In the last month or so there have been two very public indications that not even the Middle East’s oil states are counting on endless supplies of the black gold which in the space of one or two generations moved their economies from the 18th century to modernity.
First came a puff piece on Saudi Aramco from CBS’ 60 Minutes. Although there was a lot of information in Lesley Stahl’s report, it leaned a bit too heavy on the promise of technology to greatly impact the output of Saudi Arabia’s aging oil fields. There is no doubt that the Kingdom is the promised land of oil – and will remain so – but their oil is getting harder to find and harder to extract than it once was. The massive nature of Saudi fields such as Ghawar camoflage this, but the fact is there have been no major discoveries there since the 1960s and they jump through more hoops per barrel today to get it out of the ground than they once did. Very telling was this from the end of the piece:
Rather than oil pushers, the Saudis see themselves as good global citizens who are trying to save the world from a catastrophic oil shortage. But, as Al-Naimi told 60 Minutes, the kingdom is hedging its bets.
He told Stahl the kingdom is doing research on solar energy, as sunshine is more than abundant in Saudi Arabia.
And he says it won’t hurt their oil industry, but supplement it. “Our vision is that we will be exporters of gigawatts of electricity. We will be exporting both: barrels of oil and gigawatts of power.”
And so, he says, the kingdom will still be in the energy business long after the sun sets on the age of oil.
Also hedging their bets are the Saudi’s neighbors in the United Arab Emirates. Abu Dhabi, home of man-made islands and other ostentatious displays of oil wealth will host the Second World Future Energy Summit next week. World business and political leaders will be in attendance for what the New York Times describes as the Davos of alternative energy. The entire Times story is worth a read. I found interesting some of the statements being made by Arab oil men other than Ali Al-Naimi, the above mentioned Saudi Oil Minister.
So even as President-elect Barack Obama talks about promoting green jobs as America’s route out of recession, gulf states, including the emirates, Qatar and Saudi Arabia, are making a concerted push to become the Silicon Valley of alternative energy.
They are aggressively pouring billions of dollars made in the oil fields into new green technologies. They are establishing billion-dollar clean-technology investment funds. And they are putting millions of dollars behind research projects at universities from California to Boston to London, and setting up green research parks at home.
“Abu Dhabi is an oil-exporting country, and we want to become an energy-exporting country, and to do that we need to excel at the newer forms of energy,” said Khaled Awad, a director of Masdar, a futuristic zero-carbon city and a research park that has an affiliation with the Massachusetts Institute of Technology, that is rising from the desert on the outskirts of Abu Dhabi.
Notice how the language is changing? Yesterday they were oil exporters – now they are trying to remake themselves as “energy exporters.” Even the Arabs are saying that the future is in alternative energy. If oil supplies were endless these guys wouldn’t be wasting their billions on alternatives.