to a paltry $28 in 2016, the difference in price not only contributed to a loss of $390bn in anticipated profits for Saudi Arabia in 2015, but thanks to a 13% reduction in its GDP – and even though it burned through $115bn in foreign assets in order to minimize the damage – it still ended up with a deficit of $136bn in 2015 and then another deficit of $107bn in 2016. Even the "magic" of economists couldn't do much with the latter figure, only able to whitewash it down to a loss of $79bn when delayed payments and IOUs to contractors were excluded. Those exclusions would include such things as the 50,000 workers that the Binladin Construction Group terminated without having received their back-pay, and who upon having exit visas foisted upon them (necessary to leave the country thanks to the slave-like kafala system) decided to stick around and torch a fleet of company buses instead.

With oil windfalls accounting for 90% of the treasury's revenue (it pumps one in nine barrels consumed worldwide everyday), Saudi Arabia's foreign assets not only proceeded to hemorrhage hundreds of billions of dollars from a high of $737bn in 2014 (for a while $6.5bn were being lost each month), but the kingdom's fragility was then made strikingly evident by the fact that for the first time since 1991 it was astoundingly forced to turn to the world of private finance in order to raise a 5-year $10bn loan from a consortium of global banks in order to finance its deficit.

How is it possible, you might ask, that a country with not just a bounteous supply of crude but a bounteous supply of sweet crude – that costs only $10 per barrel to extract – can be on the verge of insolvency? That would be partly due to the fact that Saudi Arabia isn't so much a country as much as it's a kingdom, a kingdom which in turn doesn't so much have a government as much as it has an absolute monarchy (or rather a theocratic dictatorship) which has to contend with the high upkeep costs of the society it's built.

Founded by king Abdulaziz Al Saud in 1932 (which is where the name Saudi Arabia is derived from), the discovery of oil some 80 years ago has allowed for a procession of kings (all sons of Al Saud) to take on the role of what is essentially CEO of the family business, a family business that happens to be an absolute monarchy, or better yet a petrocratic dictatorship. With countless scions of the royal clan expecting/requiring massive handouts (one of them is rumoured to have purchased the only privately held Leonardo da Vinci last month for $450.3mn), a population that pays no income tax, gasoline priced at a little higher than zero dollars per litre (which it has to import since it's a net gasoline importer), and so forth, prior to the recent crash of oil's price Saudi Arabia required a per barrel price of about $94.80 to break even due to its need to convert oil proceeds into payoffs to buy political loyalty, the quiescence of conservative clerics and the merchant class, as well as the subservience of its subjects.

To put it a bit crudely (no pun intended), what the aforementioned implies is that Saudi Arabia and its monarchy are screwed. Because if Ron Patterson's recent conveyance over at Peak Oil Barrel that "Saudi production peaked in 2016 at 10,338 kbpd and their average production for 2017 is down 443 kbpd so far" is an indication that Saudi Arabia has already reached its all-time peak, then that means that Saudi Arabia's prospects aren't about to get better anytime soon. Or rather, ever.

Don't try and tell that to the Saudi Arabian monarchy though, what with it apparently not being too concerned with its peaking supplies of oil so much as it's leaning towards the much more palatable notion of "peak oil demand", a wishy-washy theory that has been recently espoused by the smartest men in the room over at The Wall Street Journal, Forbes, The Financial Times, and Bloomberg. Without delving into the notion of peak oil demand (I'll save that for another time), what the Saudi Arabian monarchy is effectively worried about isn't so much its supplies of oil peaking (and then decreasing), but rather the fabled renewable energy utopia where everybody's car is essentially powered by a strap-on of which causes demand for Saudi Arabia's oil to drop to nil.

Put a bit differently, the Saudi Arabian monarchy is worried that technology is going to make its crude energy supplies obsolete. And if you think I'm exaggerating, think again.

Courtesy of a glitzy conference held in Riyadh in late-October, it was announced by the kingdom's Crown Prince that plans were afoot to create a $500bn megacity called NEOM that – you guessed it – will be entirely powered by wind and solar energy and so will provide a "new blueprint for sustainable life". Eschewing the need for pyromaniac Filipinos and the like, NEOM will not only boast more robots than people (in a coinciding event a "female" android named Sophia was the first android in the world to be granted citizenship – in the country that has been unable to grant basic rights to women no less), but according to the Crown Prince "Everything will have a link with artificial intelligence, with the Internet of Things – everything."

Spanning an area encompassing 26,500 km and crossing into Egypt and Jordan, NEOM is "the future of Saudi Arabia", one in which will be found "digital air" for all (free Wi-Fi), driverless vehicles, a population fed by solar-panel-powered vertical farms growing hydroponic food, and so on and so forth.

With NEOM being independent of the kingdom's "existing governmental framework", and featuring cutting-edge technological innovation, environmental sustainability, and gender equality (a promotional video apparently showed women jogging while wearing croptops, although as I don't watch video I can't confirm whether or not cleavage was allowed as well), NEOM promises to be almost completely at odds with the values and image currently portrayed by the ultraconservative kingdom. As the Crown Prince elucidated himself,

We can do 98 percent of the standards applied in similar cities, but there is 2 percent we can't do, like, for example, alcohol. A foreigner, if they desire alcohol, can either go to Egypt or Jordan.

So although foreigners will have to venture elsewhere if they desire alcohol (and possibly cleavage), "Neom's duty is to be a world hub for everyone in the whole world" as the Crown Prince also explained.

Whether or not you think this phantasmagorical Jetsons-on-steroids-Bitcoin vision is even possible, there's still the issue of how the Saudi Arabian monarchy expects to be able to pay for it all, what with its forecasted 2017 break-even point of $74 dollars per barrel meaning it's still about $20 off the mark and so still going broke. Although I'll touch on this a lot more in part 2, this is, in part, where the Saudi Arabian monarchy expects its Wonder Women in shining armour to come to its rescue.

On top of the aforementioned $10bn hit that Saudi Arabian families must collectively take in order to employ foreign chauffers, there's also the fact that many women (who make up the majority of the kingdom's university graduates) find that after deducting the chauffer fees from their salaries there's pretty much no monetary point in working. And since the Saudi Arabian monarchy needs to quash those $10bn in remittances, and since it especially needs an increase in women's participation in the workforce so that it can boost its GDP (Norwegian housewives that moved into the workforce nearly doubled the tax base and are said to have contributed "more to Norwegian prosperity than the coincidental discovery of North Atlantic oil reserves"), the monarchy obviously felt it had no choice but to modernise itself by aiming to increase women's participation in the workforce from 22% to 30% by 2030, in part by giving them access to the aforementioned strap-ons.

But as much of a genuine improvement it would be for Saudi Arabian women to no longer have to be slaves to their men and so have the opportunity to join their men as wage slaves instead, they'll nonetheless still be slaves to their men. Because while come June 2018 women will not only be able to drive in Saudi Arabia but won't even need permission from a man to get behind the wheel or procure themselves a driver's license, this is by no means the most pressing demand of Saudi Arabian women and activists in general.

Because the fact of the matter is that Saudi Arabian women still live under what is known as the guardianship system, a system in which women aren't allowed to marry, work, study, open a bank account, travel abroad, nor even get certain kinds of medical treatment without the explicit permission of their guardian, this guardian of course being a male, a male who might be their husband, father, brother – even their son. That being so, newly-minted female drivers might want to take extra precautions and stick to the slow lanes, considering that upon arrival at car accidents some ambulance personnel have been known to refuse life-saving treatment to women until the woman's guardian had arrived and provided approval, nearly leading to death.

Nonetheless, with ten million women over twenty years-of-age (read: potential drivers and thus GDP-contributors), the monarchy seems to figure it can make even more converts via more decrees, the latest one unveiled in late-October and which is to provide women with equal access to bread and circuses (women are slowly being given permission to enter sports stadiums).

However. It wasn't a week after this latest decree that another first was achieved in the kingdom, this one being the first time in Saudi Arabia's history that the heart of Riyadh was attacked, courtesy of a group of Yemeni rebels who launched a ballistic missile towards the capital's airport.

Fortunately enough the missile was intercepted over north-east Riyadh thanks to the Patriot missile defence system that came courtesy of the decade-old deal between Saudi Arabia and the United States, the President of the United States not being able to contain his effusive glee by pointing out that

We make the best military equipment in the world... You saw the missile that went out? And our system knocked the missile out of the air. That's how good we are. Nobody makes what we make...

Perhaps. Because as a senior Yemeni air force official told CNN,

This is not the end. Saudi cities will be a continuous target. We are entering a new phase.

With this in mind, and to give the monarchy a bit of credit, could it be possible that the monarchy realizes that maybe, just maybe, those missile defence systems aren't going to be able to hold out forever, and that perhaps it might be a good idea to hedge its bets by, I don't know, testing the waters to see if it can cash out while it still can? Could it be that some factions within the monarchy have seen the writing on the wall and so have decided to make a deal?

I'll touch on that a bit more in this post's follow-up. In the meantime, and since there isn't a thing besides peeing while standing up that a man can do and that a woman shouldn't be allowed to do, let's all rejoice in the new-found privileges soon to be bestowed upon Saudi Arabian women and so stand back – way back – in awe as the next volleys of fireworks begin their ascent across the skies of Riyadh.