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Aramco Chief Warns Of "Social Unrest" If Fossil Fuels Are Abandoned Too Quickly

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by Tyler Durden
Tuesday, Dec 07, 2021 - 01:00 AM

China has promised not to build more coal-fired power plants abroad, but it's scrambling to build more plants at home in the latest indication that coal, the dirtiest of fossil fuels, will likely be with us for some time. And while ESG has become the hot factor trade du jour, analysts who know the energy space have warned that a rush to renewables could lead to energy hyperinflation, and that the UN's goal of achieving global carbon neutrality by 2050 is more of a pipe dream that could have terrible consequences for humanity.

Amin Nasser, the chief executive of Saudi Aramco, the world’s largest oil producer, has called on global leaders to continue investing in fossil fuels in the years ahead, or run the risk of spiraling inflation and social unrest that could force them to jettison emissions targets altogether, according to the FT.

Amin Nasser

Nasser was speaking at the World Petroleum Congress in Houston, Texas. He added that there's an "assumption" that the world can transition to green energy with the flip of a switch, but that's just not accurate.

"I understand that publicly admitting that oil and gas will play an essential and significant role during the transition and beyond will be hard for some," Nasser told delegates at the WPC, one of the biggest gatherings of oil and gas executives in the world.

"But admitting this reality will be far easier than dealing with energy insecurity, rampant inflation and social unrest as the prices become intolerably high and seeing net zero commitments by countries start to unravel."

This isn't the first hint at just how unrealistic climate change goals have become. Earlier this year, the IEA warned that all new gas and oil exploration projects would need to be abandoned immediately if the world were to achieve net zero carbon emissions by 2050. Exxon has considered following through on this to try and appease ESG-crazy investors.

Nasser also warned that the world is facing an increasingly chaotic transition to green energy.

"The world is facing an ever more chaotic energy transition centered on highly unrealistic scenarios and assumptions about the future of energy," Nasser said.

That oil prices feed through to inflation is hardly anything new.

Already, higher oil and gas prices have forced President Biden to reckon with his climate goals. Despite Biden's promises to lead the US on a transition away from oil, the president tried to blunt the rise in oil prices by unloading millions of barrels from the strategic petroleum reserve.

But that of course is like slapping a band-aid on a bullet wound. The real problem is the years of neglect and under investment in the energy patch as market forces suppressed commodity prices. Nasser touched upon this as well, telling the FT that the majority of "key stakeholders" in the industry and politics agreed on the risks of under-investment, but were unwilling to say so openly. "They say so in private...[t]hey should say the same in public," Nasser said.

Put another way: virtue-signaling about climate change and green energy will fall out of favor as soon as most consumers feel it in their pockets.

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