The Saudi Arabian Protectorate of Bahrain

The small archipelago nation of Bahrain can't seem to stay out of the news lately, as the government continues its containment of civil protests that it perceives as a threat to its rule. The majority (60-70%) Shi'a population has observed the examples of regime-change elsewhere in the Middle East and were demonstrating publicly about their treatment under the Sunni monarchy. The Bahrain military has escalated its armed repression of these demonstrations, and Saudi Arabia eventually sent troops there. Iran expressed its sincere displeasure with that, recalling its ambassador to Saudi Arabia. The United States, which has a strategic military presence on Bahrain and a strategic petroleum interest in Saudi Arabia, has expressed its displeasure to everybody involved except the protesters.

Bahrain wouldn't seem to have a lot to offer, except that it seems to offer something for a million people (half of which are guest workers) living on a desert island. Why is it generating so much interest? Is there any oil left there? In this article, I will discuss some recent developments between Bahrain and its neighbors in the context of its long history.

Bahrain and Oil

Given the presence of anachronistic monarchies, pricey palaces (see linked pdf), outlandish residential developments, and foreign meddling, you know that oil is somehow involved. Indeed, Bahrain was the first location in the Middle East that oil was "discovered" (in the sense of drilling for it and finding it). But even Bahrain oil is complicated, and many different factors influence the role that oil is playing in current events. For one thing, it actually produces relatively little oil directly. Its only field, Awali, peaked decades ago at about 75,000 bpd and has been producing around 30,000 bpd. Cumulative production is a little over 900 million barrels. The EIA has provided the following summary of Bahrain production and consumption:

The additional liquids production possibly comes from some natural gas liquids production (Bahrain has some non-associated gas fields), but most of the difference between the Awali and Bahrain outputs is refinery gains, as about 250,000 bpd of oil is refined at the state-owned refinery. According to the IEA, consumption is approximately one third each gasoline and jet fuel and the remainder diesel and other liquids.

Bahrain is trying to squeeze more out of Awali, and has been doing some rather extensive drilling for such a small field. From the 2009 Annual Review of Bapco (the national oil company):

An aggressive development drilling programme for the 2009-2011 period is underway. A total of 104 wells are targeted in the programme, including complex directional, horizontal and reentry wells as well as conventional vertical wells.

IHS/CERA expressed some skepticism about the economic prospects of extracting more oil from Awali, as did Michael E. Lynch. The latter missed a couple of points, though. First, gas is injected in Awali as opposed to water. Also missed is that there are plans to target shallower reservoirs containing heavy oil.

In Bahrain Occidental has partnered with Bapco and Mubadala to form Tatweer, who are currently conducting pilot studies on the heavy oil reservoirs in the Awali field. The reservoirs have low permeability (2mD) unfractured carbonates with large volumes of heavy oil, and a trial of steam injection above the fracture gradient is being considered for 2011/2012.

Some early success has been claimed, but it is not clear if this heavy oil has come on stream yet.

Bahrain's energy minister Abdul Hussain Bin Ali Mirza says his country's ageing Bahrain field, where EOR boosted output from an average of 29,000 barrels a day to a level of 40,000 barrels a day within a year, will see output hit 100,000 barrels a day within seven years.

If all goes well, they will have a bit more (of lesser quality) oil to export. However, in reading the Bapco Annual Reports, one will note that they claim quite a bit of oil exports at present. That is because Bahrain has claim to half of the output of the offshore Abu Safah field, which Saudi Arabia operates. Saudi Aramco handles all aspects of the production of 300,000 bpd of Arab Medium, and Bapco collects its share of the money paid when oil leaves the Saudi Ras Tanura port. Saudi Arabia gets credit the total Abu Safah production, but Bahrain gets half the net revenue. The benefit to the Bahraini treasury is rather substantial, and certainly makes for stronger ties with Saudi Arabia. How did this come to pass?

Islands in the Sun

History certainly plays a part in what is transpiring at present, as it is one of back-and-forth until relatively recent times. The Bahrain land grab goes back thousands of years, and its claimants have included Sumerians, Assyrians, Babylonians, and Persians. The Portugese occupied the islands starting in 1522, and after their forced exit in 1602, Bahrain was lorded over by successive waves of Persians and Arab tribes from the mainland for the next 180 years. In 1783, the Sunni al-Khalifa family, a clan from the Atabi tribe residing on the Qatari peninsula, seized Bahrain from Persia -- originally out of spite for getting their hands slapped for piracy:

Late in I782 the Al Khalifah had raided Bahrain, plundered Manamah, its principal town, and retired with a great quantity of loot. Shaikh Nasir of Bushire was despatched by the Prince of Shiraz, Governor of the Persian province of Fars, to destroy Zubarah and chastise the Al Khalifah, but was himself defeated and compelled to withdraw. Fired by their success, the Al Khalifah crossed over to Bahrain and, with the help of the Al Sabah, their kinsmen from Kuwait, overcame the Persian garrison and made themselves masters of the island.

From The Persian Claim to Bahrain by J. B. Kelly,
International Affairs (Royal Institute of International Affairs 1944-)
Vol. 33, No. 1 (Jan., 1957), pp. 51-70

The Al Khalifah did very well with Bahrain, first taking advantage of its strategic location by creating a hub for merchant vessels and a trade emporium, and later with pearl fishing. Before long, though, it was again being tussled over by some new players: the ascendant Wahhabi religio- military empire from the Arabian mainland, and the Sultanate of Muscat and Oman. Things became even more complicated with the arrival of the British around 1820. They were trying to stop piracy in the region, and then ended up being in the position of deciding who "owned" the islands. Bahrain became a British Protectorate in 1830, and this enshrined the Al Khalifah family's hold on the islands to this day.

Some interesting background on how the British apportioned control over the Gulf region is found here.

The British were concerned that rulers of the weaker gulf families would yield some of their territory under pressure from more powerful groups, such as the Al Saud or the Ottomans. Accordingly, the treaties signed between 1820 and 1916 recognized the sovereignty of these rulers within certain borders and specified that these borders could not be changed without British consent. Such arrangements helped to put tribal alliances into more concrete terms of landownership.

This excerpt really resonates today:

Controlling, or owning, land became more important with the discovery of oil. When oil companies came to explore for oil, they looked for the "owner" of the land; in accordance with British treaties, they went to the area's leading families and agreed to pay fees to the heads of these families. As oil revenues increased, the leaders became rich. Although the leaders spent much of their new wealth on themselves, they also distributed it in the area they controlled according to traditional methods, which initially consisted mostly of largesse: gifts for friends and food for whomever needed it. As time passed, the form of largesse became more sophisticated and included, for example, the construction of schools, hospitals, and roads to connect principal cities to towns in the interior.

When the British finally decided to get out of the Gulf, both Saudi Arabia and Iran made a claim for Bahrain. There was some talk of folding it into a new state including Qatar and what is now the United Arab Emerites, but this did not sit well with Iran.

An obstacle to creating a "superstate" was the status of Bahrain, which had been occupied by Iran at various times. The shah of Iran argued that he had a stronger claim to the island than the Al Khalifa, who had only come to Bahrain in the eighteenth century. Furthermore, the shah indicated that Iran would not accept a federation of Arab states that included Bahrain.

In the end, the United Nations (UN) considered the issue of Bahrain; it decided to deny the Iranian claim to the island and to allow the Bahrainis to form an independent state. Bahrain was better suited to independence than some of the other shaykhdoms because the island had been a center of British administration and had a more developed infrastructure and education system than its neighbors. Ironically, the greater British presence on Bahrain made residents more resentful of treaty ties to Britain. Bahrain was the only place in the gulf where demonstrations against Britain occurred.

Bahrain was granted formal independence in 1971.

Iranian Claims

Despite the years that have gone by, there are some with a different version of history.

What is evident is that the maritime and costal of Bahrain were part of Iranian territory from the beginning of Sasanian Empire until throughout of Iran was occupied by the Arabs Islamic forces and migration of Bedouins from Arabian deserts into southern Iranian territories started.

There were several territorial claims by Persia in the 20th century up until Bahrain was granted independence by Britain in 1971. At that time, the Shah of Iran at first restated - but then rescinded - all claims on Bahrain. Of course, the Iranian revolution in 1979 changed the scene dramatically, and Iranian clerics have occasionally used the Bahrain issue as one of their rallying cries. But the newer government has not made an official claim of ownership. A failed attempt by the Islamic Front for the Liberation of Bahrain to create an Islamic state was certainly inspired by events in Iran a short time earlier. However, there isn't much evidence to support direct involvement by Iran in the current unrest. According to Wikileaked US cables (see Appendix), there are stronger ties between the Shi'a in Bahrain and those in Iraq, than with those in Iran. More recently, King is Hamad bin Isa Al Khalifa had implicated Hamas as being behind the recent protests.

Sum of All Saudi Fears

The following map illustrates quite simply why Saudi Arabia has substantial concern over unrest in Bahrain:

Location of Bahrain relative to Saudi Arabian Oil Infrastructure. The orange outline shows the relevant maritime borders.

Quite obviously, Bahrain sits within throwing distance (as few as 25 miles) from critical Saudi oil infrastructure. Shown on the map are nearby Saudi oil fields (Ghawar, Abqaiq, Abu Safah, Qatif, and Berri), the oil export terminals (Ras Tanura, Al Juaymah), the critical oil processing facilities at Abqaiq, and the equally critical water treatment facilities of Qurayyah which enable water injection of many fields including Ghawar, Abqaiq, Berri, and Khurais. The even slight possibility that Iran could gain control over land so close to these facilities has motivated a surprising amount of largess towards Bahrain. This largess begins with the deal giving Bahrain half of the Abu Safah output (albeit under treaty), but there is more to the story. And while there are other factors besides security of the oil infrastructure which likely contribute to the largesse, it is probably true that Bahrain would not exist as an independent nation if not for it.

Let's Make An Oil Deal

Let's return to the agreement which provides Bahrain's largest single source of income. As discussed earlier, Bahrain has long had multiple claims of ownership. The first disputes were over who owned the islands; later disputes were about ownership of the water around them (and the oil under that). These disputes have come and gone over years, and just a year ago, Qatar, Iran, and Bahrain signed yet another treaty once again clarifying territorial boundaries in the Gulf. But the first agreement signed by Bahrain was with Saudi Arabia, and it concerned oil. Both BAPCO and Saudi Aramco had done some exploration on the seabed of the Abu Saf-ah Shoal, shallow waters located 65 miles NW of Bahrain but only 30 miles off the Saudi coast (see map), as early as 1949. In 1958, they came to an agreement: the disputed area was on the Saudi side of the border, but they would assign to Bahrain half of the oil revenue in perpetuity. What a sweet (, sour) deal that turned out to be.

The area cited and defined above shall be in the part falling to the Kingdom of Saudi Arabia in accordance with the wish of H.H. the ruler of Bahrain and the agreement of H.M. the King of Saudi Arabia. The exploitation of the oil resources of this area will be carried out in
the way chosen by His Majesty on the condition that he grants the Government of Bahrain one half of the net revenue accruing to the Government of Saudi Arabia and arising from this exploitation, and on the understanding that this does not infringe on the right of sovereignty of the Government of Saudi Arabia nor the right of administration over this above-named area.

Note the wording "net revenue". The timeline below shows how this agreement has resonated through the years.

1949-1950 Bapco and Saudi Aramco explore on the seabed of the Abu Saf-ah Shoal.
1958 Maritime border agreement gives oil rights to Saudi Arabia in exchange for share of revenues
1963 Abu Safah field discovered
1966 Abu Safah production started
1972 Revenue sharing agreement gives 50% to Bahrain
1986 Abu Safah field mothballed due to collapsed oil prices
1987-1992 Saudi Arabia gives Bahrain 70,000 bpd from its remaining production
1992 Abu Safah field restarted. Bahrain receives 50% of revenue
1996-2004 Saudi Arabia gives Bahrain 100% of Abu Safah revenue.
2004 Abu Safah reworked along with Qatif field. Abu Safah production at 300,000 bpd.
2004 - Bahrain receives 50% of Abu Safah revenue (150 kbpd of 300 kbpd total)

In particular, these developments stand out:

  • In border negotiations, Bahrain must have had some legitimate claims to the seabed overlying Abu Safah for Saudi Arabia to yield half of the production.
  • Saudi Arabia was strongly motivated to keep the money flowing to Bahrain, even as the oil field was mothballed. Residual concern from the Iranian Revolution and the subsequent but failed uprising on Bahrain?
  • Again in 1996-2004, Saudi gave all Abu Safah revenues to Bahrain despite much higher production and higher prices. And there are no production costs being charged to Bahrain for this. Interestingly, up until the 2004 field upgrade was finished, there was some expectation in Bahrain that it would get 100% of the new production level as well. But I guess there are limits.

Another big source of revenue for Bahrain and the government is the al-Bahrain Refinery, which process about 250,000 bpd of crude and exports refined products to Asia and elsewhere. It does not use crude from Abu Safah (although this has been considered). Rather, Arabian Light crude is imported via pipelines from Saudi Arabia to supplement the amount produced at Awali. But as others have noted, the Abu Safah oil is the dominant fraction of the overall oil revenue for Bahrain. Even an oversized refining margin on 225 kbpd of crude will be much smaller in magnitude than the full take from 150 kbpd. This point isn't grasped by many analysts, including Tom Friedman, as reported here. But a key point is that big sources of revenue for Bahrain - and even bigger for the monarchy - is directly tied to Saudi Arabian oil production. Thus, there should be no surprise that when Saudi Arabia want to drive tanks down the causeway separating the two countries, the King of Bahrain welcomes them in.

One important Saudi connection to the economy of Bahrain is the causeway connecting it with the mainland, and the millions of Saudis who drive over to enjoy a few days in a less restrictive society. What happens in Manama stays in Manama. According to the Wall Street Journal, this economic exchange accounts for a tenth of Bahrain's GDP. Consistent figures for Bahrain's finances are difficult to come by, but a good summary can be found here. Exports to Saudi Arabia are also important, and there is also the large and growing financial sector that benefits from being near that nation. As for the importance of Bahrain to Saudi Arabia, given the relative size of the latter, the evidence suggests mostly insurance against threats to its oil revenue but with a social safety valve thrown in. But recent events have spoiled the party somewhat.

Closing Thoughts

About ten years ago, a border dispute between Bahrain and Qatar involving the Hawar Islands (located near the coast of Qatar) was settled in the World Court. Bahrain wanted the islands and the potential oil under the gulf waters nearby, and they got them. What I find amusing is that Qatar was satisfied as well, because Bahrain's original claim in court included a chunk of land on the northwest Qatari mainland (encompassing the long-abandoned town of Zubara). Their rationale was that this was where the Al Khalifah lived when they drove the Persians from what is now Bahrain, and they never relinquished their ownership. Well, the court unanimously thought that claim was ridiculous. And fittingly, Bahrain hasn't found any oil near Hawar yet. But the Al Khalifah continue their reign, enriched by the oil lying far offshore from the island seized by their ancestors centuries ago. Oil ownership is a funny thing.

Appendix 1: Wikileaks


Bahrain and Iran

Guide to Bahrain's Politics

Bahrain and Iraq

King Hamad and the US

Iran's Nukes

Bahrain Wants US Missles

Saudi and Iran

Brilliant post! It's a good addition to a more well-rounded debate about the geopolitical calibrations that surround the oil industry and it provides an excellent backdrop to the recent developments - well beyond the flowery neorhetoric of Western governments. I think it would be a good trend to write more about above-ground factors when it comes to the peak oil situation as it can have a dramatic effect, which the recent Libyan fallout easily proved.

Thanks Joules
You wrote:

The United States, which has a strategic military presence on Bahrain and a strategic petroleum interest in Saudi Arabia, has expressed its displeasure to everybody involved except the protesters.

A bit more here:

The U.S. Military and Bahrain

By Dr. Richard Weitz

02/24/2011 – One of the most important U.S. Navy bases in the world is located a few miles from the site of the mass protests in Bahrain: the headquarters of the Fifth Fleet. There are presently more than 2,000 American military personnel, and several thousand more support contractors working in the 100-acre command facility in Jaffair suburb of the capital city of Manama. If one includes their families, then the U.S. military community in Bahrain exceeds 6,000 people.

The base has been providing food, fuel, water, and other supplies to the U.S. Navy ships operating in the Persian Gulf, which has some 2.5 million square miles of water, for more than half a century. The U.S. Navy first started using Bahrain’s port during the 1940s and in 1950, began leasing headquarters space from the British. In 1971, the British government was compelled to reconcile the imbalance between its global security commitments and its declining resources by transferring its Gulf security role, and the Bahrain base, to the United States.

Militarily, the US could take over Bahrain in about half an hour.

Might not go down too well with the neighbours. Not sure what the protesters would have made of it.

I wonder if the Saudis informed Obama before sending in the tanks.

I've been to Bahrain twice during the 90s. The whole of the N half of the island is given over to a "secret" air base used by USAF and RAF during GW I. Down town Manama was an interesting place with massive wealth juxtaposed to grinding poverty. Some of the more seedy hotels had "doors" and if you knew which the right doors were they would take you through to a "secret" night life... used by military, business and Arabs alike. The G&Ts on the lawn of the British Embassy weren't that bad either. Its a life style that is slipping away.


There is the Muharraq Airfield, which is next to the International Airport.

Muharraq is the name of the military airfield which is co-located with Bahrain International Airport. The military base is a separate fenced-off compound on the northern side of the main runway, while the airport occupies the southern side.

Other than that, using Wikimapia, I find that (outside Manama) the north is full of villages, palaces, the oil refinery, and the aluminum smelter. The Sakhir Airbase (seemingly used for airshows and auto races) is 2/3 of the way down the island, and the Isa Airbase is near the southern end. Neither is really secret, although the latter is used by the US.

Sorry Brian, Bahrain is built upside down. I meant to say the whole of the south half of the island was off limits. I have a paper copy of a satellite image somewhere. I used to hire taxis to drive around to amongst other places this:,_Bahrain

A North American Mesquite tree grew in the Garden of Eden?

My guess is that the oil fields are off limits, plus the Isa Airbase. But south of that is this:

According to the wiki article the american tree is considered one of the worst invasive secies in the world.

Interesting. There was concern for its survival in its native lands. Cooking with Mesquite charcoal became a major fad, and anyone selling grilled food had to be able to claim cooked with Mesquite on the package.

There is a lot about which to be skeptical in this story of this tree. If the tree is actually 400 yrs old, it took sprouted in Bahrain just seventy years after Francisco Coronado set out on his expedition to find some cities of gold reputed to be north of the land of the Aztecs (1540).
There is no reason to believe Coronado had a botanist in his party. There is no reason to suppose that some viable mesquite could have been transported to Bahrain in time to take root in 1611. Spain did not have active commerce with the Arab world. In fact, the reason for funding the Columbus expedition was that the Arabs were blocking trade routes from Europe to the far east.

But suppose that somehow the seed, or a cutting did get to Bahrain did take root. Then how could it be said that this is an invasive species. Four centuries in a new environment, free of attacks from its natural enemies in its native environment, and still only *one* living exemplar in all of Bahrain. That is not very invasive, IMHO.

An alternative hypothesis is that the tree is not actually a mesquite, but some other species that bares a striking resemblance to mesquite to the untrained eye. I have no idea why local people in Bahrain would have any interest in linking their island with the American South West. John Wayne movies in the local theater?

Still another alternative: The seeds, spores, or whatever were in the soil of Bahrain Island from ice age era, or before. But they were kept from germinating by the poisonous vapors of petroleum in the soil. Only quite recently has the petroleum concentration in the soil declined to the point the germination can happen. And the tree is only a few decades old, but nobody noticed it until expanding population forced people to live close to this awesome place. ;-0 Other ideas?

In the UK the conservation fashion is to remove as many invasive species as possible.

This certainly includes tree species like the sycamore, as well as many well known species like Ragwort, Rhododendron, buddlia and
japanese knotweed,

Rabbits are seen as an invasive pests in many areas. Horse chestnut is look on with suspicion. These were introduced by the Romans 2000 years ago.

Well, one tree in one desert is noproblem in my book. But in Africa and parts of the ME it is, according to the article, a widespread problem.

Personaly I am engaged as a hobby in the extinction of the invasive species "Giant Hogweed". That is a messy plant.

Does this mean the protesters might actually be very bad, and the government of the country is actually more good than it is made out to be?

Superb post. A very informative blog - looking forward to more country-specific analysis on the lines of Bahrain.

Excellent summary!

I'm totally impressed with how much excellent information you packed into a very readable post.

I look forward to additional posts with this level of historical context. Geopolitics is every bit as important as geology at this point in time.


Tuesday, May 17, 2011
Iran Coast Guard turns back second attempted flotilla to Bahrain

Iranian supporters of Shiite dissidents in Bahrain saw their second flotilla in less than a month turned back from the Persian Gulf kingdom Monday.

Been following TOD for quite some time now, you are doing a great job at a time when all I can hear on TV is how great the world is gonna be in the next fifty years, thanks to all of you for the heads up.

I had some doubts regarding the rise in oil prices in recent years. Although from the charts it's quite clear that while oil production has stagnated in the past 6-7 years, demand has gone up. What I wanted to know is what part of it is actual demand supply problem and how much of it is due to the depreciation in the value of dollar.

Is it possible that we are exaggerating when we look at dollars per barrel as evidence for PO because the FED has been printing dollars at an alarming rate and as a result increasing the cost of commodities priced in dollars. I don't know if this issue has been discussed before. Thanks again.

Peak Oil (and especially Peak Exports) and weakening currencies are not mutually exclusive.

Following are what we show for global net oil exports (GNE) for 2002 to 2010 (oil exporters with net oil exports of 100,000 bpd or more in 2005, which account for 99% plus of global net oil exports).

Note that GNE increased at about 5%/year from 2002 to 2005, and then we had flat to declining GNE. I suspect that this inflection point was quite a shock to oil importing countries, especially developed oil importing countries. At the 2002 to 2005 rate of increase in GNE, we would have been at about 59 mbpd (million barrels per day) of GNE in 2010.

Also shown are Chindia's combined net oil imports. The difference between GNE and Chindia’s imports is what I define as Available Net Oil Exports (ANE), i.e., GNE not consumed by Chindia. As you can see, ANE fell from 40.4 mbpd in 2005 to 35.1 mbpd in 2010.

Global Net Oil Exports Less Chindia’s Combined Net Oil Imports

2002: 39.1 - 3.5* = 35.6 (ANE)

2003: 41.6 - 4.0 = 37.6

2004: 44.8 - 5.1 = 39.7

2005: 45.5 - 5.1 = 40.4

2006: 45.5 - 5.5 = 40.0

2007: 44.6 - 6.1 = 38.5

2008: 44.5 - 6.4 = 38.1

2009: 42.3 - 6.9 = 35.4
2010: 42.6 – 7.5 = 35.1

*Chindia's combined net oil imports (BP + Minor EIA data, mbpd, total petroleum liquids)

Note that ANE in 2010, 35.1 mbpd, were below ANE in 2002, 35.6 mbpd. In other words, the supply of global net oil exports that were available to oil importers other than China & India in 2010 was below the supply of net oil exports available to oil importers other than China & India in 2002--and of course it was well below what was available in 2005.

A plausible estimate is that ANE will be down to between 27 to 30 mbpd by 2015.

Obviously, this analysis does not support the popular misconception that generally rising oil price are solely due to “Speculation.” It also goes along way toward explaining the IEA’s decision to release emergency oil supplies. While US crude inventories are fine, the WSJ reported that European commercial crude oil inventories are at five year lows, and I think that the IEA was quite concerned about supply versus demand problems in the fourth quarter (at current oil prices).

The problem that the developed countries are facing of course is that given a continued decline in ANE, after the release of emergency crude oil supplies, then what? Do they keep depleting emergency crude supplies?

awesome post.

Can you explain the drop in production from 2002 to 2010 with just improve fuel efficiency? It is not the whole picture but certainly it can explain some of the difference.

CAFE standards
year    cars                    light trucks
2002 	27.5 			20.7
2003 	27.5 			20.7
2004 	27.5 			20.7
2005 	27.5 			21.0
2006 	27.5 			21.6
2007 	27.5 			22.2
2008 	27.5 			22.5
2009 	27.5 			23.1
2010 	27.5 			23.5

source: National Highway Traffic Safety Administration. "Automotive Fuel Economy Program: Annual update calendar year 2003".

Note that we are talking about global net oil exports versus net oil imports into China + India (Chindia).

US oil consumption (and net oil imports) appear to have peaked in 2005, with subsequent years all showing lower oil consumption numbers, relative to 2005.

how much of it is due to the depreciation in the value of dollar.

The dollar is actually worth more against a basket of currencies now than it was the last time oil price peaked in July 2008. The US Dollar Index bottomed out at about 72 in 2008. It is currently at about 75.4

Btw, You really should post this in current Drumbeat. This is the "The Saudi Arabian Protectorate of Bahrain" thread.

Does there exist a commodity that is totally demand-inelastic? This is the one to measure the Dollar against... Maybe rice?


No such thing exist. But gold is considered stable over the long run. I read somewhere that one ounce ofgold got you a high quaility toga in the roman empire, and will get you a high quality suit today. Don't know if it is true. I never buy togas or trade with gold, and very rarely buy suits. But gold for the time beeing is increasing and I predict this will become the biggest speculation bubble in history, past, present and future, once it is over.

But this is off topic from this thread.

First response: Totally inelastic commodity is very unlikely concept. Surely the demand for any commodity depends on the size of the population. If there were no people there would surely be no demand, I believe. But the grand claims of the grand theorists of Economics never cease to amaze me.

Second, for rice in particular: The per capita demand for rice probably would be seen to decline as per capita income increases in rice eating cultures because of an acquired taste for meat. Don't know for sure. Really just a guess. Really no doubt that we are omnivores whose diet has included some animal protein for at least a million years. Probably won't change significantly in the next hundred years.

I thought the Bahrain economy depended on gas, used to power their aluminium smelters. Have I missed something?

It is true that aluminum smelting is also a large part of the Bahrain economy (second largest export after oil). They import ores from elsewhere, and export mainly to Saudi Arabia. But contrary to what that article suggests, Bahrain does not have enough natural gas. They have been in discussions with Qatar and (until recently) Iran on importing LNG.

An item about Saudi Arabia's problem with natural gas:

Pretty good article. A couple of points:

- The King usually blames Hezbollah, not Hamas for the unrest (without giving evidence), but then again, they blame so many people its hard to keep track.
- On the history section, lets not forget that the Marxist-Leninist Bahrain National Liberation Front was active in the key 1950s-1970s era and was brutally crushed especially in 1986 (interesting date). Most of the literature is in Arabic, but here's a link to more–_Bahrain

Hi there Bahraini. Thanks for you input. Hope you stick around.

Does anyone know what happened to the pearl beds of Bahrain? Was the Abu Safah shoal a pearlbed? That would explain the legal claim. I wonder how the coral reefs of the Persian/Arabian Gulf are surviving? Do any of them still exist after all the various oil spills, particularly Gulf Wars I and II?

Pearling seems to be more of a relic now. I can't find anything about pearls up as far as Abu Safah. In any case, the local pearl industry collapsed earlier due to low world prices.

I mapped the coral reefs of the Arabian Gulf in the 1990s, and snorkelled/dived on them.

At least after GW1 the reefs were in reasonable shape, with decent fish life. However I do know that coral bleaching is a problem now. We made a trip to Jizan in the Red Sea for instance, and noted widespread coral bleaching then.