Wealth Outlook 2024 - Slow then grow

90 Wealth Outlook 2024 | Unstoppable trends OPEC's unlikely role in the energy transition FIGURE 3 From at least a pure gross domestic product (GDP) standpoint, the global economy is increasingly weaning itself from oil IP: Electric power (2009=100) Recession Real Gross Domestic Product (YoY) 140 140 100 100 60 60 20 20 1990 2000 2010 2020 1980 Source: Haver Analytics as of October 31, 2023. OPEC’s long shadow in the green transition Imagine if OPEC took a more aggressive stance “against” the green transition. We would have seen a collapse of the market price for oil and gas. While this would have produced undeniable economic benefit for households and businesses around the world, it would have come at a cost. OPEC could have set back the transition to a sustainable energy economy by years, possibly decades. Instead, we have a situation where OPEC has kept the oil price at an almost ideal level to drive alternative energy development forward. Oil prices are low enough where many people can still afford to fill up their car and power their home until more green capacity becomes available, but high enough to see further investments in the critical infrastructure needed to keep the transition at least more-or-less moving forward. That’s why it is no coincidence that the most recent COP conference this November is taking place in Dubai, where OPEC participated for the first time. The question is, what is OPEC’s end game? We think the answer comes down to a cold, hard self- assessment of its own future. Saudi Arabia, the largest of the OPEC countries, for example, has staked out an ambitious agenda reimagining the entire country as a global commercial hub with a diverse economy built around finance, tourism, technology, services and abundant solar power, not oil. Almost every aspect of its long-term planning is geared toward this one set of goals, but those plans also take money. And as vast as the kingdom’s resources are, it seems to recognize that even more is needed, and at a faster pace apparently than even has been earned in many periods before. That’s why OPEC is “taking the cash now” option by keeping prices higher for longer.