OPEC oil CRISIS
how related to exxon knew prius?
FORK ZERO SEE UKRAINE WATERSHED
an 4 22 hartmann
...Within minutes they’ll be croaking about that time back in 2008 when Maxine Waters — a Black woman with power and therefore the most terrifying thing Republicans can imagine — threatened oil industry CEOs who were giving Congress deliberately deceptive and incomplete answers with “socializing… taking over and the government running all your companies.”
Immediately, Fox “News” was all over it, as were dozens of rightwing sites.
In that, they’ve completely ignored (or never knew) the long American history of taking over industries during a time of national crisis.
And, as we re-enter a cold war with Russia and face unprecedented human death and property damage from climate change, it’s hard to claim we’re not in the midst of a national crisis that has fossil fuels at its foundation.
We’re at least 40 years behind where we should be in dealing with the fossil fuel/global warming crisis because giant oil companies have run massive disinformation campaigns while funding the political careers of hacks in Congress willing to lie to the public for them.
President Jimmy Carter, for example, declared a national crisis in 1979 and proposed legislation to create “this nation's first solar bank, which will help us achieve the crucial goal of 20 percent of our energy coming from solar power by the year 2000.”
FDR had sold bonds to the public to fund a government corporation that would develop synthetic rubber for fighter jet tires back in the day, and Carter wanted to do the same to end our dependence on fossil fuels:
'Just as a similar synthetic rubber corporation helped us win World War II,' Carter said, 'so will we mobilize American determination and ability to win the energy war.'
In that same July 15, 1979 speech, he proposed the government issue bonds that would fund:
[T]he creation of an energy security corporation to lead this effort to replace 2-1/2 million barrels of imported oil per day by 1990. The corporation will issue up to $5 billion in energy bonds, andI especially want them to be in small denominations so that average Americans can invest directly in America’s energy security.
It all came crashing down 42 years ago this coming January when the fossil fuel industry’s candidate, Ronald Reagan, replaced Carter, killed the solar bank and the bond program, and even took Carter’s solar panels off the roof of the White House.
If ever there was an industry that merited nationalization, the fossil fuel industry is it. They manipulate prices to both enhance profits and swing elections, bribe their way through the halls of Congress, and pump out a steady stream of lies about climate change. All while pouring hundreds of billions into the money bins of their morbidly rich CEOs, shareholders, and senior executives.
America has a long and proud history of taking on companies that put profits over the public good during a time of crisis. And we could acquire controlling interest of the nation’s three largest fossil fuel players — ExxonMobil, Chevron, and ConocoPhillips — for, according to Robert Pollin writing atThe American Prospect, fewer than a half-trillion dollars.
For less than a quarter of the cost of Trump’s billionaire tax cuts we could rapidly move a long way toward saving our nation and the world from climate destruction. But is it even possible? Turns out that history says an emphatic, “Yes!”
guk 719
Biggest compliment yet': Greta Thunberg welcomes oil chief's 'greatest threat' label
Activists say comments by Opec head prove world opinion is turning against fossil fuels
Jonathan Watts
@jonathanwatts
Fri 5 Jul 2019 11.13 EDT Last modified on Fri 5 Jul 2019 12.55 EDT
Greta Thunberg and other climate activists have said it is a badge of honour that the head of the world’s most powerful oil cartel believes their campaign may be the “greatest threat” to the fossil fuel industry.
The criticism of striking students by the trillion-dollar Organization of the Petroleum Exporting Countries (Opec) highlights the growing reputational concerns of oil companies as public protests intensify along with extreme weather.
Mohammed Barkindo, the secretary general of Opec, said there was a growing mass mobilisation of world opinion against oil, which was “beginning to … dictate policies and corporate decisions, including investment in the industry”.
He said the pressure was also being felt within the families of Opec officials because their own children “are asking us about their future because … they see their peers on the streets campaigning against this industry”.
Although he accused the campaigners of misleading people with unscientific arguments, the comments were welcomed by student and divestment campaigners as a sign the oil industry is worried it may be losing the battle for public opinion.
“Thank you! Our biggest compliment yet!” tweeted Thunberg, the 16-year-old Swedish initiator of the school student strike movement, which continues every Friday.
“Brilliant! Proof that we are having an impact and be sure that we will not stop,” said Holly Gillibrand, who was among the first students in the UK to join the global climate strikes.
Opec – which is made up of 14 countries with 80% of the world’s proven oil reserves – is planning to expand production, which is undermining efforts to slow global heating. The backlash is not just from students, Extinction Rebellion activists and climate scientists.
Insurance companies– which have the most to lose from storms, floods, fires and other extreme weather – are increasingly pulling investment from fossil fuel assets. The governor of the Bank of England has warned of growing climate risks to the financial sector.
Earlier this week, the London Stock Exchange reclassified oil and gas companies under a non-renewable energy category that effectively puts them on the wrong side of climate crisis.
Parliaments in three countries – the UK, Canada, France – have declared a climate emergency, as have dozens of municipalities. They include most recently a first major US city, New York, which has previously filed a lawsuit against the five biggest private oil companies.
The Organisation for Economic Co-operation and Development (OECD), a group of wealthy countries, has also taken a more strident tone in calling for government to put a higher price on oil, gas and coal, to end subsidies and to rethink fossil fuel investment.
“Our policies have to be made with our children’s future in mind … short-term decision-making can lock countries into expensive mistakes in financing and developing infrastructure … that will be neither necessary nor profitable in a low-emissions world, they will be stranded assets,” said the OECD secretary general Angel Gurría.
Scientists are also backing a phaseout of fossil fuels as the signs of climate disruption grow more evident.
In the past two weeks, temperature records have been broken in France, Alaska and Cuba; there have been wildfires in Germany, Spain, Sweden and Anchorage; Chennai is among more than a dozen Indian cities running out of water; Russia is experiencing historic floods; Mexico experienced freak hailstorm that left Guadalajara streets more than a metre deep in ice; while the Chinese meteorological agency said records had been broken at 40 weather stations.
While Opec continues to insist oil is not responsible for climate chaos, campaigners feel they are finally winning the argument.
Bill McKibben, the founder of 350.org, which has led a series of divestment and anti-pipeline campaigns in recent decades, said the fossil fuel companies were finally losing their social licence.
“By this point, most people realise that the oil companies lied for decades about global warming – they are this generation’s version of the tobacco companies. And it’s clearly affecting their ability to raise capital, to recruit employees and so on. People set out to cost them their social licence, and it’s working. Whether it’s working fast enough – that’s another question.”
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12/18
https://www.alternet.org/world/g20-you-can-smell-tear-gas-streets-oil-industry-squabbles
Last week, two important meetings took place—one, in Buenos Aires, Argentina, of the Group of 20 (G20) nations, and two, in Vienna, Austria, of the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers. The two meetings did not produce any resolution to the major economic challenges in the world. But they did soothe the nerves of financial markets. At the G20, the United States and China dialed down the temperature over trade but did not settle the long-term grievances each side has of the other. At the OPEC+ meeting,Russia and Saudi Arabia agreed to cut production and raise the price of oil despite pressure from the United States and others to keep oil prices low.
At neither meeting did the major powers find solutions to their problems. They are all caught in mazes from which there are no easy exits. But what calmed the world of finance was that the geopolitical tension between the major powers seemed to have lessened. What impact this reduced tension has for the world’s people, however, is not clear.
Trade
The “trade war” engineered by U.S. President Donald Trump against China began with tariffs and ended with a damp squib. At the G20, Trump told China’s Xi Jinping that the U.S. tariffs that would have gone up to 25 percent on $200 billion worth of Chinese imports will no longer be applied. China, for its part, said that it would import more goods from the United States. No specifics were announced, which is why the tensions over even this agreement spilled over onto Twitter (courtesy of Trump’s hyperbole) and into more sober statements from the Chinese government.
The more fundamental questions of intellectual property and currency valuation remain unsolved. The United States accuses China of theft of the intellectual property of U.S. firms, but the Chinese counter—as they have in the arbitration panels of the World Trade Organization—that they merely draw from technology transferred as a result of commercial agreements freely made by firms eager to use Chinese labor. It will be impossible to resolve these two problems, since neither side sees the issues in the same way. Their worldviews regarding intellectual property and currency valuation are utterly alien to each other. If the United States believes that China is unfairly valuing its currency, the Chinese point to the unfair advantage that the dollar has over every currency in the world since it is used as one of the major global currencies for facilitation of trade and for the storage of wealth.
Oil
Russia’s Vladimir Putin and Saudi Arabia’s Mohammed bin Salman offered each other a friendly hand slap at the G20. Everyone seemed happy to see Mohammed bin Salman, despite the clear evidence of his role in the murder of the Saudi journalist Jamal Khashoggi.
But the real agreements between Russia and Saudi Arabia were not directly made in Buenos Aires. They were made more quietly in Vienna at the OPEC+ meeting. At Buenos Aires, Putin said, “yes, we have an agreement to prolong our accords.” He was referring to the deal between Russia and Saudi Arabia since 2016 to manage oil prices to their mutual benefit. The deal notwithstanding, Saudi Arabia has continued to pump itself into trouble—flooding the market with oil, driving prices down and depleting its own treasury as a result. Now Russia is eager to see oil production cuts and oil prices rise. Trapped by sanctions and by low oil prices, Russia has plunged into internal economic difficulties. The real issue was how much each country inside and outside OPEC should pump. That is why Putin said, “there is no final deal on volumes.” In fact, even after the deal has begun to emerge, there is no final deal. Saudi Arabia has not been a good partner here. It has pumped outside the numbers over the course of the past few years, largely under pressure from the United States.
There are two reasons why the United States wants low oil prices, despite the fact that the U.S. is now one of the world’s largest oil producers. First, low oil prices mean an immediate subsidy for the U.S. consumer and for U.S. manufacturing firms. There is no economic incentive to move to renewable energy when oil prices are low. Second, low oil prices hit adversaries of the U.S.-led world order that—as it happens—are major oil producers. The list includes Iran and Venezuela, two countries that have been sent into internal turmoil as oil prices have plummeted. But the United States has sufficient tools to hurt these countries without forcing oil prices down. For instance, even if oil prices rise, U.S. sanctions can be harsh enough to cut Iranian and Venezuelan oil out of the market. The lack of Iranian and Venezuelan oil operates as an effective cut in oil production, which will itself raise oil prices.
Saudi Arabia has already begun to pressure Libya and Nigeria to reduce oil exports, although both these African countries are reliant upon oil revenues. Saudi Arabia has succeeded in pushing Qatar out of OPEC on political grounds, but since Qatar only produces 2 percent of OPEC’s crude oil the departure, Qatexit is not meaningful. Inside the world of oil, there are those who are always pushed aside so that others can benefit.
Oil Buyers’ Club
In 2005, Indian Petroleum Minister Mani Shankar Aiyar assembled his counterparts from across Asia to start a discussion on a buyers’ club. The precise issue on the table was the “Asian Premium” charged by Saudi Arabia and other oil producers to Asian countries. The “Asian Premium” is substantial—close to $10 billion per year for the Asian consumers of Gulf oil. It is what bothered Aiyar and the other oil ministers. But they did not come to any agreement.
Asia is the largest importer of oil in the world. India and China, with the United States, are the three largest importers of oil. Right behind them are Japan and South Korea. If you add the oil imports by China, India, Japan and South Korea, then these four Asian countries import a full third of world oil imports. They are both reliant upon the oil exporters, but they also have power as a bloc of consumers.
In 2012, China’s premier Wen Jiabao said that there needed to be a counter-cartel to OPEC that should include Europe and the United States. Interest in his proposal was minimal. Oil had reached $100 per barrel. It stifled economic growth and did not move any of these industrial giants toward non-carbon renewable fuel.
The issue of a buyers’ cartel came back on the table in April this year at the International Energy Forum. The chairman of Indian Oil Corporation (IOC) Sanjiv Singh and the chairman of China National Petroleum Corporation (CNPC) Wang Yilin then met in Beijing to go deeper into the possibility. By June, China and India—which import 17 percent of the world’s oil—had begun to openly talk about a buyers’ cartel to help create “stable and moderate” oil prices, as India’s current Petroleum Minister Dharmendra Pradhan put it.
China and India have been upset by the U.S. sanctions on Iran. They have felt that these produce an adverse impact on Asian economies. They are joined by Japan and the European Union, who are also not pleased with these sanctions. It is now being said that if China and India establish a buyers’ club, Japan and Europe will join in.
Smellof Tear Gas
From the air-conditioned rooms of the oligarchy, we go to the tear gas of the streets.
Protests in Paris, France, have been the most violent in decades. The yellow vests (giletsjaunes) appeared as if out of nowhere to demonstrate against the French government’s hike in fuel prices. They make the case that the violence of the economy has destroyed their ability to function. Any violence on the streets is a reflection of the violence that structures their lives. The streets of Paris smelled of tear gas.
In Buenos Aires, Argentina, labor unions and political groups of one kind or another planned massive protests against the G20. They wanted to scream at their leaders, who have been deaf to their pleas. But the Argentinian government held the G20 meeting at the Costa Salguero convention center, on the magnificent Rio de La Plata. Police cordoned off the area, while the coast guard boats sailed up and down the river. No one could get near the site. None of the leaders were interrupted by the chants.
There were no protests in Vienna. The OPEC building was nonetheless surrounded by the elite WEGA units. No one knew that the meeting was being held. There is so little democracy in the institutions that structure our lives.
This article was produced by Globetrotter, a project of the Independent Media Institute.
==
http://ecowatch.com/2016/04/28/end-of-the-old-oil-order/
Sunday, April 17 was the designated moment. The world’s leading oil producers were expected to bring fresh discipline to the chaotic petroleum market and spark a return to high prices. Meeting in Doha, the glittering capital of petroleum-rich Qatar, the oil ministers of the Organization of the Petroleum Exporting Countries (OPEC), along with such key non-OPEC producers as Russia and Mexico, were scheduled to ratify a draft agreement obliging them to freeze their oil output at current levels. In anticipation of such a deal, oil prices had begun to creep inexorably upward, from $30 per barrel in mid-January to $43 on the eve of the gathering. But far from restoring the old oil order, the meeting ended in discord, driving prices down again and revealing deep cracks in the ranks of global energy producers.Whatever the fate of the Saudi royals, if predictions of a future peak in world oil demand prove accurate, the debacle in Doha will be seen as marking the beginning of the end of the old oil order.
It is hard to overstate the significance of the Doha debacle. At the very least, it will perpetuate the low oil prices that have plagued the industry for the past two years, forcing smaller firms into bankruptcy and erasing hundreds of billions of dollars of investments in new production capacity. It may also have obliterated any future prospects for cooperation between OPEC and non-OPEC producers in regulating the market. Most of all, however, it demonstrated that the petroleum-fueled world we’ve known these last decades—with oil demand always thrusting ahead of supply, ensuring steady profits for all major producers—is no more. Replacing it is an anemic, possibly even declining, demand for oil that is likely to force suppliers to fight one another for ever-diminishing market shares
The Road to Doha
Before the Doha gathering, the leaders of the major producing countries expressed confidence that a production freeze would finally halt the devastating slump in oil prices that began in mid-2014. Most of them are heavily dependent on petroleum exports to finance their governments and keep restiveness among their populaces at bay. Both Russia and Venezuela, for instance, rely on energy exports for approximately 50 percent of government income, while for Nigeria it’s more like 75 percent. So the plunge in prices had already cut deep into government spending around the world, causing civil unrest and even in some cases political turmoil.
No one expected the April 17 meeting to result in an immediate, dramatic price upturn, but everyone hoped that it would lay the foundation for a steady rise in the coming months. The leaders of these countries were well aware of one thing: to achieve such progress, unity was crucial. Otherwise they were not likely to overcome the various factors that had caused the price collapsein the first place. Some of these were structural and embedded deep in the way the industry had been organized; some were the product of their own feckless responses to the crisis.
On the structural side, global demand for energy had, in recent years, ceased to rise quickly enough to soak up all the crude oil pouring onto the market, thanks in part to new supplies from Iraq and especially from the expanding shale fields of the United States. This oversupply triggered the initial 2014 price drop when Brent crude—the international benchmark blend — went from a high of $115 on June 19 to $77 on November 26, the day before a fateful OPEC meeting in Vienna. The next day, OPEC members, led by Saudi Arabia, failed to agree on either production cuts or a freeze, and the price of oil went into freefall.
The failure of that November meeting has been widely attributed to the Saudis’ desire to kill off new output elsewhere—especially shale production in the U.S.—and to restore their historic dominance of the global oil market. Many analysts were also convinced that Riyadh was seeking to punish regional rivals Iran and Russia for their support of the Assad regime in Syria (which the Saudis seek to topple).
The rejection, in other words, was meant to fulfill two tasks at the same time: blunt or wipe out the challenge posed by North American shale producers and undermine two economically shaky energy powers that opposed Saudi goals in the Middle East by depriving them of much needed oil revenues. Because Saudi Arabia could produce oil so much more cheaply than other countries—for as little as $3 per barrel—and because it could draw upon hundreds of billions of dollars in sovereign wealth funds to meet any budget shortfalls of its own, its leaders believed it more capable of weathering any price downturn than its rivals. Today, however, that rosy prediction is looking grimmer as the Saudi royals begin to feel the pinch of low oil prices, and find themselves cutting back on the benefits they had been passing on to an ever-growing, potentially restive population while still financing a costly, inconclusive, and increasingly disastrous war in Yemen.
Many energy analysts became convinced that Doha would prove the decisive moment when Riyadh would finally be amenable to a production freeze. Just days before the conference, participants expressed growing confidence that such a plan would indeed be adopted. After all, preliminary negotiations between Russia, Venezuela, Qatar, and Saudi Arabia had produced a draft document that most participants assumed was essentially ready for signature. The only sticking point: the nature of Iran’s participation.
The Iranians were, in fact, agreeable to such a freeze, but only after they were allowed to raise their relatively modest daily output to levels achieved in 2012 before the West imposed sanctions in an effort to force Tehran to agree to dismantle its nuclear enrichment program. Now that those sanctions were, in fact, being lifted as a result of the recently concluded nuclear deal, Tehran was determined to restore the status quo ante. On this, the Saudis balked, having no wish to see their arch-rival obtain added oil revenues. Still, most observers assumed that, in the end, Riyadh would agree to a formula allowing Iran some increase before a freeze. “There are positive indications an agreement will be reached during this meeting… an initial agreement on freezing production,” said Nawal Al-Fuzaia, Kuwait’s OPEC representative, echoing the views of other Doha participants.
But then something happened. According to people familiar with the sequence of events, Saudi Arabia’s Deputy Crown Prince and key oil strategist, Mohammed bin Salman, called the Saudi delegation in Doha at 3:00 a.m. on April 17th and instructed them to spurn a deal that provided leeway of any sort for Iran. When the Iranians—who chose not to attend the meeting—signaled that they had no intention of freezing their output to satisfy their rivals, the Saudis rejected the draft agreement it had helped negotiate and the assembly ended in disarray.
Geopolitics to the Fore
Most analysts have since suggested that the Saudi royals simply considered punishing Iran more important than lowering oil prices. No matter the cost to them, in other words, they could not bring themselves to help Iran pursue its geopolitical objectives, including giving yet more support to Shiite forces in Iraq, Syria, Yemen, and Lebanon. Already feeling pressured by Tehran and ever less confident of Washington’s support, they were ready to use any means available to weaken the Iranians, whatever the danger to themselves.
“The failure to reach an agreement in Doha is a reminder that Saudi Arabia is in no mood to do Iran any favors right now and that their ongoing geopolitical conflict cannot be discounted as an element of the current Saudi oil policy,” said Jason Bordoff of the Center on Global Energy Policy at Columbia University.
Many analysts also pointed to the rising influence of Deputy Crown Prince Mohammed bin Salman, entrusted with near-total control of the economy and the military by his aging father, King Salman. As Minister of Defense, the prince has spearheaded the Saudi drive to counter the Iranians in a regional struggle for dominance. Most significantly, he is the main force behind Saudi Arabia’s ongoing intervention in Yemen, aimed at defeating the Houthi rebels, a largely Shia group with loose ties to Iran, and restoring deposed former president Abd Rabbuh Mansur Hadi. After a year of relentless U.S.-backed airstrikes (including the use of cluster bombs), the Saudi intervention has, in fact, failed to achieve its intended objectives, though it has produced thousands of civilian casualties, provoking fierce condemnation from U.N. officials, and created space for the rise of al-Qaeda in the Arabian Peninsula. Nevertheless, the prince seems determined to keep the conflict going and to counter Iranian influence across the region.
For Prince Mohammed, the oil market has evidently become just another arena for this ongoing struggle. “Under his guidance,” the Financial Timesnoted in April, “Saudi Arabia’s oil policy appears to be less driven by the price of crude than global politics, particularly Riyadh’s bitter rivalry with post-sanctions Tehran.” This seems to have been the backstory for Riyadh’s last-minute decision to scuttle the talks in Doha. On April 16, for instance, Prince Mohammed couldn’t have been blunter to Bloomberg, even if he didn’t mention the Iranians by name: “If all major producers don’t freeze production, we will not freeze production.”
With the proposed agreement in tatters, Saudi Arabia is now expected to boost its own output, ensuring that prices will remain bargain-basement low and so deprive Iran of any windfall from its expected increase in exports. The kingdom, Prince Mohammed told Bloomberg, was prepared to immediately raise production from its current 10.2 million barrels per day to 11.5 million barrels and could add another million barrels “if we wanted to” in the next six to nine months. With Iranian and Iraqi oil heading for market in larger quantities, that’s the definition of oversupply. It would certainly ensure Saudi Arabia’s continued dominance of the market, but it might also wound the kingdom in a major way, if not fatally.
A New Global Reality
No doubt geopolitics played a significant role in the Saudi decision, but that’s hardly the whole story. Overshadowing discussions about a possible production freeze was a new fact of life for the oil industry: the past would be no predictor of the future when it came to global oil demand. Whatever the Saudis think of the Iranians or vice versa, their industry is being fundamentally transformed, altering relationships among the major producers and eroding their inclination to cooperate.
Until very recently, it was assumed that the demand for oil would continue to expand indefinitely, creating space for multiple producers to enter the market, and for ones already in it to increase their output. Even when supply outran demand and drove prices down, as has periodically occurred, producers could always take solace in the knowledge that, as in the past, demand would eventually rebound, jacking prices up again. Under such circumstances and at such a moment, it was just good sense for individual producers to cooperate in lowering output, knowing that everyone would benefit sooner or later from the inevitable price increase.
But what happens if confidence in the eventual resurgence of demand begins to wither? Then the incentives to cooperate begin to evaporate, too, and it’s every producer for itself in a mad scramble to protect market share. This new reality—a world in which “peak oil demand,” rather than “peak oil,” will shape the consciousness of major players—s what the Doha catastrophe foreshadowed.
At the beginning of this century, many energy analysts were convinced that we were at the edge of the arrival of “peak oil”; a peak, that is, in the output of petroleum in which planetary reserves would be exhausted long before the demand for oil disappeared, triggering a global economic crisis. As a result of advances in drilling technology, however, the supply of oil has continued to grow, while demand has unexpectedly begun to stall. This can be traced both to slowing economic growth globally and to an accelerating “green revolution” in which the planet will be transitioning to non-carbon fuel sources. With most nations now committed to measures aimed at reducing emissions of greenhouse gases under the just-signed Paris climate accord, the demand for oil is likely to experience significant declines in the years ahead. In other words, global oil demand will peak long before supplies begin to run low, creating a monumental challenge for the oil-producing countries.
This is no theoretical construct. It’s reality itself. Net consumption of oil in the advanced industrialized nations has already dropped from 50 million barrels per day in 2005 to 45 million barrels in 2014. Further declines are in store as strict fuel efficiency standards for the production of new vehicles and other climate-related measures take effect, the price of solar and wind power continues to fall, and other alternative energy sources come on line. While the demand for oil does continue to rise in the developing world, even there it’s not climbing at rates previously taken for granted. With such countries also beginning to impose tougher constraints on carbon emissions, global consumption is expected to reach a peak and begin an inexorable decline.According to experts Thijs Van de Graaf and Aviel Verbruggen, overall world peak demand could be reached as early as 2020.
In such a world, high-cost oil producers will be driven out of the market and the advantage—such as it is—will lie with the lowest-cost ones. Countries that depend on petroleum exports for a large share of their revenues will come under increasing pressure to move away from excessive reliance on oil. This may have been another consideration in the Saudi decision at Doha. In the months leading up to the April meeting, senior Saudi officials dropped hints that they were beginning to plan for a post-petroleum era and that Deputy Crown Prince bin Salman would play a key role in overseeing the transition.
On April 1, the prince himself indicated that steps were underway to begin this process. As part of the effort, he announced, he was planning an initial public offering of shares in state-owned Saudi Aramco, the world’s number one oil producer, and would transfer the proceeds, an estimated $2 trillion, to its Public Investment Fund (PIF). “IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince pointed out. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”
For a country that more than any other has rested its claim to wealth and power on the production and sale of petroleum, this is a revolutionary statement. If Saudi Arabia says it is ready to begin a move away from reliance on petroleum, we are indeed entering a new world in which, among other things, the titans of oil production will no longer hold sway over our lives as they have in the past.
This, in fact, appears to be the outlook adopted by Prince Mohammed in the wake of the Doha debacle. In announcing the kingdom’s new economic blueprint on April 25, he vowed to liberate the country from its “addiction” to oil.” This will not, of course, be easy to achieve, given the kingdom’s heavy reliance on oil revenues and lack of plausible alternatives. The 30-year-old prince could also face opposition from within the royal family to his audacious moves (as well as his blundering ones in Yemen and possibly elsewhere). Whatever the fate of the Saudi royals, however, if predictions of a future peak in world oil demand prove accurate, the debacle in Doha will be seen as marking the beginning of the end of the old oil order.
Michael T. Klare, aTomDispatch *regular*, is a professor of peace and world security studies at Hampshire College and the author, most recently, ofThe Race for What’s Left. A documentary movie version of his bookBlood and Oilis available from the Media Education Foundation. Follow him on Twitter at @mklare1.