12 ms·

My guess is they will reduce those holdings - they have a large budget deficit they need to cover, before it bankrupts them. Defense and fuel subsidies make a l

by dharma1 10y ago

My guess is they will reduce those holdings - they have a large budget deficit they need to cover, before it bankrupts them. Defense and fuel subsidies make a large part of that deficit. For a country of 30 million people with a lot of sun, I find it crazy they produce most of their electricity with oil and are the 6th largest oil consumer in the world. Much of that is simply wasted through inefficient power plants and AC. Would do them well to use their foreign reserves (while they still have them) to cover their energy needs by building solar.

brianwawok 10y ago
Oil is $1 a barrel for them. I bet solar is 40x the price per MW.
- chillacy 10y ago
  But if it would have sold for $50 a barrel, that's $49 in lost revenue (ignoring supply/demand curves shifting). They could have used that $49/barrel to buy some solar panels and (maybe) come out energy even in however many years.
  - beagle3 10y ago
    The $50 includes transportation, storage and other costs. It's more like "use it for $1 or earn $20". Also, they are selling as much they can right now; so it's not like they are leaving money on the table.
  - brianwawok 10y ago
    But they can't sell anymore! Supply currently exceeding demand. If they put 1 million more barrels of oil a day on the public market, prices go down by Y, making the net gain of that 1 million barrels low (maybe negative, but if not at least close). So if market has demand for you to sell 10 million barrels of oil a day, but you have capacity to pump 20 million... you found a way to basically have "free" energy by burning some oil. Yes it shortens the length of your oil reserve and yes it kills the environment, but in the short term it is the best option. Most people/countries make decisions in the short term. So to me it is very logical that the middle east burns oil for electricity, nowhere near a "duh why not use solar" moment.
    - chillacy 10y ago
      I didn't want to mention how price points would shift due to increased supply, but in doing so committed an oversimplification, so you are more correct. I suspect that they're making the right choice since I'm just some dude on the internet and they've run the numbers. I didn't mean for my comment to sound like I had the answers. There are many unsolved challenges for solar in deserts as well: http://www.nomaddesertsolar.com/the-desert-solar-challenge.html http://www.nomaddesertsolar.com/the-desert-solar-challenge.h...
    - dharma1 10y ago
      Not only they burn it in very large quantities, but they subsidise burning it to a degree that ends up as a hole in their budget, eroding foreign currency reserves they've built up previously. And there are huge wastages - old power plants, inefficient AC, oversized cars etc They are starting to wake up to building solar now though: http://www.theatlantic.com/magazine/archive/2015/07/saudis-solar-energy/395315/ http://www.theatlantic.com/magazine/archive/2015/07/saudis-s...

by dharma1 10y ago

brianwawok 10y ago

Oil is $1 a barrel for them. I bet solar is 40x the price per MW.

chillacy 10y ago
But if it would have sold for $50 a barrel, that's $49 in lost revenue (ignoring supply/demand curves shifting). They could have used that $49/barrel to buy some solar panels and (maybe) come out energy even in however many years.
- beagle3 10y ago
  The $50 includes transportation, storage and other costs. It's more like "use it for $1 or earn $20". Also, they are selling as much they can right now; so it's not like they are leaving money on the table.
- brianwawok 10y ago
  But they can't sell anymore! Supply currently exceeding demand. If they put 1 million more barrels of oil a day on the public market, prices go down by Y, making the net gain of that 1 million barrels low (maybe negative, but if not at least close). So if market has demand for you to sell 10 million barrels of oil a day, but you have capacity to pump 20 million... you found a way to basically have "free" energy by burning some oil. Yes it shortens the length of your oil reserve and yes it kills the environment, but in the short term it is the best option. Most people/countries make decisions in the short term. So to me it is very logical that the middle east burns oil for electricity, nowhere near a "duh why not use solar" moment.
  - chillacy 10y ago
    I didn't want to mention how price points would shift due to increased supply, but in doing so committed an oversimplification, so you are more correct. I suspect that they're making the right choice since I'm just some dude on the internet and they've run the numbers. I didn't mean for my comment to sound like I had the answers. There are many unsolved challenges for solar in deserts as well: http://www.nomaddesertsolar.com/the-desert-solar-challenge.html http://www.nomaddesertsolar.com/the-desert-solar-challenge.h...
  - dharma1 10y ago
    Not only they burn it in very large quantities, but they subsidise burning it to a degree that ends up as a hole in their budget, eroding foreign currency reserves they've built up previously. And there are huge wastages - old power plants, inefficient AC, oversized cars etc They are starting to wake up to building solar now though: http://www.theatlantic.com/magazine/archive/2015/07/saudis-solar-energy/395315/ http://www.theatlantic.com/magazine/archive/2015/07/saudis-s...