8 ms·

The House of Saud has a plan. It isn't going quite as well as they had hoped, but it's going. Aramco was IPO'd. They wanted a trillion dollar valuation, and did

• deleted 6y ago
  [deleted]
• willis936 6y ago
  Who is going to buy a trillion dollar stake in a shrinking market?
  • qppo 6y ago
    People who get left holding the bag when trading options.
  • dboreham 6y ago
    People who believe mainstream media narratives?
    • rightbyte 6y ago
      Is the MSM narrative that Saudi oil is a good investment?
  • munk-a 6y ago
    A lot of people - this IPO has already happened.
  • fomine3 6y ago
    Index funds
    • thekyle 6y ago
      The vast majority of index funds don't buy IPOs
    • klipt 6y ago
      Index funds will buy at the market value, no? Is the market still overvaluing oil given knowledge of renewables?
      • ehnto 6y ago
        Renewables as a utility power source won't stop our reliance on oil. Fossil fuels like coal and natural gas are on the chopping board, but oil still has considerable permeation through our lives and a very large conversion cost and social inertia to overcome yet. Plastics, shipping fuels, many manufacturing processes use oil during manufacturing but perhaps not in the final product. Vehicles are still decades away from being replaced by EVs. The technology is all there and there are some "quick wins" coming around the corner I think. Container shipping switching to nuclear would be a quick change once regulations are in place for one example.
        • ClumsyPilot 6y ago
          > "Container shipping switching to nuclear would be a quick change once regulations are in place for one example." This is one of those things that will not take off without government initiative - risky, expensive to invest and develop, regulatorily difficult. The payoff is potentially massove though Mind you the culture nees to change too, we've had quite a few ships seized by pirates or capsized because the crew was drunk
        • xyzzyz 6y ago
          Most common plastics, that is, polyethylene, PVC, and polypropylene, can and often are produced from natural gas feedstock: many natural gas fields have abundant ethane, ethylene, and propane.
        • yourapostasy 6y ago
          > Container shipping switching to nuclear would be a quick change once regulations are in place for one example. This comment sent me looking, and I didn't see anyone making any kind of move towards installing a regulatory environment that is conducive towards a "quick win" for nuclear-powered container ships. This Flexport article [1] was interesting, but didn't mention any such legislative moves afoot. This article [2] lays some numbers down. One way I can see to introduce and sustain nuclear-powered container vessels is to expand US naval shipyards that currently handle nuclear carrier and submarine construction to take on the container vessels' commissioning, refueling, maintenance, and decommissioning, design vessels with much longer service lifespans than current container ships to amortize the cost over a much longer period, standardize the power plants on existing designs, and carve out specially-secured multimodal ports with preferential rates for the nuclear-powered container vessels with much faster container moving infrastructure. In the US political-economic landscape, this would spread out the current military expenditures on the power plant R&D, manufacturing capex, and opex costs, into a wider market. It would be an interesting geopolitical power play a nation, if the nation subsidized from taxpayer funds the regulatory compliance and national flagging expenses, to make a play to dominate and control the global container shipping service market. Nearly half of container ship opex costs are fuel and port costs [3]. Subsidize away the ruinous regulatory and security compliance costs of nuclear, crater the existing bunker-fuel powered shipping market rates, and controlling global shipping could be wielded as a significant geopolitical tool. Certainly cheaper than the trillions spent on the US military, and delivers leverage at the logistical and supply chain level. I can easily see China do this too, especially with their OBOR initiative. If this came to pass by any nation, then I'm sure it would rightly alarm a lot of people and nations. [1] https://www.flexport.com/blog/nuclear-powered-cargo-ships/ https://www.flexport.com/blog/nuclear-powered-cargo-ships/ [2] https://cleantechnica.com/2017/01/28/now-time-nuclear-cargo-shipping/ https://cleantechnica.com/2017/01/28/now-time-nuclear-cargo-... [3] https://transportgeography.org/?page_id=2250 https://transportgeography.org/?page_id=2250
  • ahupp 6y ago
    Growth isn't necessary to make something a good investment. Imagine you are investing in a single mortgage: you get a little income each month, and after 30 years it stops completely. Essentially the value goes to zero! But the stream of income is what you care about. Aramco is similar; it will kick off income every year in dividends and eventually be worth zero.
    • willis936 6y ago
      It’s the opposite of growth. Would you buy a house if you knew it wouldn’t be there in 20 years?
      • bobthepanda 6y ago
        People do this with cars and those depreciate the moment they get off the lot. Japanese homes have a lifespan of 30 years.
      • CydeWeys 6y ago
        Yes, if I get my money's worth out of that 20 years. Hell, I'm currently renting an apartment and I don't own shit now, let alone 20 years down the line.
      • tomp 6y ago
        I agree. But in the UK people routinely buy houses/apartments on leasehold which means you only "own" it for e.g. 99 years (sometimes less). Crazy if you ask me, "normal" if you ask them.
  • peteretep 6y ago
    People who think there’s more than a trillion dollars left in that market?
  • atombender 6y ago
    One of the fascinating observations in Carlota Perez's "Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages" [1] is that outdated technological industries continued to provide superior returns even after they'd been supplanted. You'd have more money today if you'd invested in Exxon in the mid 1970s than if you'd put the money in IBM, even though Exxon has slipped from the top 10 to something like 40th place in the S&P. Meanwhile, railroads peaked at 60% of the US stock market around 1860, shrinking to less 2%, yet continued to beat the market for the next 120 years. Discussed recently on the Rational Reminder [2] podcast. [1] https://www.amazon.com/Technological-Revolutions-Financial-Capital-Dynamics/dp/1843763311 https://www.amazon.com/Technological-Revolutions-Financial-C... [2] https://www.youtube.com/watch?v=vEwwtjDo1dU https://www.youtube.com/watch?v=vEwwtjDo1dU
• munk-a 6y ago
  Just to preempt the other obvious reply (Okay - so that's good for the House of Saud but what about the rest of the country?). If they're wise and invest that money into education they could just convert their current rather highly skilled resource economy into an economy focused on service, finances or defense.
  • Trisell 6y ago
    The issue is that most Saudis don’t work. Most of the work done in that country is done by “lower classes” of non Saudis. So when the tap dries up and they all have to work. What do they do?
    • sangnoir 6y ago
      > What do they do? Realistically - they'll get deported to their home countries. There's no government on earth that will tolerate a non-citizen, non-refugee as a public charge with no prospect of being productive in the future. Foreigners are politically convenient scape-goats for all that is wrong with {ECONOMY|JOBS|CRIME|SERVICE DELIVERY}, and politicians will politic.
      • tuatoru 6y ago
        By "they all have to work" gp is referring to Saudi citizens, not the migrant workers. They (citizens) won't get deported anywhere. The migrants will try to migrate somewhere else that has work.
      • spiritplumber 6y ago
        The "they" in "what do they do" refers to unproductive Saudi citizens, not productive Saudi immigrants.
        • sangnoir 6y ago
          Oh, I misunderstood the question. I think if the government can afford to pay about $58,000 p.a. to each citizen based on sovereign fund interest alone, we'll get to witness the biggest UBI experiment the world has ever seen.
• dd36 6y ago
  They should’ve bought TSLA at $420/share ($84/share adjusted for split).
• visarga 6y ago
  > Cash is going into technology stocks, venture funds, and international real estate. And that's how the situation in SF came to be. Lots of money wanting to be "saved" by tech.
• missedthecue 6y ago
  Right now, Saudi Aramco is worth $1.9 trillion.
• ashtonkem 6y ago
  Saudi needs to do one of two things before the oil runs out: 1) Diversify their economy 2) Build up enough sovereign wealth to maintain their citizens standard of living after the oil has run out. The first is very hard, because huge percentages of their population are completely disengaged from the economy. It's estimated that 30-40% of working age adults neither have a job, nor are looking for one. An unusually high percentage of those who have jobs work for the government, and somewhere close to 90% of non-oil jobs are held by foreigners. There is immense social and economic pressure against citizens of KSA getting private sector jobs. The biggest "employer" in the country is the yearly hajj pilgrimage, which isn't a lot. The latter is incredibly hard because of the former. That 30-40% of the population that don't have jobs need to be fed, or they'll eventually revolt. And all of those government jobs cost a huge amount of money. And the fact that the citizens of KSA neither want jobs (apparently) and aren't properly trained for a lot of those jobs makes reducing the social services bill very, very hard. If they can outrun the de-carbonization of the world, KSA will do okay. Maybe not as good as it was during the peak (if you were one of the few getting the benefits), but not terrible. If they don't outrun de-carbonization .... well, then I would recommend not being there when whatever happens, happens.
  • pmiller2 6y ago
    Oil is not running out in Saudi Arabia anytime soon. They have reserves underneath their desert land equal to over 200 years' worth of current consumption. [0] What they need to do is stop pumping it, and soon, otherwise climate change will cook us all. --- [0]: https://www.worldometers.info/oil/saudi-arabia-oil/ https://www.worldometers.info/oil/saudi-arabia-oil/
    • freewilly1040 6y ago
      At this point it seems demand for oil will run out before supply
      • ako 6y ago
        We'll still need oil, not for energy, but as a raw material for production of plastics and many other products.
• PeterisP 6y ago
  On the other hand, right now the house of Saud needs their lands and citizens because their oil wealth comes from there - but if it runs out, they might as well abandon them and relocate with their wealth (as a monarchy, it's their personal wealth, not the country citizens') anywhere they want and leave the ordinary people in the desert.
• Cthulhu_ 6y ago
  From what I know (and that's not much), they've already spent the past decade or two heavily investing in real estate all over the world, from the opulent vanity projects like the Palm Island, to tons of highrise / office buildings all over the world. I mean if you own a skyscraper in NY you're basically set for life. Multiple lives.