Saudi Aramco’s CEO Amin Nasser said that oil-output capacity across the world is dropping quickly and companies need to invest more in production, according to a story in Bloomberg.
It’s a “huge concern,” Nasser said in an interview in Riyadh. “The spare capacity is shrinking.”
Oil has soared 70% this year to around $85 a barrel.
Nasser pointed to the Coronavirus and the aviation industry as pivotal in the coming months to supply concerns.
“If there’s aviation pick up next year, that spare capacity will be depleted,” he said. “It’s now getting to a situation where there’s limited supply — whatever is left that’s spare is declining rapidly.”
The world is at a turning point for energy production and consumption in 2021 as climate change and a global economic recovery are priorities for governments and corporations alike. While governments around the world seek to produce green energy from a variety of sources to reduce emissions, the transition to energy supply from fossil fuels to alternatives will take time and investment to develop.
As Bloomberg notes, some have criticized governments and climate activists for calling on companies to stop investing in fossil fuels, saying that will cause shortages of energy in the coming decade.
This week at the 5th Future Investment Initiative event in Riyadh, the issue was discussed by the some of the most powerful financial executives in the world. Steve Schwarzman, Blackstone’s billionaire co-founder, became the latest financier to sound the alarm about an energy crunch.
Per the New York Times, which published some comments from Schwarzman in his appearance at the FII:
“A focus on E.S.G. is driving a credit crunch for oil and gas companies, Schwarzman and others say. So-called environmental, social and corporate governance investing principles have spurred investment giants to divest their holdings in oil and gas companies. That, according to Schwarzman, has made it hard for the industry to invest in new wells and other sources of capacity. “If you try and raise money to drill holes, it’s almost impossible to get that money,” he said. (Blackstone has invested in both fossil-fuel and renewable energy companies.)”
“…Governments need to intervene, Schwarzman said, particularly to help manage the transition into greener energy. “There’s unanimity something should be done, but how you get from where we are today to a green world is utterly undefined,” Schwarzman said. Otherwise, political troubles await: “You’re going to get very unhappy people around the world, in the emerging markets in particular but in the developed world,” he added.”
