Monday, November 1, 2010

Saudi Arabia Wants to "Help" Renewables by Keeping Oil Above Market Clearing Price

This is one funny guy.
From the Financial Times' Energy Source blog:
Ali Naimi, the oil minister of Saudi Arabia, was in mischievous mood on Monday night, positing an oil price of $70 to $90 for the foreseeable future, and suggesting that oil consumers should be happy with such a settlement – because a price of more than $70 was needed to justify investments in renewable energy.

His remarks, which came in response to questions from the Financial Times at a dinner hosted by the Singapore International Energy Week, did not go down well with all sections of the audience – some were unhappy that the world’s biggest oil producer should suggest they be content with an oil price they felt was unnecessarily high.

Mr Naimi justified his $70 to $90 prediction, which he called a “comfortable zone” that should be welcomed by oil producers and consumers alike, by reference to renewable energy, which he suggested gave oil an “anchor” price. If the oil price were to fall below $70, then renewable energy would not be competitive, he said.

In other words, he seemed to be implying, governments and companies that have invested in renewable energy are at least partly responsible for setting a de facto minimum price for oil of $70 per barrel....MORE
This Bloomberg headline "Carbon Price Must Rise to $175 a Ton to Halve Emissions, IEA's Tanaka Says" implies* an oil price of $71.76/Bbl, depending on the specific gravity of the oil. In this case I used API 39, a bit heavier than WTI. That would have been just fine by me.
[still unhappy about the oil short? -ed]

Just thought the prince should know.

Here's the 2008 post where I walked through the math:
Today's Oil Price Equals a CO2 Price of $336.98 per Tonne