The second session of the National Council on US-Arab Relations’ “Policymakers Conference” featured Daniel Yergin as the keynote speaker. Yergin, Chairman of Cambridge Energy Research Associates, and Pulitzer prize winner for his book The Prize: The Epic Quest for Oil, Money & Power pretty much covered the landscape on Saudi Arabia’s economy. He noted that Asia is the natural place for Saudis to be looking to expand their economy because the Asian economies—particularly China and India—are the most rapidly expanding. That expansion was seen in the enormous growth in demand for oil the world has seen over the past two years. Asia is also exporting goods on a vastly higher basis.

In speaking about oil, Yergin stated bluntly that “peak oil” is a myth. To be more accurate, we should be speaking of an “oil plateau”, where supplies remain largely constant as prices determine which technologies will be used. As oil prices rise, the cost of producing from non-traditional sources—such as oil sands or oil shale—becomes competitive. While prices may rise, the supply stays essentially stable.

He noted that oil in barrels is not the only energy the US imports: American imports of liquid natural gas (LNG), he says, have risen from 3% to 20% over the past decade. Investment in gas production is rising quickly throughout the Gulf as what was once just a dangerous byproduct of oil production is recognized as extremely valuable, though still dangerous.

The next speaker was Nawaf Obaid, Managing Director of the Saudi National Security Assessment Project, an co-author (with Anthony Cordesman) of National Security in Saudi Arabia: Threats, Responses, and Challenges. [See my review here.] Obaid gave a reprise of his report Fragmented Iraq [See my post on the report here.] A fragmented Iraq, of course, worries all the Arab Gulf countries. Something Obaid added that I’d previously missed was that Saudi Arabia has pledged to forgive all Iraqi debt. That amount, approaching billions of dollars, could provide substantial relief to the struggling central government.

Next up was Rachel Bronson, author of Thicker than Oil, which received praise throughout the conference as the best current book on Saudi Arabia. [My review here.] Bronson—I’m happy to have finally met her—reiterated why the US-Saudi relationship is important. She noted that in many areas, particularly anti-terror cooperation, the US-Saudi governmental relationship is stronger than ever before. She also pointed out that the reforms now taking place in Saudi Arabia are real and that the steps toward reform, however halting, matter.

The final speaker of the morning session was Dr. Nahed M. Taher, Founder and CEO of Gulf One Investments and former Chief Economist of Saudi National Commercial Bank, the first Saudi woman to hold such a position. Taher was not all sweetness and light. She said that the Saudi government has an 18-month window to make substantial economic change before the hard facts of demographics start to bite. The Saudi economy, she said, needs to be growing at a rate of 11% annually to keep up with the demographics, and it’s not halfway there. She also said that the Saudis should break the peg of the Saudi Riyal to the US Dollar and allow the Riyal to float.

This sessions speakers were all of high quality and made many interesting arguments. I hope that NCUSAR makes full transcripts available. As these sessions were broadcast by CSPAN, it’s possible that they might carry transcripts. In any event, this was an extremely useful session.