Category: Uncategorized

Coming to Grips with Energy

There’s more to the energy issue than what’s been written in that sacred text, THE BOOK OF CLIMATE CHANGE. Much of what that book contains is undoubtedly true, but if you’re fearful — TRULY FEARFUL — of watching civilization stop DEAD IN ITS TRACKS, try getting by on insufficient quantities of FOSSIL CARBON.

With an economy THIS COMPLEX, the moment you materially reduce fossil carbon exploration, supply and usage, you diminish everyone’s capacity to make interest payments on all manner of EVER-GROWING DEBT.

Plus . . .

YOU WON’T HAVE ENOUGH ENERGY EITHER TO TRANSITION TO RENEWABLES OR RUN EVERY DAY SOCIETY IN THE MEANTIME.  Believe me, THERE’S NO MAGIC WAND HERE.

And this is exactly what this Jim Rickards piece breaks down in such honest detail.

“The Revenge of Fossil Fuels”

Some highlights and observations:

  • “Global energy demand is growing much faster than renewables can come online, meaning that oil, natural gas, clean coal and nuclear energy will be needed whether renewables grow or not.”
  • “A grid can’t run on intermittent sources; it needs continuous sources . . . that only come from oil, gas, coal and nuclear.”
  • Due to supply-chain issues, China, which gets more than 50% of its electrical generating capacity from coal, is running out of it.  But since supplies of coal elsewhere are abundant, China will figure out how to import more to keep things running both now and as energy needs increase.  Note that China isn’t embarking on a crash program to build a GREEN ECONOMY.
  • “A similar situation exists in Germany where the failure of renewables to provide a reliable source of supply combined with a shutdown of nuclear plants have led to dependence on Russian natural gas.”
  • “Many will die this winter as power outages spread and as heating systems fail.”
  • “‘Green” energy just isn’t ready for prime time, and probably won’t be for decades.”
  • “If predictions of oil’s demise are off the mark by a decade or three, there will be very painful, real-world consequences in the form of underinvestment in the oil patch. Underinvestment in oil projects as oil companies chase wind and solar could lead to trade-crippling, market-crashing gasoline and diesel prices.”
  • “So much for the Great Reset and ‘building back better.'”

Near-Term De-Carbonization Danger

From Haley Zaremba via OilPrice.com

Is Decarbonization Threatening Europe’s Energy Security?

Three things to think about:

  • The energy crisis that is unfolding across the globe could set the world back in terms of carbon emissions as coal and gas demand skyrockets.
  • China will burn and import more coal this year than it did last year, seriously imperiling the nation’s own emissions pledges as well as the world’s chances of avoiding the worst impacts of climate change.
  • Achieving net-zero is going to require an extremely delicate balancing act as the world struggles to move away from fossil fuels while keeping the economy running smoothly.

Art Berman’s Energy Outlook

Berman has been acclaimed as the best independent energy analyst in the US.  This is a great hourlong discussion between him and Adam Taggart.

Why Energy Prices & Shortages Are Going Berserk

Key points discussed:

  • The correlation between higher energy prices and higher inflation is axiomatic.
  • Energy IS the economy and affects the cost of EVERYTHING.
  • We can’t ABANDON INVESTMENTS in our PRIMARY ENERGY SOURCES — all of which are carbon-based — though many countries have been PRETENDING we can.
  • Renewable energy ISN’T READY FOR PRIME TIME, not only as a principal source but also not even as a leading source.  Premature reliance on renewable energy is a LEADING CAUSE of the current ENERGY CRISIS.
  • The R-squared factor between GDP growth and energy use remained in an almost 1:1 correlation between 1969 ad 2013.  No increased energy use, no GDP growth.
  • No fossil fuel source is running out.   The same is true for up and running renewables.  But there are supply/demand mismatches as per shipments and deliveries.
  • Germany depends on wind for 25% of its power supply, but the WIND HASN’T BEEN BLOWING.  Yet, THERE’S NO ADEQUATE BACKUP.
  • At the same time, Germany shut down all of its nuclear plants following the Fukushima disaster while UPPING ITS COAL USAGE.
  • Meanwhile, no country in Europe will acknowledge its ABSOLUTE DEPENDENCY ON RUSSIAN GAS.
  • In short, Germany — as well as Europe in general — has planned poorly while disregarding its need for ENERGY SECURITY.
  • In contrast, resource-poor Asian countries such as Japan and South Korea, do everything in their power TO SECURE ENERGY SECURITY IN ADVANCE, whether it’s, oil, coal or LNG.
  • China, due to political issues with Australia, has been purchasing coal in the broader global market and outbidding Europe for LNG.  Other Asian countries have done likewise.
  • Germany doesn’t even have terminals TO RECEIVE LNG.
  • Yet, all current shortages are TEMPORARY.  It’s a distribution issue but without any clear normalization date.
  • OPEC+ (OPEC plus Russia) could alleviate much of the current shortages by simply PUMPING MORE OIL but refuses to.
  • Despite all of this, markets are still discounting the price of oil by $5 to $10 a barrel as they’re cheap and hate to overpay.
  • As part of a psychological shift, the “old economy” based on metals, commodities and energy has given way to the “new economy” based on electronics, tech and renewables.
  • In the process, THE OLD ECONOMY HAS BEEN STARVED OF FUNDING and is now GETTING ITS REVENGE.
  • Investors are SHORTING OIL in the mistaken belief that there are only 5 to 10 more years left of demand.  THIS IS A LUDICROUS ASSUMPTION.
  • As a result, ENERGY OVERALL NOW REPRESENTS ONLY 2.4% OF S&P MARKET CAP EVEN THOUGH FOSSIL CARBON REMAINS 79% OF OUR TOTAL ENERGY SUPPLY.
  • Carbon energy WILL CONTINUE TO BE USED IN SIGNIFICANT QUANTITIES FOR SEVERAL DECADES AND AT LEAST UNTIL WE CAN DEVELOP GREATER ELECTRICITY STORAGE CAPACITY ON A SUFFICIENT COMMERCIAL LEVEL.
  • Central banks can only keep interest rates low, if ENERGY PRICES COOPERATE.
  • The Fed can’t print its way around SUSTAINED HIGHER ENERGY PRICES.
  • Nuclear may not be the answer either because of a) the court of public opinion; b) capital constraints on building the number of plants it would take to make a difference; c) logistical constraints on getting it done soon enough; and d) spent rods waste disposal issues.

But let Berman tell it himself.

No Lawnmowers or Chainsaws?

California Bans Small Off-Road Gas Engines, Including Lawnmowers and Chainsaws

I see unintended consequences ahead

As per the piece:

“Not all Californians approve of the new legislation. Andrew Bray, vice president of government relations for the National Association of Landscape Professionals, argued the zero-emission commercial-grade equipment landscapers will be far too expensive.

“’These companies are going to have to completely retrofit their entire workshops to be able to handle this massive change in voltage so they’re going to be charged every day,’ Bray said, according to a Los Angeles Times report Saturday.”

IS NEWSOM STILL THINKING THINGS THROUGH?

Perhaps not so much.