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When most people think of crude oil, or economic dependencies on crude oil, they instantly think of Saudi Arabia. Since the creation of the Petrodollar, Saudi Arabia and oil have been joined at the hip, with most of its economy relying heavily on the export of the valuable commodity into the world market. Being the world’s largest crude exporter and relying so much on oil money, Saudi Arabia has been under a lot of financial stress as of late, due to the drastic drop in oil prices, which are currently sitting at around 40 dollars a barrel, down from almost 120 not so long ago. Although many financial analysts tend to think that the current trend in oil is just a hiccup, and prices will be back to normal in no time, there are others who disagree completely with that assessment and feel that the age of oil may very well be on its way out.
With ever expanding environmental restrictions on fossil fuels and the strong agenda that is pushing new and more costly clean energy sources, as well as an overall reduction in global manufacturing, shipping, and construction, the demand for oil shows no real promise of returning back to normal any time soon. Add to that, there is now more competition in the oil game than ever before, and there is currently so much of an oil stockpile that many countries are running out of places to store their unsold oil.
With this in mind, as reported by the Daily Mail, recently Saudi Arabia announced that in the near future it is planning to create the largest investment fund on Earth, totaling a whopping 2 trillion dollars. To put that in perspective, that would be enough money to buy Google, Apple and Microsoft and still have money to spare. The planned fund is said to be used as a hedge against the death of the age of oil, which the Saudis and many others sense is likely coming in the not so distant future. The overall goal of the fund is to allow the country to greatly reduce their overall economic dependencies on oil exports in general. The fund, which is called the Public Investment Fund ( PIF), was established by the second-in-line to the Saudi throne and is being overseen by the Deputy Crown Prince Mohammed bin Salman, who plans to offer a public offering as soon as early next year. Prince Mohammed stated that “Undoubtedly, it will be the largest fund on Earth. This will happen as soon as Aramco goes public”. As a starting step to the plan, Saudi Arabia is set to start selling shares in Aramco’s parent company, beginning sometime next year.
In the end, the plan is for the country's economy to become completely non-reliant on oil exports within a 20 year period, which is probably a good idea, but one must ask, is this a case of too little, too late? I also wonder what this would all mean for the Petrodollar itself, which relies heavily on the continuous export of massive amounts of oil in the global market, which in the coming years could very well, no longer be a viable expectation?
Anyways, as always share your thoughts in the comments below!
Saudi Arabia planning for the end of the oil age by creating a $2 TRILLION investment fund which would be big enough to buy Google, Apple and Microsoft
http://www.dailymail.co.uk/news/article-3519536/Saudi-Arabia-planning-end-oil-age-creating-2-TRILLION-investment-fund-big-buy-Google-Apple-Microsoft.html
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