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Well, yes and no. This is plausibly a move which could be performed even in a world where oil is expected to be the only viable energy source. But on the other
by marvin 9y ago
Well, yes and no. This is plausibly a move which could be performed even in a world where oil is expected to be the only viable energy source.
But on the other hand, if you wanted to divest from oil with the expectation that oil will become a non-essential resource, you wouldn't go around proclaiming it loudly. I had the same thought when I first heard the announcement; this is going to be interpreted as more than a diversification move, and I'm not certain that it _is_ purely a diversification move.
Saudi Arabia is doing the same thing by listing Saudi Aramco on the stock exchange. If oil will eventually become a (relatively) niche resource, the market value derived from non-extracted resources will tank, and divesting needs to happen now, before everyone realizes what's going on. To do this without triggering the very thing you are hedging against, you need to have plausible deniability, which Norway does.
- SomeStupidPoint 9y agoThe question that you're circling, but can't seem to put your finger on is "if they weren't concerned with oil's future, why would they diversify?" Historically, oil has gone gangbusters. I doubt any of the sovereign wealth funds lost money buying oil stocks. Yet, within a decade, we've seen a few of them announce that they're going to diversify. Ostensibly, this is a move to stabilize their long-term value against market fluctuations, but given the criticality of energy and how well historically these companies have done, it seems more likely that they're worried about a major market shift on the 30-50 year horizon and are looking to reposition themselves ahead of when the market itself moves. So to me, it looks like major oil producers are preparing to leave oil, when viewed through a generational lens -- the wealth funds are clearing out, educational training programs are shifting, etc. In 10-15 years, the flow of new workers will hit whatever low-level long-term carrying will be; in 30-40 years, oil will have settled into some kind of "post primary energy" role. (It's not like petrol products are suddenly not useful; just the bulk of traffic will shift, and so there won't be enough business to support several nations.) Of course, 2050-2060 was when people were guessing that was going to happen for quite a while. But this seems like a sign we're on track for that, broadly speaking.
- deleted 9y ago[deleted]
- mseebach 9y ago> Yet, within a decade, we've seen a few of them announce that they're going to diversify. The important development in this decade is that we have turned some corners in technology, primarily electrical cars with sensible mass-market economics, so a significantly less oil-dense energy economy is now a mainstream projection using fairly orthodox assumptions - electricity is primarily produced from coal and natural gas, rarely oil. Previously, predicting the end of oil was more in doomsday/crackpot conspiracy territory. Also, in this same decade, fracking came of age. Where previously the endgame for oil was holding the world hostage at ever rising prices, we now know that there is a substantial supply at $80-100, effectively capping the price there, making the endgame a lot shorter and much less profitable.
- jernfrost 9y agoSaudi Arabia is quite different from Norway though as something like 70% of their economy is oil and 30% of Norway’s is. Saudi Arabia has made themselves insanely dependent on foreigners while Norway isn’t and can continue to function as a normal country after oil. Nothing is normal with Saudi Arabia.
- gozur88 9y ago>But on the other hand, if you wanted to divest from oil with the expectation that oil will become a non-essential resource, you wouldn't go around proclaiming it loudly. Particularly if you're an oil exporter.