Since OPEC and Saudi Arabia surprised everyone who was and was not paying attention to oil prices at the November 2014 OPEC meeting, no one wants to miss out on the June 2015 one. The media are hanging on every word that comes out of Ali al-Naimi’s mouth (Saudi Arabia’s oil minister) – hoping he will tell them when OPEC is going to cut production and oil prices will go back up.
That’s not going to happen.
Ali al-Naimi isn’t going to tell anyone what Saudi Arabia’s plans are (even, probably fellow non-Persian Gulf OPEC members), which is why he is making statements like “No one can set the price of oil – it’s up to Allah,” and had the following exchange with a reporter:
Reporter: What would you like to hear from the oil executives over the next two days?
Al-Naimi: What do they think the future holds? … On the whole energy spectrum.
Reporter: What do you think is interesting that is going on right now in the energy spectrum?
Al-Naimi: Solar energy. It’s an opportunity for everybody.
Unlike Janet Yellen at the Fed, al-Naimi has no reason to give up information unless it is strategically beneficial to Saudi Aramco.
Al-Naimi, the al-Saud, and Saudi Aramco have long-term plans for Saudi Arabia’s energy industry that include expansion and diversification across all energy fields and into markets around the world. Of course they are interested in solar energy. And in natural gas, thermal energy, wind power, electric cars, and anything that makes stuff move and turns on the lights. They are interested in everything you can do with energy products including traditional refining, petrochemicals, and green plastics.
According to Bloomberg Business, however, this is evidence that “renewable power is disrupting the traditional energy industry.”
But Aramco has been interested in solar energy since the 1970s when it teamed with Exxon to explore nascent solar technology. In the 1990s Saudi Aramco started its own research and development into alternative energy vehicles. And in 2008, al-Naimi told 60 Minutes, “Our vision is that we will be exporters of giga-watts of electricity. We will be exporting both. Barrels of oil and giga-watts of power.”
As the Bloomberg article notes, Saudi Arabia has referred to its penchant for solar energy in the past, but has made little investment in solar energy generation. Al-Naimi is probably playing the reporters with whimsical responses – but why not? Saudi Aramco’s venture capital firm is undoubtedly keeping track of the technological developments in solar energy generation, storage, and transmission so that when the time comes, the most valuable energy company can swoop in and buy the technology they need.
Why waste your time with R&D or expensive subsidies to keep inefficient technologies chugging along when you have all the money and the all the patience in the world?