5 ms·

There is literally no difference. The value of Aramco is the discounted value of all future cash flows. So selling 5% in an IPO is equivalent to selling 5% of a

by nebolo 8y ago

There is literally no difference. The value of Aramco is the discounted value of all future cash flows. So selling 5% in an IPO is equivalent to selling 5% of all future cash flows (discounted appropriately). This allows them to diversify now rather than later/gradually. There are other non-financial advantages of having at least partial public ownership of a publicly owned company like Aramco, like increased transparency and accountability.

adventured 8y ago
There is actually a critical difference depending on your oil market projections, which is why they're diversifying now rather than later. A very optimistic projection would be that Saudi can gradually extract & sell most of their oil before the clock runs out. If that doesn't happen, they could lose a large amount of value as global energy markets change dramatically over the next 30-50 years. Half of the US oil consumption is gasoline (9.3 million barrels per day oil equivalent, nearly equal to Saudi's output), and that's almost entirely going away with the switch to electric vehicles in the coming decades. China - the world's other giant oil & gasoline consumer - will similarly move almost exclusively to electric vehicles, as will the rest of the developed world. If you're a petro state, you don't want to be sitting on 100 years worth of oil and betting on extracting annual payouts from it over that time (comparable to what they can get for it now).
- supertrope 8y ago
  Americans will only switch away from gasoline burning cars when the price makes it un-affordable or there is a supply shock.
  - jjeaff 8y ago
    Having a cheaper electric alternative to a gas auto with similar or better performance will quickly make gas vehicles seemingly "unaffordable". Very few Americans will stick with a combustion engine if it is the more expensive alternative. In other words, gas prices don't have to rise, electric vehicle prices need to continue to fall. Which they will.
    - perl4ever 8y ago
      I could drive much less (I drive below average miles anyway though) and I could get a much more fuel efficient car. I'm not going to get a house with a car charger, so it's unlikely I will get a rechargeable car, let alone one that is fully electric. My apartment complex has one charger for hundreds of units. Incidentally, there is a charger near the gym I go to and I noticed that it does not display the price in advance. If regulators do not force electric car chargers to show prices like gas stations do, it tells me nobody is serious.
      - jjeaff 8y ago
        If electrics get down to the price range that apartment dwellers are buying them, you can be sure that the number of chargers will increase dramatically. As for charger pricing, most chargers I see out in public are free. They don't display the price of gas in Venezuela at gas stations because it is too small to account for.

by nebolo 8y ago

adventured 8y ago

There is actually a critical difference depending on your oil market projections, which is why they're diversifying now rather than later. A very optimistic projection would be that Saudi can gradually extract & sell most of their oil before the clock runs out. If that doesn't happen, they could lose a large amount of value as global energy markets change dramatically over the next 30-50 years. Half of the US oil consumption is gasoline (9.3 million barrels per day oil equivalent, nearly equal to Saudi's output), and that's almost entirely going away with the switch to electric vehicles in the coming decades. China - the world's other giant oil & gasoline consumer - will similarly move almost exclusively to electric vehicles, as will the rest of the developed world. If you're a petro state, you don't want to be sitting on 100 years worth of oil and betting on extracting annual payouts from it over that time (comparable to what they can get for it now).

supertrope 8y ago
Americans will only switch away from gasoline burning cars when the price makes it un-affordable or there is a supply shock.
- jjeaff 8y ago
  Having a cheaper electric alternative to a gas auto with similar or better performance will quickly make gas vehicles seemingly "unaffordable". Very few Americans will stick with a combustion engine if it is the more expensive alternative. In other words, gas prices don't have to rise, electric vehicle prices need to continue to fall. Which they will.
  - perl4ever 8y ago
    I could drive much less (I drive below average miles anyway though) and I could get a much more fuel efficient car. I'm not going to get a house with a car charger, so it's unlikely I will get a rechargeable car, let alone one that is fully electric. My apartment complex has one charger for hundreds of units. Incidentally, there is a charger near the gym I go to and I noticed that it does not display the price in advance. If regulators do not force electric car chargers to show prices like gas stations do, it tells me nobody is serious.
    - jjeaff 8y ago
      If electrics get down to the price range that apartment dwellers are buying them, you can be sure that the number of chargers will increase dramatically. As for charger pricing, most chargers I see out in public are free. They don't display the price of gas in Venezuela at gas stations because it is too small to account for.