Blaming Saudi won’t make energy cheaper

How outraged should we be that Saudi Aramco has reported a world-record quarterly profit of $48 billion, representing a giant bonus from the global oil price spike provoked by the war in Ukraine? Well, that’s how the cookie crumbles when you’re sitting on oil reserves so abundant and so easily accessible that your marginal cost of producing the next barrel is less than $10 when the market price has just doubled to $130 – as it did in March, before settling back to around $95 today.

And you might think that this recent price retreat is likely to continue as oil demand begins to shrink with the onset of recession in developed economies – just as you worry that your own reserves will one day dwindle. So reaping maximum short-term returns is the best thing you can do for your still underdeveloped desert country, especially if (as Aramco likes to do) you can present a narrative about reinvesting some of the proceeds in hydrogen and other green technologies that will eventually take you to net zero.