Category Archives: Energy

Dollar’s Purchasing Power Plunges Further, as Housing CPI Begins to Climb, Food & Energy Soar, New Vehicle Prices Spike, by Wolf Richter

Just remember that there’s one root cause for both the supply chain issues and rising prices: fiat debt creation and monetization by central banks. From Wolf Richter at wolfstreet.com:

CPI inflation highest since 2008 and 1991.

The Consumer Price Index (CPI) jumped 0.4% in September from August. The relentless series of jumps started in January when this “transitory” inflation took off. But now, “transitory is a dirty word,” as Atlanta Fed President Raphael Bostic phrased it so elegantly, because the underlying dynamics have made it persistent: as some prices back off, others are surging.

On an annual basis, CPI jumped by 5.4%, matching the June high this year, and both are the highest since July and August 2008 (5.6% and 5.4%), and all four are the highest since early 1991, according to data released by the Bureau of Labor Statistics today.

The increase was driven by numerous factors including food and rents and gasoline and utilities and new vehicles.

Food and energy can move sharply and erratically, often following prices of commodities. With food and energy removed, the “core CPI” rose by 0.2% for the month and by 4.0% year-over-year.

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Is Decarbonization Threatening Europe’s Energy Security? By Haley Zaremba

“Decarbonization” is going to be much more difficult than the Green New Dealers and all its other proponents think. From Haley Zaremba at oilprice.com:

  • 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.

Later this month about 25,000 people are headed to Glasgow for the 26th annual United Nations Framework Convention on Climate Change (UNFCCC), known as COP26. The UK, this year’s host of the Conference of the Parties, has asked participants to submit more ambitious targets for emissions reductions by 2030 in order to enable the possibility of achieving global net-zero emissions by mid-century. Conference leaders have also asked for increased monetary contribution to climate adaptation and mitigation funds, and have the stated goal of finalizing the regulatory framework for implementing and enforcing the pledges made in the 2015 Paris agreement.

At the same time that the world ramps up for the latest and most robust global climate meeting, an energy crisis is unfolding in Europe and Asia which could set the world back in terms of carbon emissions, and which showcases just how difficult the road to decarbonization will be. As global economies have surged back to life in the post-pandemic era, demand for consumer goods and services has skyrocketed. While consumers have largely bounced back to business as usual, however, supply chains have not been able to keep up.

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Things Go Awry, by Israel Shamir

It’s going to be a long time before the world or any appreciable part of it is going to make the green energy transition. Right now Europe is demonstrating the difficulty of doing so. From Israel Shamir at unz.com:

An interesting coincidence: the beginning of October ushered in a double crisis: the first collapse of the Internet and the final failure of the Green Economy. Facebook employees used saws and axes to get into their working places, for the smart doors stubbornly refused to yield the way and their badges had lost their magic touch. It seems the Internet trouble had been initiated by some unknown forces outside of Facebook. These forces have access to the inner working of the Internet. Perhaps it was military; or some obscure technicians guarding Internet secrets. They proved their power: even Facebook’s domain was placed up for sale. Mark Zuckerberg could not do it, I was told. Was it a blackmailer’s threat to global finance? Or an attempt to deflect Congressional hearings? Perhaps it was a simple demonstration of naked power.

At the same time, the first blow of winter revealed the inability of green energy to heat our homes and energise industry. Nature proved its abilities: all of a sudden, Europe’s winds refused to move the turbines. An unusual calm settled in the North, as if the winds were confined by Aeolus in his bag. Energy prices skyrocketed. The excellent future planned for mankind, all digital, internet-based and free of fossil remains, failed to materialise. Instead of continuing our march towards the dreadful New Normal, we shifted back to our troublesome but familiar normality when things went awry. The cowboy hat of Big Tech was too large for its head. Mercifully, this misfortune occurred well before the whole of mankind had been railroaded into smart dwellings heated by the mischievous wind. Otherwise, last weekend could have been the end of Homo Sapiens: we would have frozen outside, unable even to pass through the smart doors.

An energy crisis combined with an Internet failure is very dangerous. Why don’t we encounter extra-terrestrials? Here’s a possible answer: every sapient civilisation destroys itself before it achieves the capability to venture to the stars. Intelligent creatures tend to overestimate their thinking abilities; instead of sticking to known technologies and implementing small improvements, they want to make a giant leap forward. The results are gloomy, as we learn now.

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Green Policies Return the World to Coal, by Clarice Feldman

Renewable energy is not yet ready for prime time, and mistakenly thinking that is has meant that coal, the dirtiest of energies, has had to pick up the slack. From Clarice Feldman at americanthinker.com:

There’s scarcely a place in the modern world that will not be feeling the high cost and discomfort of a shortage of energy supplies and their increasingly soaring prices. Lebanon already is. Due to a shortage of oil, the two power plants that supply 40% of that country’s electricity shut down. There is no electricity in Lebanon and will not be any for some days.

It’s an extreme case, but even the United Kingdom, the EU, the U.S., and China are running up against diminishing ability to obtain the necessary energy supplies to keep things running smoothly. Some of the shortages are due to accidents, like the cutting of an undersea cable to the UK, but most are due to green policies and stupid political choices, ironically shutting down oil and gas-fired power plants and fossil fuel exploitation and transport at the demand of the greens, who grossly overestimate both global warming and the ability of air, sun and water to take their place. Ironically, this means coal — the dirtiest possible fuel — is back in huge demand,

Despite an import ban on Australian coal, China relented and has begun unloading Australian coal because of an extreme power crunch. Coal is now in demand in Europe as gas prices soar and the EU’s energy policies are in large responsible:

The ideological split will drive a wedge between the European Union, a long-time champion of a coal phaseout, and corporate interests as market conditions favour gas-to-coal switching. The switching ratio has slid in coal’s favour in the last weeks of June 2021 and judging by the current futures structure, it will stay in place until at least Q2-2022 [snip] Given the natural limitations to further coal utilization, in Germany the main interaction in the upcoming weeks will be between coal and wind. Coal-fired electricity generation rose to multi-year highs in the first weeks of September when every single day saw wind generation only a fraction of its usual strength and speed. Now, the situation has changed somewhat as wind started blowing again, dropping hard coal generation to an average generation rate of 7.5-8 GWh, still some 30-35% higher than at this time of the year in 2020. Yet still, Germany’s travails are far from over, especially with December looming large on the horizon. According to preliminary plans, that month alone three nuclear plants will stop operating in Germany — Brokdorf, Grohnde and Gundremmingen — with a combined (non-intermittent) capacity of 4 GW, representing the penultimate wave of nuclear phase-out closures before 2022 sees the last 3 reactors decommissioned. Such substantial capacity would need to be replaced with either coal or gas, with profitability skewed overwhelmingly towards the former. [snip]

The current coal demand surge should force the European Union to reconsider its position on coal — as polluting as it might be, it could still help alleviate energy crunches across Europe when the situation demands it. As things stand today, the upcoming four years would see at least seven countries phasing out coal: Portugal (2021), France (2022), UK (2024), Hungary, Italy, Ireland and Greece (all 2025). As Europe has seen nine consecutive year-on-year increases in aggregate coal burns, perhaps more switching flexibility and less bans could still be the way forward.

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Bigger on Two Wheels, by Eric Peters

Automobile engines are getting smaller and smaller. From Eric Peters at ericpeters.com:

The 2021 BMW R18 – which is a motorcycle – has a bigger engine than many of the new cars I’ve been test driving this year.

Proportionately, it has one of the biggest engines available in anything you can still buy that rolls under power.

This roughly 900 pound bike has an 1800 cc air-cooled twin cylinder engine. Another type of engine you cannot find in anything on four wheels, that’s new. Those are two very big cylinders, with each of the two pistons pumping within them equivalent – in terms of individual displacement – to almost the total displacement of all four pistons within the becoming ubiquitous 2.0 liter (or 2,000 cc) inline (and water-cooled) four cylinder engine you’ll find under the hood of so many new cars – and even crossovers and SUVs.

All of which weigh a great deal more than 900 pounds.

Such disproportionately small engines in such large – and heavy – cars are as mismatched as ballet slippers for Mike Tyson. But they’re shoed into place, so to speak, by car companies forced to go to absurd lengths to comply with government regulations, especially those regarding gas mileage and the “emission” of the gas – carbon dioxide – that has become the justification for a kind of jihad against the internal combustion engine.

These regs do not yet – yet – apply to motorcycles. For the same reason that “mandates” regarding the Jabbing of employees only apply – for now – to businesses that employ 100 or more people.

Give it time.

In the meanwhile, we have an interesting juxtaposition – fundamentally similar to the juxtaposition that exists between the healthy Unjabbed and the unhealthy Jabbed, who continue to get sick even though they have taken what is marketed as the “cure.”

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The WEF and the Pandemic, by Swiss Policy Research

The WEF has been planning a pandemic, and grooming world leaders, for a long time. Check out the people who have gone through their Young Global Leaders and their Global Leaders for Tomorrow programs. From Swiss Policy Research at swprs.org:

WEF founder Klaus Schwab in 2014 (Alamy)

How is the Davos World Economic Forum involved in the coronavirus pandemic?

The Davos World Economic Forum (WEF) is a premier forum for governments, global corporations and international entrepreneurs. Founded in 1971 by engineer and economist Klaus Schwab, the WEF describes its mission as “shaping global, regional and industry agendas” and “improving the state of the world”. According to its website, “moral and intellectual integrity is at the heart of everything it does.”

The WEF has been involved in the coronavirus pandemic in several ways.

First, the WEF was, together with the Gates Foundation, a sponsor of the prescient “Event 201” coronavirus pandemic simulation exercise, held in New York City on October 18, 2019 – the same day as the opening of the Wuhan Military World Games, seen by some as “ground zero” of the global pandemic. China itself has argued that US military athletes may have brought the virus to Wuhan.

Second, the WEF has been a leading proponent of digital biometric identity systems, arguing that they will make societies and industries more efficient, more productive and more secure. In July 2019, the WEF started a project to “shape the future of travel with biometric-enabled digital traveler identity management”. In addition, the WEF collaborates with the ID2020 alliance, which is funded by the Gates and Rockefeller foundations and runs a program to “provide digital ID with vaccines”. In particular, ID2020 sees the vaccination of children as “an entry point for digital identity.”

Third, WEF founder Klaus Schwab is the author of the book COVID-19: The Great Reset, published in July 2020, which argues that the coronavirus pandemic can and should be used for an “economic, societal, geopolitical, environmental and technological reset”, including, in particular, advancing global governance, accelerating digital transformation, and tackling climate change.

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The Energy Transition Will Take Decades Not Years, by Tsvetana Paraskova

You’re not just going to flip one switch off and one switch on and seamlessly shift economies and consumers from coal, gas, and oil to renewable energy. From Tsevetan Paraskova at oilprice.com:

  • With natural gas, coal, and oil prices all soaring this summer, it is clear that a successful energy transition will take decades not years
  • Some energy transition proponents may have confused Covid energy demand destruction with a change in consumer behavior
  • The truth is that an energy transition can only occur when clean energy can be provided both cheaply and reliably

This year’s global demand for all three fossil fuels has sent a message to overly enthusiastic proponents of the energy transition – hold your horses.

Those who predicted last year the demise of oil, gas, and coal after the pandemic and those who said that peak oil demand was already behind us because lasting changes in consumer behavior would reduce the use of crude are now facing reality.

Global oil demand is just a few months away from reaching pre-pandemic levels, while natural gas and coal demand have already exceeded the 2019 volumes.

Sure, international airline travel is still struggling because of COVID-related travel restrictions in place in many countries. But economies are bouncing back, industries are growing, and the world needs a lot of energy, once again.

Fossil Fuels Support Economic Growth

And fossil fuels continue to supply most of that energy and will do so for years to come. Last year’s slump in fossil fuel consumption is being erased, and those who expected oil, gas, and coal demand to never return to pre-COVID levels now know they were wrong.

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The Ugly Math: GM, Ford, other Legacy Automakers Throw Hundreds of Billions at EVs, Only Auto Segment that’s Growing. Tesla Made Them Do It, by Wolf Richter

The question remains: if electric utilities right now are having trouble supplying enough juice in places like Europe and China, where does the extra juice come from for millions of EVs? From Wolf Richter at wolfstreet.com:

It’s a zero-sum game that’s eating up a huge amount of cash. But Electric Utilities are loving it.

In the press release for its investor conference today, GM said that it plans to double its annual revenues by the end of the decade as it transitions to EVs. In terms of the math, 8% in price increases a year for nine years would do that without having to jump through the hoops of selling more vehicles. GM’s average transaction price in Q3 in the US jumped by 20% year-over-year. So…  I don’t see this statement as sign of an increase in volume, but an increase in prices.

GM confirmed that logic by pointing out that it expects its margins to increase as it transitions to EVs. It said that half its manufacturing capacity in North America and China will be capable of producing EVs by 2030.

Sales growth in this industry is obtained by selling higher-priced vehicles. But volume growth, in terms of the number of vehicles sold, is hard to come by in the auto industry. There are some developing economies where sales are still growing. But there has been no growth in developed economies in two decades.

In the US, sales peaked in 2000 at 17.4 million vehicles, then fell off, then plunged to 10.4 million vehicles in 2009, and then recovered to hit 17.5 million vehicles in 2016, and that was it. Sales have been falling ever since. Last year, the industry sold 14.6 million vehicles. This year, may be around 15 million vehicles.

But the one segment that is growing in leaps and bounds is EVs. And that’s what GM’s investor conference was about – creating investor excitement about this “transition to EVs,” from a Chevrolet crossover “priced around $30,000,” to the high-end Hummer EV pickup truck with 1,000 hp.

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European Energy Crisis — And is That Gas You Think You’re Burning? by Tom Luongo

Like virtually all emergency shortages, the current European Energy Crisis has been created by European elites per some sort of arcane political calculations. From Tom Luongo at tomluongo.me:

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Europe’s Energy Crisis Presents A Real Danger, by Daniel Lacalle

Europe’s governments have created an energy crisis for Europe. A severe winter could be disastrous. From Daniel Lacalle at app.hedgeye.com:

Europe’s Energy Crisis Presents A Real Danger - AdobeStock 9699481

This week the wholesale price of electricity has exceeded the psychological barrier of 200 euros per megawatt hour in most countries of the European Union.

Although the daily price currently only affects 15% of the energy sold, since the rest is locked for almost twelve months since last winter at much lower prices, it is a sign of future risk. Thousands of contracts are going to have to be revised with huge price increases in the next three months when the locked contracts expire.

The price of liquefied natural gas (LNG) has soared to $34/mmbtu delivered in December and January. In comparable energy terms it would be about $197 per barrel of oil equivalent, according to Morgan Stanley. Meanwhile, the price of natural gas (NBP) has risen more than 200% in 2021.

The price of CO2 emission rights has increased more than 1,000% since 2017, and more than 200% in 2021. This concept, which is a hidden tax for which the governments of the European Union are going to collect more than 21 billion euros in 2021, adds to the inflationary spike.

These extraordinary tax revenues should be used to mitigate the price increases in consumer bills and avoid an energy crisis in Europe that will sink the recovery.

Two key factors explain the rise in energy prices and in both there is a responsibility of governments: The forced closure of the economy is a key factor to understand the damage generated in the supply chains, and the prohibition of investment in gas resources and abandoning nuclear in Germany has led to a more volatile and expensive energy mix in peak demand periods.

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