To the last drop

The cover story of the international edition of the Economist, which is headlined “To the last drop”, looks at “Saudi Arabia’s strategy to survive the end of oil”. In a leader article, the Economist says the “oil industry may decline, but it won’t go quietly”. It notes: “Many oil firms still say that production will creep up over the next decade, to slightly above today’s level of 95m barrels per day (b/d), and then plateau. But output will need to drop to 45m-70m b/d by 2050 if the world is to stop temperatures rising more than 1.5-2C above their pre-industrial level.” 

Common sense suggests that “the highest-cost and dirtiest oil firms will tend to go out of business first”, says the Economist. “If so, an industry that has become gargantuan over 160 years will shrink to a core of producers that fulfil the world’s residual demand at the lowest financial and environmental cost.” 

This fits with the strategy and pitch to investors from the Saudi Arabian state oil company Aramco, says the article. “The firm spends just $3 to lift a barrel from beneath the desert, less than almost anyone else. The emissions from extracting Saudi oil are rock-bottom, too. Saudi Arabia has promised investors they will get steady dividends whatever the weather. Implicit in the kingdom’s approach is that, if and when oil demand falters, Aramco will be the producer of last resort.”

Of course, that may all be at lower prices.  It is in Saudi Arabia's interest to persuade the world to reduce CO₂ emissions, because it will be the most expensive and the most polluting producers which close down first, so that falling demand will be offset by falling supply, just not Saudi Arabia's.


(Source: Carbon Brief )

Saudi Arabia Crude oil production
Source: Macrotrends