Not enough investment in global refining capacity is one of the key drivers of the global rally in gasoline, diesel, and jet fuel prices, according to Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, who reiterated the Kingdom’s view that a rushed transition to cleaner energy fails to take into account realities.
“All mobility fuels have skyrocketed ... and the gap between crude prices and these products in some cases is actually 60%,” Prince Abdulaziz bin Salman said at an aviation conference, as carried by Reuters.
If the industry is discouraged from investments, this will lead to a lack of supply, which will translate into inflation, and that will affect the end consumer, the Saudi energy minister said at the Future Aviation Forum in Riyadh, Arab News reports.
Achieving sustainability can’t be done by just relying on biofuels. Instead, all options, including hydrogen, should be considered to ensure a better low-carbon future, Prince Abdulaziz bin Salman added.
The energy minister of the world’s top crude oil exporter reiterated his view from before the Russian invasion of Ukraine that the “La La Land” scenario of net-zero is being undermined by the reality of the still-growing global demand for oil and gas.
Even before February, the “la la land scenario about net-zero had been smacked with so many realities,” including cost, Reuters quoted Prince Abdulaziz bin Salman as saying.
Related: JPMorgan Slashes Demand Outlook Amid Soaring Oil Prices
Days before the Russian invasion of Ukraine, the minister had said at the 2022 International Petroleum Technology Conference (IPTC) in Riyadh that insufficient investment in the oil and gas industry harms consumers, raises concerns about short-term supply shortages, and creates challenges for policymakers.
The sole focus on renewables is a mistake, said the most influential oilman of the OPEC+ coalition.
“The net-zero does not mean cherrypicking, net-zero does not mean zero oil,” he added. The sharp decline in oil and gas investments has created a danger “that the world will not be able to produce all the energy it needs to promote recovery,” Prince Abdulaziz bin Salman said in February.
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By Tsvetana Paraskova for Oilprice.com
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Underinvestment in oil and gas is indeed a major underlying reason behind the rise in crude oil and refined products as well gas and coal. And yet, the IEA’s la-la-land roadmap to 2050 called for immediate halt of investments in oil and gas.
There could neither be a post-oil era nor a peak oil demand. Rising world population and growing global economy will take care of that. Moreover, we may never see an alternative to oil as a versatile and practicable as oil itself for the next hundred years. Oil and natural gas will continue to drive the global economy well into the future.
The notions of net-zero emissions and a total global energy transition are illusions. Even a partial transition couldn’t succeed without huge contributions of natural gas, nuclear energy and coal (yes coal).
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Long stuff blown to pieces.
Strong buy.