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1 J. Energy & Dev. 1 (1975-1976)

handle is hein.journals/jeldv1 and id is 1 raw text is: A NEW ERA OF STABILITY IN ENERGY ECONOMICS Ahmed Zaki Yamani* T he subjects I want to deal with are some of the economic aspects of the world energy situation. I would like to express the views of my country, as a leading oil producer, on some of the recent developments in the energy situation; developments which have been misinterpreted thereby leading some people to arrive at erroneous conclusions and hold beliefs that are based more on conjecture than actual facts. I hope I shall be able to remove some of the ambiguities that have shrouded the real facts. The world energy sources, and in particular petroleum, have gained such importance that no economic life can be conducted without their availability. Energy permeates every level of modern human behavior, and virtually every economic activity, to such an extent that production of goods and services is inconceivable without it and thus it may be likened to the factors of production, the main prerequisites for economic activity. The expenditures and revenues associated with energy give a revealing picture of its economic importance in today's world. Investment in energy production and distribution amounts to about $100 billion annually. Its value in international trade is about $120 billion annually. The revenues it generates for governments of producing and consuming countries as well as operating companies is in the vicinity of $200 billion annually. Energy, and oil in particular, transcends all other raw materials in that it has gained such importance as to make it directly exchangeable for wealth and technology, which are among the ultimate products of human endeavor. Economists once described technical know-how as a separate factor of production, in conjunction with land, labor, and capital, because of its great importance to economic activity. By virtue of the even greater importance of energy, we can also consider it as belonging to the same rank and as commanding returns of proportionate magnitude. Another indication of the importance of energy is the fact that the yardstick for measuring the degree of economic progress of nations is no longer limited to per capita income but includes per capita energy consumption as well. However, the purpose of this article is not to devise a new economic theory; this may be left to those engaged in the current controversy over the adequacy of the existing world economic order. Our purpose is to examine the salient features in the developments in the oil sector of the energy *His Excellency Sheikh Ahmed Zaki Yamani is the Minister of Petroleum and Mineral Resources of the Kingdom of Saudi Arabia. 1

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