Saudi Arabia could enjoy revenue ‘feast’ from changing oil demand: energy expert

Saudi Arabia just announced a $5 billion project to turn renewable energy into hydrogen. (File/Shutterstock)
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Updated 08 October 2020

Saudi Arabia could enjoy revenue ‘feast’ from changing oil demand: energy expert

  • Energy expert says Saudi Arabia could enjoy a “veritable feast” of oil revenues for many decades
  • Expert says stronger climate policies should focus not just on the greenhouse gases emitted by burning a fuel, but the carbon intensity of the entire production cycle

DUBAI: One of the world’s leading energy experts believes that oil producing countries like Saudi Arabia could enjoy a “veritable feast” of oil revenues for many decades before changing patterns of energy use reduce global demand for crude.

Jason Bordoff, director of the Centre on Global Energy Policy at Columbia University and a former White House energy policy adviser, said: “it is the lowest-cost producers — such as Kuwait, Saudi Arabia, and the United Arab Emirates — that will be able to keep selling their oil the longest.

“What’s more, stronger climate policies should focus not just on the greenhouse gases emitted by burning a fuel, but the carbon intensity of the entire production cycle. Most Gulf Arab states are very efficient producers,” he added.

Writing in Foreign Policy magazine, Bordoff predicted that low cost producers like the Kingdom could consolidate their dominance of global energy markets. “With easy-to-extract barrels, less methane leakage, and lower flaring rates, they have some of the lowest life cycle emissions associated with their oil. Therefore, even as oil demand declines, OPEC’s share of global production could rise as a result of its members’ lower costs and emissions, strengthening the cartel’s grip on a market that will remain sizable for some time,” he said.

His view, which comes as some independent oil companies are drawing back from crude production because of climate concerns, is a retort to some critics of Middle East energy policymakers who have predicted economic and financial problems for regional oil exporters as global demand for oil declines because of the COVID-19 pandemic.

“The narrative of collapse and chaos in a post-oil world has taken over the pundits’ imaginations. More likely, however, is that during the many decades needed to achieve the climate goals of the Paris Agreement, petrostates could enjoy a veritable feast before the famine,” Bordoff said.

He also suggested that oil-exporting countries could use their energy revenue wealth to spark the move to cleaner energy technologies.

“Saudi Arabia, for example, has abundant, low-cost solar power, just announced a $5 billion project to turn renewable energy into hydrogen, and has also sent Japan the world’s first blue ammonia shipment,” he said.

The KIngdom has launched the strategy of the Circular Carbon Economy as a way of mitigating harmful greenhouse gasses by eliminating emissions of carbon dioxide in the atmosphere. 

Bordoff’s contribution comes amid the growing debate about climate change and its global implications. “National security leaders must anticipate and prepare for the new geopolitics of clean energy—not only to mitigate new risks, but because a robust climate agenda will not succeed unless they do,” he said.


Researchers say new model shows Turkish inflation well above official tally

Updated 22 October 2020

Researchers say new model shows Turkish inflation well above official tally

  • Since last year, opposition lawmakers have raised questions about the accuracy of official inflation data
  • Year-on-year inflation was 11.75% according to the official tally announced earlier this month

ISTANBUL: Turkish monthly inflation was more than triple the official rate in September, according to a new model developed by a group of academics and researchers based on more frequent data than the government statistics office.
Veysel Ulusoy, a professor at an Istanbul-based university and head of the independent Inflation Research Group (ENAG), said the model collects “several times more” price data than the official Turkish Statistical Institute (TUIK) tally, and is meant to complement it.
Since last year, opposition lawmakers have raised questions about the accuracy of official inflation data, arguing that the published rate was lower than the market realities.
According to ENAG’s first published finding, consumer prices in September rose 3.61% from the previous month, compared to TUIK’s calculation of 0.97% increase.
Year-on-year inflation was 11.75% according to the official tally announced earlier this month. ENAG has not yet published a year-on-year figure.
TUIK was not immediately available for comment.
“We observed price differences and volatility in almost all groups in the basket,” Ulusoy said in an interview. ENAG brings together academics from multiple Turkish universities.
“TUIK collects 550,000 prices for all the basket items in a month. ENAG calculations include several times more than that, constructing a richer set of data,” Ulusoy said.
Turkish annual inflation has remained in double digits this year despite a sharp economic contraction in the second quarter due to the coronavirus pandemic. High prices and a record low lira prompted the central bank to raise interest rates last month, and it is expected to hike again on Thursday.
The ENAG model can calculate inflation as frequently as every hour, meaning it can fill gaps for researchers and investors, Ulusoy said. It weighs items in the same way as TUIK, but excludes price data from health, education spending and alcoholic drinks.
The September calculation showed that school-related items had the most price spikes including computers, tablets and mobile phones, as well as children’s’ clothing and some agricultural goods.
Ulusoy said the ENAG model showed that tablets and computer prices were up more than 30% in September from August due to school reopenings, while TUIK put these items at around 4% month-on-month.
Last year opposition parties submitted parliamentary questions to Finance Minister Berat Albayrak over claims that TUIK tweaked inflation data for political reasons, claims dismissed as groundless by the head of the institute.