Retiring From Oil

(FYI: this was sent as an letter in the Trib-Review, 20 Jan 2016.)

Saudi Arabia has said it may sell shares in Saudi Aramco.  That’s the company that controls their oil; it is the world’s most valuable company, and it accounts for half the GDP of Saudi Arabia.

Why would they sell such a valuable asset?

Perhaps they fear that there may be permanent glut of oil.  Renewable energy is beginning to be competitive with oil and gas, and technical improvements will push the cost of solar and wind downwards.

And, then there is the Paris Climate Agreement.  187 countries have pledged to reduce their fossil fuel use.  If that happens, oil production, oil prices, and oil profits will go down.  Scientists think this is necessary, and that the entire industry will need to be shut down by about 2040.

So, in 2016, oil is a risky industry to invest in, and the long-term prospects are dubious.

Oil is not the kind of industry that we should invest our city pensions in, especially since City taxpayers would be required to pay extra taxes if the pension fund investments in oil do poorly.  Divestment makes financial sense; your pension is safer when it’s not invested in oil.

Retiring From Oil by Greg Kochanski is licensed under a Creative Commons Attribution 4.0 International License.

Based on a work at https://docs.google.com/document/d/14TCC48yb50bz_nSYj2-7P4uZy2hzR81QTUOTj35Wfqo/pub.

Published version (NOT CC): http://triblive.com/opinion/letters/9831514-74/oil-saudi-arabia