about 1 month ago • 2 mins
What’s going on here?
Saudi Arabia’s state-controlled oil titan Aramco read the room, deciding against plans to produce more oil while the world is in a kumbaya moment.
What does this mean?
Aramco already cranks out 12 million barrels of oil a day, making it the world’s biggest exporter of black gold. Trillion-dollar companies don’t tend to take it easy, though, and Aramco’s already secured funding to churn out another million barrels a day by 2027. Problem is, there might not be anyone to sell to. Global economies have been pulled down by inflation, meaning major industries that usually guzzle oil are on something of a hunger fast. What’s more, governments are pushing firms toward more sustainable energy sources. That’s why OPEC – the group of the world’s biggest oil-exporting nations – has been tinkering with supply to match faltering demand, an effort to keep prices steady. So unfortunately for Aramco, this isn’t the time to throw more barrels into the already stuffed oil market. And if the green transition keeps its pace, that time may never come at all.
Why should I care?
For markets: Saving the planet is pricey.
Governments and companies around the world aren’t putting enough money where their mouths are, according to BloombergNEF. While nearly $2 trillion was invested into the green transition last year, some 17% more than the year before, that’s pennies compared to the amount needed to pull off net zero by 2030. In fact, the research organization believes sustainable-minded spending must double from here on out in order to hit that goal.
Zooming in: The prayer circle is broken.
Not every company is ready to bid goodbye to the heady days of oil fumes and long, boozy expensed client lunches, though. Activist investors have been pushing ExxonMobil to lower its carbon emissions, but that well-intentioned idea doesn’t exactly jibe with the oil and gas giant’s business plan. So, Exxon filed a lawsuit. Let’s just hope the firm’s kitchens are stocked with paper straws, at least.
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