Saudi Arabia is home to the world's most valuable company, Saudi Aramco. Responsible for the production of the kingdom's fossil fuel exports, this energy behemoth is valued at anywhere from $1.25 to $10 trillion. Saudi Arabia built a financial empire on the oiloiltrade — and now, they're trying to get out of the business.
On April 25, 2016, Deputy Crown Prince Mohammed bin Salman announced the implementation of "Vision 2030," the kingdom's ambitious plan to, in the prince's words, rid the country of its addiction to oil. Diversifying the economy is a tall order, and the kingdom will need to tackle the issue in several ways. First, they'll sell up to a 5 percent stake in a Saudi Aramco IPO. Second, they'll pour more funding into their public investment fund, making it one of the world's largest. Third, in what is certain to be a domestically unpopular move, the kingdom will cut various government benefits, saving an estimated $61 billion per year.
Through Vision 2030, the prince aims to raise non-oil revenue to $160 billion by 2020 and $267 billion by 2030 (in 2015, that number was $43.6 billion). Many observers are skeptical, to say the least. According to Capital Economics' Middle East analyst Jason Tuvey, there are "still several key issues that policymakers have yet to address," noting that he and other market watchers were hoping for more specific information on how this economic shift would be accomplished. To some this is merely a symbolic gesture, but to others it's a sign of a nation fighting for survival. And either way, it leads to a bigger question:
Is oil on the way out?
For decades we've known that an oil-powered economy is not indefinitely sustainable. And while other forms of energy exist, like solar, wind and nuclear, none have yet to match oil in terms of efficiency and productivity. Paradoxically, as we deplete this resource, we're also finding ways to make it cheaper. Recent breakthroughs in extraction technology (like fracking) have driven a precipitous drop in the price of fossil fuels. For energy export-dependent countries like Saudi Arabia and Russia, this spells trouble. So the kingdom may be moving in this direction for two reasons: first, to free itself from the whims of global commodity markets, and second, to create a viable, long-term survival plan for the post-Oil Age.
So what happens if Saudi Arabia succeeds? Will it be one anomalous case, or is it just the first in a game of global dominoes, setting a precedent for other countries to follow?
Learn more in the above video.