As Saudi Arabia builds infrastructure, less oil for world

There has been rising concern that countries like Mexico which export vast quantities of oil will begin to use more crude for internal needs like gasoline and manufacturing.

Now Saudi Arabia can be added to that list. According to The Wall Street Journal, "in the works are new seaports, an extended railroad system, a series of new industrial cities and a score of refineries, power stations and smelters." All of that building means that more oil will stay inside the Arab nation. For every 100 barrels of oil produced by Saudi Arabia, 22 are used there. That is up from 16 barrels just seven years ago.

This need for oil to build local economies accompanies a growing need for oil in large developing countries such as China. It is unlikely that this demand will drop any time over the next few years. Alternative energy sources are just not developed far enough.

A number of arguments have been made that oil is trading around $90 a barrel because of market speculation by investors like hedge funds. But the truth is more basic. Less oil will be coming from exporters and the need at importers is spiking up.

Who says $100 oil in not part of the future?

Douglas A. McIntyre is an editor at 247wallst.com.