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It’s amazing what people will refuse to understand

Summary:
Saudi Arabia is about to float a small portion of Aramco, the state oil company. Well, OK, their company, if they wish to sell a few percentage points then it’s theirs to sell. This is then triggering howls from the uninformed:Scientists warn that fossil fuels and money will soon need to divorce because carbon emissions must be slashed by half over the next decade if the world is to have any chance of keeping global heating to a relatively safe level of 1.5C. Despite this, Aramco expects to receive the greatest infusion of cash in history.As far as we’re aware at least Aramco isn’t going to receive an infusion of anything.Until now, the company has been state-owned, influenced by the Saudi royal family, and has disrupted, delayed and diluted international efforts to cut carbon emissions.

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Saudi Arabia is about to float a small portion of Aramco, the state oil company. Well, OK, their company, if they wish to sell a few percentage points then it’s theirs to sell. This is then triggering howls from the uninformed:

Scientists warn that fossil fuels and money will soon need to divorce because carbon emissions must be slashed by half over the next decade if the world is to have any chance of keeping global heating to a relatively safe level of 1.5C. Despite this, Aramco expects to receive the greatest infusion of cash in history.

As far as we’re aware at least Aramco isn’t going to receive an infusion of anything.

Until now, the company has been state-owned, influenced by the Saudi royal family, and has disrupted, delayed and diluted international efforts to cut carbon emissions. The flotation will not change this dramatically.

The bigger questions are who is going to buy the shares, how will the money be used and will a public listing make the company more transparent and less of an obstacle to climate action. So far, the indications are less than reassuring.

The point being that the money isn’t going to Aramco. It’s going to the Saudi state. That is, the IPO will not involve issuing new shares in Aramco, the funds from which go into the company. Rather, the Saudi state is going to sell some of the extant shares which it owns. The money flow will be from investors to Saudi Arabia, entirely bypassing the actual oil company and its investment plans…

….the crown prince, Mohammed bin Salman is getting positive global attention for his Aramco selloff plans.

He said the sale would raise money for the state’s sovereign wealth fund to invest in a diverse range of businesses across the globe, which would make Saudi Arabia less dependent on oil.

Yes, quite. The investment isn’t going into new oil at all.

Climate campaigners believe it is reckless to pour such money into a petrochemical giant when fossil fuel firms should be scaling back.

But as has just been pointed out, that’s not where the money is going.

It is just astonishing what people will refuse to understand, isn’t it?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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