Good ’til The Last Drop

Crown Prince Mohammed bin Salman, 34, the ruler of Saudi Arabia, has decided to move full speed ahead with economic and social reform. The debate is over and there seems to be no turning back. “We are all riding in the back seat of a speeding car,” says a nervous Saudi citizen, quoted in the Wall Street Journal. “We can’t see where we are going. We just pray the driver knows so we avoid crashing.”

The social liberalization of Saudi society is changing fast and now it’s economic life blood; the iconic oil wells that have defined the geopolitics of the region are also changing just as fast.

Oil is in decline in the world and in an attempt to squeeze every drop of profit, Saudi is planning an IPO of Aramco (Arab-American oil company). Oil giant Saudi Aramco is the world’s most profitable company, earning $111 billion dollars annually. That is nearly twice as much as Apple which is the world’s most profitable company listed on the stock exchange. It is also more profitable than the five biggest oil companies: ExxonMobil, Dutch Shell, B.P., Chevron, and Total Oil.

If this IPO were offered 15 or 20 years ago it would be really compelling and kinda like printing money. However times have changed, and the reality is that more than a third of oil sold today is used by cars and trucks, and that percentage is quickly shrinking. Tesla and the eventual popularity of electric vehicles seem to be the direction and the future of the next generation of cars and trucks. Therefore, oil demand may not be as bullish as Wall Street would like.

The market seems to think that the world is already awash in oil, with Russia and Iran pumping as much as they possibly can. It really feels like the Saudis’ IPO is a strategy that would allow them to be the last oil man standing.

Nobody really knows the future. I am not making a stock prediction because the demand may be around for another 150 years. Third world countries are developing and will need oil and natural gas. “Dirty” coal is being replaced with natural gas , and natural gas will become the bridge energy source until the new clean energy king is identified and crowned.

The other oil giants are also trying to convince investors that the death of oil is wildly premature. Mike Wirth, CEO of Chevron said, “When our company started (140 years ago) we were not producing petroleum to fill vehicles because Henry Ford had not invented the car yet, and the Wright Brothers were decades away from their first flight. So we began producing kerosene to replace whale oil for light.”

Shell Oil, CEO, Ben van Beurden warned against demonizing big oil. “It’s entirely legitimate to invest in oil and gas because the world demands it.”

In other words, the energy pie may in fact be getting much bigger. For nonprofits, big oil offers numerous grant opportunities. GrantWatch lists a number of grant opportunities given by oil companies.

About the Author: Jake Tewel holds a Masters Degree from YU. He has been a wine seller, caterer and a million miler for the past 15 years. Jake is a best friend, great neighbor, your go to travel person, father, grandfather and loving husband. He is now focusing his efforts on heart healthy nutrition, exercise and travel.