Where Einstein Meets Edison

“There’s A Killer in the House”: Why the Situation in Libya Should Scare the Daylights Out of You

“There’s A Killer in the House”: Why the Situation in Libya Should Scare the Daylights Out of You

Apr 7, 2011

A movie that absolutely terrified me as a kid was Wait Until Dark, about a blind woman terrorized by threatening phone calls. The movie seemed like a standard horror flick until the moment that the police traced the source of the calls and discovered the calls were coming from within the house. No longer was the threat external – the killer was in the house.

How does this relate to the current situation in Libya? Surely that situation is an abstract, overseas episode, right?

Au contraire, mon ami. The situation is very much in our house – in our living room, in fact.

My cab driver from my recent visit to London might disagree with me. “Libya is Libya’s problem; let the Libyans sort it out,” he argued during a five-minute diatribe on the conflict. He noted that Western nations stayed out of internal conflicts in Rwanda and Cambodia, and he was convinced that one simple reason made Libya’s situation different for the United States and United Kingdom – oil.

The man was right about oil, but he failed to see the importance of a stable oil supply. I desperately wanted to point out to him that his car is wholly dependent on oil. What would he think if the price of petrol doubled or tripled? (I instead shifted into DNE – Do Not Engage – mode so I could preserve the cordiality of my cab ride.)

Yet my cab driver is not alone. Countless people, both Americans and non-Americans, don’t see the direct connection between Libya and the oil in our “house”. Let me explain.

The unrest in Libya has virtually cut off deliveries of oil from the country. Libya used to produce 1.8 million barrels of oil a day, mostly for export, so the oil’s loss has disrupted the global energy markets. This is a problem, considering that our economy and way of life are tied to oil. (Even Denmark, where switching away from foreign oil has a top national priority for over 30 years, only gets 20 percent of its energy from non-fossil fuel sources.)

Fortunately, Libya is only 18th in the world in oil production, so for the time being, we have a buffer that can pick up the slack – the Kingdom of Saudi Arabia.  This 800-pound gorilla of oil is producing over 10 million barrels per day, mostly for export, and has spare production capacity of 3 million barrels per day to stabilize the market.

But there’s a problem in the Kingdom, and it’s about jobs.

Look at Tunisia, Egypt, Libya, Yemen, and the other hot spots. Democracy, unchecked leaders and human dignity are important topics, but fundamentally, this unrest is about a lack of jobs. China is another example, where anti-government protests are becoming more numerous these days because of growing economic issues, not necessarily because of the government’s structure.

Jobs give people financial security, as well as hope, pride and rigor.  Without these, you tend to see desperation and a lack of stability, as we have seen in spades recently in the Middle East.

Now, let us revisit Saudi Arabia and consider the following:

  • Unemployment for the age 20-24 population is 43.2% today.
  • Forty-one percent of the population is 14 or younger, and another 18 percent is between 15 and 24 years old. (Central Department of Statistics and Information).
  • Neither the government nor Saudi Aramco (the largest “private” employer in the kingdom) will be creating enough new jobs required for the upcoming bubble of new laborers entering the market. So 59 percent of the population will be entering the employment market in Saudi Arabia without great prospects for jobs. (There are already signs of unrest today, and it will not get better.  Are you starting to worry?)
  • Job creation comes from innovation-based entrepreneurial venture research.  Research from the Kauffman Foundation shows that in the United States, all net new job creation from 1980 to 2005 came from companies in their first five years of existence, and mostly from innovation-based companies.
  • Saudi Arabia has a weak track record in innovation-based entrepreneurship. 

Today, the disturbances in Libya seem abstract to us – the threat certainly doesn’t feel like it is inside of our house. But if the unrest in Libya is duplicated in Saudi Arabia, we could lose 10 million barrels of oil a day, which would have an absolutely devastating global impact.  Dare I say that life as we know it today would come to a halt?

In my next post, I will discuss potential solutions to remedying Saudi Arabia’s job creation problem, but we first must have a sense of urgency. We must understand the magnitude and immediacy of this threat and recognize the parallels to the “killer is in the house” scenario from Wait Until Dark.

We should be scared.  Really scared.

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