The Importance of Oil in Saudi Arabia

Crude oil is such an essential part of our modern lives that we can often take for granted that our supply of it will remain constant. Small, unstable countries often hold great amounts of this precious resource, along with the ability to cut our supply in a moment’s notice. Therefore, the discovery of oil in Saudi Arabia caused a dramatic increase in the revenue of the country. Saudi Arabia’s newfound wealth was exploited to serve the political and economic needs of an opportunistic Islamic monarchy, while the concerns and rights of its subjects were consistently cast to the wayside. Through a global trade network, Saudi Arabia found great prosperity at the cost of sacrificing its founding principles.

Stability of the Arabian Peninsula created the opportunity for the newly formed Saudi Arabia to encourage foreign investments, and thus the eventual oil industry. The Arabian Peninsula of the early 20th Century was characterized by diverse and militant Islamic groups (Federal Research Division, 2004, p. 10). Although oil was discovered by 1938, Saudi Arabia did not begin to reap its benefits and face its problems until after World War 2.

Oil has often been described as a ‘transforming force’, and this description is easy to apply to Saudi Arabia. Prior to World War 2, government yearly revenues barely reached half of a million dollars (Mansfield, A History of the Middle East, 1991, p. 281). By 1950, revenues were up to $56 million, and by 1956, they were at an unprecedented $200 million.

While oil revenue has been observed to bring positive effects to Saudi Arabia, large amounts of money have the intrinsic ability to corrupt leaders and produce negative effects. The extravagance of the Saudi Royal Family has drawn particular att...

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