118SHIFTING GEARS IN SAUDI ARABIATime and again, King Abdullah’s ministers and energy advisers
brought up the necessity of reform. The ruler did not want to hear it. “The
king would look at it and might say, ‘Don’t anger the people with new-
fangled economic theories. Why raise prices? Aren’t we a rich country?
Give the people what they want!’ ” the technocrat said.^4 “He thinks the
ministers are trying to gain influence and channel the benefits to
themselves.” Unfortunately, the technocrats needed the king’s signature
to raise energy prices. There was no way the Shura Council would
approve such a confrontational rearrangement of the terms of the social
contract without the king’s approval.
Abdullah was perhaps more cautious given the failure of the two pre-
vious attempts to raise electricity prices in the kingdom, in 1985 and
- Both times the leadership backed down amid public outcries and
reversed the increases for households. Abdullah had authorized one price
hike during his rule, in 2012, but that, too, was restricted to commercial
customers. Antagonizing Saudi households looked too politically risky.^5
Since the residential sector was the largest, consuming nearly half of all
power generated, the inability to raise prices on Saudi homes became a
major impediment to demand management.
The king wasn’t the only point of opposition. Wealthy Saudis had
raised hell over the 1999 increase, making the politically effective but
false argument that the new pricing amounted to an attack on the poor.
In reality the pricing scheme— which would have kept rates unchanged
for modest levels of consumption— was aimed at profligate consumers.
Saudis in the largest homes consume more than 10,000 kWh per month,
around what the average American household consumes in a year and
more than double the average yearly consumption in Britain.
THE REGULATORThe architect of the failed subsidy reform of 1999 was Abdullah al- Shehri,
the Saudi electricity regulator and a member of the Shura Council. Al-
Shehri was a classic Saudi “meritocrat” who leveraged education to climb