Which Country's Oil is Cheaper Than Water? The Saudi Arabian Paradox

The concept of oil being cheaper than water might sound absurd at first glance, but in certain parts of the world, especially in countries facing water scarcity, this paradox is a stark reality. One such country is Saudi Arabia, where desalinated water can be more expensive than oil. This article will explore why this is the case, the safety of drinking water in Saudi Arabia, and a global comparison of the cheapest oil prices.

The Paradox in Saudi Arabia

Oil Cheaper Than Bottled Water: In Saudi Arabia, it is no myth that oil has become cheaper than bottled water. The issue is deeply rooted in the country's natural resource scarcity and the high costs associated with desalination. Water scarcity, along with the contentious privatization of water resources, has led to water prices exceeding the cost of oil in some instances. This article will delve into the reasons behind this economic anomaly.

Why is Water So Expensive in Saudi Arabia?

The paradox of very low water tariffs and water privatization can be traced back to extensive government subsidies. The government purchases desalinated water from private operators at high prices and resells it for free in large quantities. This creates a discrepancy where the consumers pay very little, while the supply chain remains expensive.

Government Subsidies and Desalination Costs: The cost of desalination is significant, and the government subsidizes the process to keep the tariffs low. Desalination plants in Saudi Arabia treat seawater and enrich it with specific minerals, making it safe for consumption. This process is crucial, considering the vast coastline of the kingdom where many cities are located.

Is Saudi Water Safe to Drink?

The Saline Water Conversion Corporation (SWCC) plays a crucial role in ensuring that the water is safe for consumption. The desalinated water undergoes a series of chemical processes, enriching it with specific minerals that make it suitable for drinking. The SWCC ensures that the water is free from harmful contaminants, meeting stringent safety standards.

Which Country Has the Cheapest Oil?

Global comparisons show that different countries offer the cheapest oil in the world due to varying production costs, subsidies, and state policies. Here’s a list of countries with the least expensive fuel:

Venezuela: Gasoline costs just 0.1 Venezuelan Bolivar (VEF) or approximately 0.004 USD per liter for the first 120 liters, after which it is priced at 0.50/liter. Iran: ... Libya: ... Angola: ... Algeria: ... Kuwait: ... Egypt: ... Turkmenistan: ...

While these countries offer the cheapest oil, the overall cost of oil is still significant compared to other everyday goods. For example, if we look at crude oil priced at $25 per barrel, it would cost about $0.59 per gallon (42 gallons in a barrel). In contrast, water sold in grocery stores like Walmart can cost around $1 per gallon, making water 70 times more valuable per gallon than crude oil.

The Global Context

The case of oil being cheaper than water can vary significantly from country to country. In the United States, for instance, crude oil was priced at $25.00 per barrel or roughly $0.60 per gallon, while a gallon of water from Walmart would cost nearly $1.00. This means that a barrel of water would be priced at $42.00, making water 70 times or 6900 more valuable per barrel of crude oil.

Conclusion

The oil-waters paradox is a complex economic and environmental issue, often exacerbated by government policies and natural resource scarcity. Countries like Saudi Arabia demonstrate how water scarcity can lead to unusually high water costs, while nations like Venezuela offer some of the world's cheapest oil due to government subsidies.

Understanding these dynamics is crucial not only for economic and environmental planning but also for sustainable development. Whether you are in Saudi Arabia, Venezuela, or any other part of the world, the cost relationship between oil and water is a fascinating area of study with significant implications for resource management and policy-making.