Saudi Arabia is gearing up for a summer heatwave, but their modern power plans have hit a bit of a snag. Instead of burning cleaner natural gas as they hoped, the Kingdom is going old school and preparing to burn a lot more crude oil just to keep the lights on and the AC blasting.
Saudi summers are no joke. When the heat hits, the entire country collectively reaches for the remote control to turn on the air conditioning. This creates a spike in electricity demand. To meet this demand, Saudi Arabia has been trying to transition its power plants to burn natural gas and renewable energy. It’s cleaner, it's more modern and frankly, it saves the good oil for exporting to other countries, but because of some unexpected dips in domestic natural gas production, they don't have quite enough gas to feed the power plants and since letting citizens melt in the desert heat is not an option, Saudi Arabia is turning to its trusty plan B, direct crude burning.
Saudi Arabia's direct oil burning could jump by anywhere from 50,000 to over 100,000 barrels per day compared to last year. At its peak this summer, they could be burning through over 600,000 barrels of oil a day just for electricity. That is a lot of oil literally going up in smoke. Think of it this way, burning your own crude oil to generate electricity is a bit like using fine mahogany wood to light a backyard campfire. Sure, it gets the job done and keeps you warm, but you can’t help but think, Man, mahogany wood cost a lot of money.
Every barrel of oil Saudi Arabia burns at home to power a refrigerator or an elevator is a barrel of oil they cannot export to the global market for top dollar. Saudi Arabia has been working hard on an ambitious green initiative to reduce its liquid fuel burning to zero by 2030. This summer's gas shortage is like trying to go on a strict diet, only to find out the grocery store is out of salad, forcing you to eat a triple cheeseburger for survival. You do what you gotta do!
If you’re sitting at home thousands of miles away, you might wonder why you should care about Saudi AC habits. Well, the oil market is a giant, interconnected web. If Saudi Arabia is consuming more of its own oil domestically, it means they have less spare oil to ship out to the global market. Saudi Arabia and its OPEC+ allies have already been cutting oil production to keep global prices steady. Burning extra oil at home adds a wild card to their math equations.
Everyone will be watching how hot this summer actually gets. If it’s a record breaker, the oil burning numbers will go even higher. So, the next time you complain about your electricity bill this summer, just remember, at least your local power plant isn't devouring hundreds of thousands of barrels of oil a day just to keep your room cold. Stay cool and be thankful.
سبحانك اللهم وبحمدك أشهد ان لا اله الا انت استغفرك وأتوب اليك