Renewables: Is There Anything They Can't Do?

From the Wall Street Journal:

Natural gas and electricity markets were already surging in Europe when a fresh catalyst emerged: The wind in the stormy North Sea stopped blowing. The sudden slowdown in wind-driven electricity production off the coast of the U.K. in recent weeks whipsawed through regional energy markets. Gas and coal-fired electricity plants were called in to make up the shortfall from wind. Natural-gas prices, already boosted by the pandemic recovery and a lack of fuel in storage caverns and tanks, hit all-time highs. Thermal coal, long shunned for its carbon emissions, has emerged from a long price slump as utilities are forced to turn on backup power sources.

The episode underscored the precarious state the region’s energy markets face heading into the long European winter. The electricity price shock was most acute in the U.K., which has leaned on wind farms to eradicate net carbon emissions by 2050. Prices for carbon credits, which electricity producers need to burn fossil fuels, are at records, too... At their peak, U.K. electricity prices had more than doubled in September and were almost seven times as high as at the same point in 2020. Power markets also jumped in France, the Netherlands and Germany.

So the transition to so-called renewable energy has really been raking European energy markets over the coals. Literally, in fact, as coal-fired power plants are having to increase production to meet energy demands. And it's making Russia into a one nation OPEC, the only country in the region with an excess of natural gas which will happily export it.... for some significant diplomatic concessions.

Quite the bind the E.U. finds itself in. Perhaps they might consider changing course, accepting that shutting down their natural gas and nuclear power plants, not to mention banning fracking, is a mistake?

Doesn't sound like it! Reuters --

Record high power prices in European Union countries show the bloc must wean itself off fossil fuels and speed up the transition to green energy, the EU's top climate change official said on Tuesday.

That official -- first vice-president of the European Commission Frans Timmermans, who has appeared in these pages before, always singing the same one-note tune -- argues that, in fact, it is because they haven't transitioned quickly enough that things are so bad! "Had we had the Green Deal five years earlier, we would not be in this position because then we would have less dependence on fossil fuels and on natural gas," he said.

Never mind that the transition itself helped create the shortage by causing a shortage of the fuels that, for the foreseeable future, the continent continues to run on. That, and the fact that the wind doesn't always blow and the sun sometimes fails to shine.

Anyway, you heard it from Frans first -- renewable energy causes problems that can only be solved by... more renewable energy. Is there anything it can't do?

The Colonial Pipeline Experiment

Here's some good news -- after several days offline, due to a ransomware attack by Russian hackers, Colonial Pipeline is back up and running as of Wednesday evening. And sooner then expected -- the initial estimates suggested that it might not be able to be restarted until this weekend. This has led to some questions about whether Colonial (perhaps with some encouragement from the Feds) simply paid the hackers' ransom demand. CNN says no, they just beat the hackers with an assist from the FBI, but Bloomberg is reporting that that's exactly what they did:

Colonial Pipeline Co. paid nearly $5 million to Eastern European hackers on Friday... The company paid the hefty ransom in untraceable cryptocurrency within hours after the attack, underscoring the immense pressure faced by the Georgia-based operator to get gasoline and jet fuel flowing again to major cities along the Eastern Seaboard, those people said. A third person familiar with the situation said U.S. government officials are aware that Colonial made the payment.

Either way, this is an embarrassment for the Biden Administration, but allowing (maybe encouraging) an American company to pay a ransom to Russian cyber terrorists would be hard to come back from. Still, Joe must not have liked the prospect of gas lines -- that totem of Carter-era malaise and harbinger of the Reagan revolution -- lasting more than a few days.

Even so, this crisis won't be ending immediately. Colonial has said, "it will take several days for the product delivery supply chain to return to normal," meaning that souring prices, panic buying, and even rationing are probably going to be with us in the affected states for at least a week.

On the bright side, this is about as close as we can get to a controlled experiment. It would be wildly irresponsible to shut down a pipeline just to spite our obnoxious anti-pipeline protestors and the limousine liberals who fund them. But to see those same liberals sitting in their limousines (or SUVs more likely) in northern Virginia waiting their turn to fill their tanks (and maybe a few plastic bags) with gas? Priceless. Here's hoping the Canadians are watching how this is playing out.

Perhaps the headache will even cause Biden to rethink a few of his own green commitments. As Kyle Smith reminds us,

If Biden himself were not on record as being himself a fan of shutting down fuel pipelines — Keystone XL not only was a menace to our American way of life by bringing us energy, Biden thought it had to be cut off before his first afternoon nap — this brewing crisis wouldn’t be so potentially damaging to him. Biden is an ardently pro-fuel-limits guy in a moment when fuel is limited. As one of his other first acts in office — “Let’s own Trump by endangering our energy future” — he also banned new fracking leases on federal land. Maybe it would be nice to have more energy supply rather than less given what’s happened since?

Don't hold your breath.

Canada: Never Let a Good Crisis Go to Waste

Last week I wrote about the fear among Democrats that the U.S. might be heading for a significant economic recovery before the election in November, such that the Trump campaign would be able to point to "the most explosive monthly employment numbers and gross domestic product growth ever" (in the words of Obama Administration senior advisor Jason Furman), and ride that good news to reelection. Well, yesterday morning we all woke up to news which suggests that that upward trajectory might be beginning. After months of catastrophe, with Great Depression-like unemployment figures, the May jobs report showed that the economy added 2.5 million jobs in that period, the most ever in a single month.

The news was so surprising that left-wing rags like the Washington Post had to frantically delete their pre-written tweets about how terrible the report was:

Of course, we aren't out of the woods yet. An unemployment rate of 13 percent is still pretty bad, even if things are heading in the right direction. And, as I argued last week, Joe Biden's willingness to squander our gains on his ideological program (or that of his advisors while he naps in the Lincoln Bedroom), including his announcement that he would definitively kill Keystone XL  pipeline upon entering the White House, should make us all wary about trusting him to save the economy.

Well, up in Canada we can see what it looks like to have people already in power whose instincts are invariably ordered toward ideology over job creation or the cost of living. We've already covered Trudeau's doubling the nation's carbon tax during the pandemic, a decision which ran counter to what basically every other nation in the world was doing. We also discussed his oil and gas aid package, which seemed ordered towards the end of an industry which accounts for roughly 10 percent of Canada's GDP.

This is the path Trudeau has committed his nation to, and it doesn't seem like it is going to slow down anytime soon. Dan McTeague, president of the indispensable Canadians for Affordable Energy, has been writing recently about the return of Justin Trudeau's college drinking buddy, Gerald Butts, who grew up to be an environmental activist, director of policy for then-Ontario premier Dalton McGuinty, and eventually Trudeau's chief adviser. Butts, you may recall, was forced to resign in the run up to the 2019 election for his role in the SNC-Lavalin scandal.

Now that that election is over, McTeague reports that Butts is back in Ottawa serving on a new task force called Resilient Recovery. "The task force," explains McTeague, is "made up of green industry and environmental leaders [and] says its goal is to help seize a "once-in-a-generation" opportunity to build things in a “better” way post the COVID-19 pandemic." If you guessed that that means taking advantage of a crisis to get Canada even more entangled in the Green Energy industry than it already is and make it harder for oil and gas companies to operate, you win.

Butts: I'm ba-ack.

In the course of two articles, McTeague argues that Canadians should be aware of, and concerned by, this "green energy at any and all costs" task force, and especially by Butts' inclusion in it. Butts has the ear of the prime minister and a history of making life harder for Canadians. McTeague has taken the time to remind us of that history. In his first piece, he examines Butts' work in the McGuinty government in Ontario:

Gerry Butts is known as one of the architects of Dalton McGuinty’s disastrous Green Energy Act. The GEA hurt Ontarians (and is still hurting them), resulting in energy bills increasing by 70% from 2008 to 2016. Ontario’s claim to fame became its high energy rates - the highest in all of North America. Big manufacturers across the province began to flee for friendlier economic climates. Even former premier Kathleen Wynne said in her 2018 campaign that because of the Green Energy Act many families were having to choose between paying their energy bills and feeding their families.

The GEA originally promised the creation of 50,000 green energy jobs. The government later admitted that that number was not based on any formal analysis, that many of the jobs would be temporary, and that it did not account for the lost manufacturing jobs due to the increased energy prices. Wind and solar were incredibly expensive to produce... and the consumer was the one who had to make up the difference. How? Through a hidden tax euphemistically called the Global Adjustment Fee which suddenly started to appear on Ontario energy bills. A Global News article from 2016 stated that for every $100 in usage that appeared on your bill, $23 was actual electricity cost, while the other $77 was from the “Global Adjustment Fee”.

After a few years out of government, Butts jumped onboard the Trudeau train after the Liberals won their majority in 2015, and brought his wealth of experience making everyday life more expensive for Ontarians to Canadians more generally. That part of his career is covered in McTeague's second piece:

The costs of Butts’ climate agenda are apparent in the policies that the Trudeau government put in place during its first term, the most important (and destructive) of these being the carbon tax. It is no surprise that the mastermind behind the Ontario green energy debacle would help create expensive and ineffective policies at the federal level. The carbon tax adds at least 7 cents per litre of gas at the pump for Canadians. Because it applies to all energy sources, the hidden costs – on food and services and our competitiveness – will be even greater, and the carbon tax will increase annually by large increments.

Other expensive and anti-industry policies that were launched during Butts’ time in Ottawa include Bill C-69 (an overhaul of Canada's regulatory and resource project approval system) and C-48 (the oil tanker moratorium act). These have meant significant new and unnecessary regulatory burdens that restrict resource development, drive away investment, and have the effect of making energy more expensive.

Though Canada's May jobs numbers crept up somewhat, just like America's, Canada is still experiencing record unemployment. Bombardier just announced that they'ree laying off 2,500 workers. This is still a time of crisis, and for any recovery to be really resilient, it needs a laser focus on getting people back to work and getting the economy back on track. Gerald Butts' resumé speaks to the fact that he is more than willing to prioritize environmentalist virtue signalling over the benefit of ordinary Canadians.

'The Earth is Healing Itself'

I've already mentioned the disturbing phenomenon of environmentalists celebrating the real suffering we're seeing all around us right now. By some measures, we're approaching Great Depression-level unemployment numbers (though it is encouraging to note that the vast majority of those who've lost jobs at least believe that they'll get them back soon), and the Greens are out there celebrating the attendant fall in carbon emissions, even worrying that they'll rebound once the economy gets going again.

One ridiculous enviro-meme popping up around the internet lately has people sharing a picture of some beautiful scene -- a blue sky, a mountain, an empty beach -- along with the comment "The Earth is Healing." Of course, this trope is at once so smug and sentimental that mockeries of it likely outnumber the originals at this point:

As the lockdowns start to ease (whether governments want them to or not),  I've actually caught myself muttering "The Earth is Healing itself" with a half smile whenever I've noticed local traffic at roughly normal levels. I was reminded of that when I read this WSJ report on the increased consumption of gasoline throughout the country:

Americans are starting to get back behind the wheel, welcome news for the companies that turn oil into gasoline and diesel. Fuel makers including Valero Energy Corp. and Phillips 66 have said they expect gasoline demand to continue to rebound after plunging to roughly half of normal levels in early April, as states reopen from lockdowns imposed to limit the spread of the new coronavirus.

As a result, some refiners are looking to produce more gasoline again after choking back output in recent weeks. Such a move should help keep prices at the pump low for longer. Regular gasoline averaged about $1.80 a gallon in the U.S. on Thursday, down from $2.89 a year earlier, according to the price tracker GasBuddy. “People have been cooped up, they want to drive,” Phillips 66 Chief Executive Greg Garland told investors recently, offering a glimmer of hope as the largest U.S. refiners posted their worst quarterly earnings in years....

Fuel makers typically do well when oil prices are low because people drive more. But the recent oil-price crash has largely been driven by a rapid decline in demand as people stay home and travel less to avoid contracting Covid-19. That means the second quarter is expected to be grim for refiners, too. Nevertheless, fuel makers were generally optimistic about an eventual recovery in appetite for their products, saying they think gasoline consumption will continue to climb, even as people remain wary of getting on an airplane.

There are a few Karens out there who will tell you that it's a bad thing that more people are driving, that any time you go outside you risk killing your grandmother, and that our wise political leaders have ordered us to shelter in place for some very good reasons, so we should listen to them.

Those Karens are, of course, wrong. Being outside during the virus is good. Being indoors all the time will drive you crazy, and anyway plenty of people are being hospitalized with the virus who were staying at home. Better not risk it. Get out, get yourself some cheap gas, take your kids to the park (if you're lucky enough to live somewhere where parks are still open). Delight in the sunshine, but also delight in the knowledge that you're helping the economy -- since gasoline and diesel are made in the same process, and there was a real danger there that, if we ran out of storage space for gas, we'd run low on diesel which fuel delivery trucks, you're helping to preserve America's straitened supply chain.

And if you ever get stuck in traffic, just take a deep breath and remind yourself, "The earth is healing."

Trudeau's Oil Sands 'Relief' a Bust

Back in 2017, Justin Trudeau was speaking at a town hall event in Peterborough, Ont., and was asked about his government's decision to approve an extension to Kinder Morgan’s Trans Mountain pipeline, which seemed in tension with his environmentalist commitments. He replied:

We can’t shut down the oil sands tomorrow. We need to phase them out. We need to manage the transition off of our dependence on fossil fuels but it’s going to take time and in the meantime we have to manage that transition.

This was widely considered to be a gaffe of the Kinsley variety, which is to say the type in which a politician "accidentally reveals something truthful about what is going on in his or her head." Trudeau was acknowledging that somewhere in that woolly brain of his is the desire to shut down Canada's oil sands, the backbone of Canada's western economy, and a key sector of the national economy as well.

The representatives of affected Canadians were compelled to respond. Rachel Notley, whose socialist New Democratic Party was enjoying a rare period in power in Alberta, said, “[Our] oil and gas industry and the people who work in it are the best in the world and we’re not going anywhere, any time soon.” Jason Kenney, who would replace Notley as premier two years later, asked whether Trudeau's "phase-out" meant "he wants to hand-over all global oil production to Saudi [Arabia], Iran, Qatar, et al?" Then-opposition leader Brian Jean replied, "If Mr. Trudeau wants to shut down Alberta's oil sands... he'll have to go through me and four million Albertans first." The pushback was such that eventually -- that is, more than a week later -- Trudeau walked back the comment, saying that he "misspoke," and that he had “said something the way I shouldn’t have said it.”

Fast forward to our present calamity, which has seen Canada's oil and gas industry pounded by a perfect storm consisting of the COVID-19 pandemic and its attendant lockdowns on the one hand, and the Saudi/Russian production war on the other. Back in the middle of March, as the nature of these twin crises was becoming clear, news began to surface about Ottawa's proposed response.

The federal government is preparing a multibillion-dollar bailout package for Canada’s oil and gas sector that is expected to be unveiled early next week, sources say.... [G]overnment insiders are saying little about the details... but the oil and gas sector can expect to get more access to credit, especially for struggling small and medium-sized operations, and significant funding to create jobs for laid-off workers to clean up abandoned oil and gas wells.

One senior Alberta source said the province is expecting Ottawa to provide $15-billion in relief to an industry that has been hammered by the COVID-19 crisis and the price war between Saudi Arabia and Russia that has cratered oil prices and energy-company stocks.

Finance Minister Bill Morneau assured the nation on March 25th that the government understood that "the energy sector is in a particularly challenging situation," and that the rumored bailout was imminent, not "weeks [but] hours, potentially days" away.

Well, not hours or days, but nearly a month later details of the relief package were made public, and they were underwhelming to say the least. Reports of a $15 billion package were off by almost an order of magnitude, as the actual package came to $1.7 billion, largely geared towards environmentalist priorities. Whereas oil and gas representatives had been asking mainly for new lines of credit and an easing of regulations, the actual package earmarked the vast majority of dollars for the remediation of abandoned oil wells and methane-gas emission reduction.

As Grant Fagerheim of Whitecap Resources put it, “This is not going to do anything... If this is as good as it gets, it will do very little or nothing to assist with operations for companies.”

What changed? Well, for one thing, the environmentalists got involved. Around the time of Morneau's pledge, a coalition of environmentalist groups wrote an open letter to Trudeau arguing against such a package, saying

"Giving billions of dollars to failing oil and gas companies will not help workers and only prolongs our reliance on fossil fuels."

They seem to have had an influence. As one oil executive observed to the National Post:

[T]he announcement appeared to adhere closely to Ottawa’s tendencies around environmental messaging, rather than addressing immediate concerns on private sector balance sheets. “I think they made the calculation that it would be politically unpalatable in Ontario and Quebec to provide direct supports to oil and gas."

Of course, Canada's environmentalist groups were elated and were quick to offer praise:

Josha McNabb of the clean-energy think tank Pembina Institute said well cleanups and methane reductions are good steps toward reorienting Canada’s economy toward a low-carbon future. “Those are types of things that are going to lead to an oil and gas sector that is more competitive because it’s cleaner, and also (develop) the kind of expertise that is going to be in demand,” she said.

Even more to the point was the statement put out by Tzeporah Berman of Stand.Earth, which read,

Today, Prime Minister Trudeau made clear that Canada’s bailout package will prioritize addressing the climate crisis and building the cleaner, safer economy we need. This is the kind of leadership the world needs .… This bailout announcement is a major turning point for oil and gas politics in Canada.... [W]inding down the oil and gas industry [is] a hard, but necessary part of achieving [Canada's Paris Agreement climate] targets.

Of course, Trudeau's cabinet is itself brimming with borderline enviro-activists, including Catherine McKenna, Navdeep Bains, and Steven Guilbeault (the latter a full blown activist, who spent ten years with Greenpeace before running for office). None of them needs much pressure -- public or private -- to leave the resource sector out in the cold. No doubt when Morneau said that relief was "hours, possibly days" away, that was based on his perception of the negotiations as they stood at the time. Perhaps he was even trying to hurry his fellow ministers along. But he appears to have gotten ahead of his skis, and in the end the greenies won out.

Furthermore, despite requests from industry representatives, the Trudeau government insisted on going ahead with its plan to double the Federal Carbon tax and merely delayed the implementation of their Clean Fuel Standard by a few months.

“Just because we are in one crisis doesn’t mean we can forget about the other crisis, the climate crisis, that we’re facing as a world and as a country,” said Trudeau.

It must be mentioned that one request from the resource industry was included in the relief package, namely expanding credit availability for small and medium sized energy companies, and there has been talk of further assistance aimed at ensuring that the industry maintains liquidity. There's a good argument for such interventions -- since government ordered lockdowns are a major contributor to the industry's plight, it makes sense that the government would help shoulder the burden while oil and gas companies work their way through this. And it's worth noting that, as the energy sector has contributed more to the Canadian economy over the past 20 years than any other, a lot of that money comes from oil and gas to begin with.

Even so, the core of this package makes plain the Prime Minister's priorities. Weighted as heavily as it is toward capping off old wells, it serves mainly as an instruction to an ailing industry that it had better restructure itself with an eye towards closing up shop for good. Rahm Emmanuel famously advised Barack Obama in 2008 to never let a good crisis go to waste, and Trudeau and his ministers appear to have taken that to heart. Never mind that the resource sector makes up roughly 10 percent of the Canadian economy; that, as this pandemic has reminded us, it contributes the material to make personal protective equipment and ventilators; or that the Green Energy Industry on which they have pinned their hopes has been shown to be a sham. This is their moment. They will not let it pass.

When the Future Meets the Present

By the market close Monday, the impending expiration of May futures contracts sent prices tumbling into the abyss of unprecedented negative territory. The market has never before experienced this. Even industry veterans were surprised by the market turn. By day’s end though, there was actually light in some parts of the industry.

In practical terms, the market reflects what has been the reality since demand so quickly and dramatically seized up. The collapse revealed that there were companies that were supposed to receive shipments of U.S. oil, but didn’t want to receive those shipments because they had no place to sell or store the oil. They would’ve had to pay someone else to take the oil from them. That’s right…pay someone to take the off their hands...

A crisis of demand for petroleum products, and a crisis of supply on the storage front created this market reaction. Closing down a shocking -$37.63, the negative price was the explanation point to an already stunning story of low demand, lots of lay-offs, and loads of lost investments. But while there is assuredly more pain in oil to come than there are socialists on the Seattle City Council, the fundamental landscape remains relatively unchanged from recent weeks. While Monday was a flop, June futures, hovering just above $20 BBL, indicate that the market anticipates demand will improve as the CoVID concerns peter out. This will relieve some supply pressures. After all economies can’t stay shut down in perpetuity.

What does this mean over the longer term?

North American shale producers and service companies remain the most heavily burdened by current market conditions. For producers there was already weakness on the supply side, driven by the refusal of Russia and Saudi Arabia, until late last week, to implement needed production cuts. In addition, there is ongoing low demand created by the CoVID 19- inspired global economic shutdown. While governments struggle to make sense of the dreadfully inaccurate CoVID-19 models, government officials around the world have shut down their respective economies. Thus, there is very high global supply relative to low global demand.

While integral to the supply discussion, service companies have gone relatively unmentioned. Service companies in many respects represent the ability of the producers to recover from current market conditions. After all it is these service companies that actually perform the physical work of building and maintaining wells to ensure maximized production, or ensure the produced water and oil is transported from the production tanks to disposal wells or to market. In other words, the service companies are the eyes, ears and hands of the producers. With limited or no work currently being done because wells are being shut-in or plugged and abandoned, layoffs have not only already happened, but will continue. And with layoffs comes the loss of untold amounts of institutional knowledge as these oilfield workers flee the industry. This will limit producers’ ability to recover and to maximize production efficiencies as the market improves. This must remain front of mind for producers as they make decisions to cut services (or not). They must be weathering this storm shoulder to shoulder with their best service providers so they are in the blocks when the supply needs return.

But while prices have gone up in smoke, there are a number of bright spots that are worth noting and maybe eventually, even worth celebrating.

The fossil fuel industry will ultimately gain strong footing against the purveyors of green energy -- wind and solar. They will be competing against now-inexpensive hydrocarbon-based products at the wholesale and retail levels. This will help mitigate the inclination of some to tout green energy. Cheap and abundant energy is the path to economic recovery across the economy.

In the meantime, while May oil futures tumbled, the share prices for companies that own storage tanks and vessels have increased about 16% across the sub-sector. Companies like Vitol and Teekay Tanker Ltd (NYSE: THK), which provide various kinds of storage capacity for both crude and refined products had terrific Monday afternoon rallies. They too must bend a knee to the realities of supply and demand. In their case, however, they offer a supply of storage to a market whose demand could not be more strident.

In addition, there is an awareness that construction of major pipeline projects which move oil from plays up north in Alberta and North Dakota, to places like Cushing, Okla. (the largest oil storage location in the world), Houston, and Louisiana, will be a vital part of any infrastructure proposals the Trump administration and Congress end up implementing as part of the inevitable economic ‘recovery’ efforts. Companies like Energy Transfer (ET) are poised for bullish long term performance despite the market routing. They are primed to deliver improved oil and gas infrastructure. That will lead to improved market access for many plays across the country.

Finally, it is worth noting that North American shale producers fuel functioning market economies that are diversified and integrated. No economy experiences market conditions in a vacuum. In the case of oil producers like Saudi Arabia and Russia, they rely entirely on high oil prices to fuel their respective economies. Although we know North American producers will survive while enduring some market restructuring, the economies of many OPEC states are utterly reliant on the price of oil and gas remaining high. Their economic philosophies only ‘work’ under certain market conditions -- conditions that will not exist for the foreseeable future. Their citizens will be reminded of how liberty is inextricably connected to strong market-based economies.

So, while this week has been painful and unprecedented for futures contract holders, the variables underpinning the off-loading of those contracts are the same as they have always been. Until demand recovers globally and the supply glut is reduced, the markets will remain volatile and unfavorable.

The Wu Flu: Even Better than the Green New Deal

While everyone else is miserable right now, the International "climate change" community is delirious with joy. They have won. On pretty much every action item, and a few they want but won’t admit to (such as population reduction), they’ve seen the entire world surrender to their agenda. Since February 1, every environmental dream of Greta Thunberg and Alexandria Ocasio-Cortez and their Green New Deal collaborators has been realized.

And all it took was a little bio-engineered bat virus! Thank you, Wuhan!

In the West, we’ve learned that politicians playing on fear of imminent death beats fear of the planet burning up in the unspecified future, when it comes to taking unpopular action. Just look how successful this pandemic has been:

In China, where this wonderful movement started, there were a few downsides. Ugly rumors that cats and dogs conveyed the virus led to people tossing pets out of high-rise windows, (perhaps a better fate than being skinned alive and roasted at a wet market). Livestock died in barns and fields when people were forbidden to feed them. And some people died too…but the Chinese government says not too many. And you don’t hear a lot of complaints.

Still, with industry down across China, pollution levels have receded radically. Less shopping means less garbage. Imagine how clear American skies will be when American industry is finally completely shut down! What's that you say? Most American industry was shut down over and moved to China? Well now it’s all gone! Yay.

On the other hand, maybe there is a reason we haven't heard from the climate control activists as the lockdowns, impoverishment, and deaths proceed. It should now be entirely clear that the Green New Deal will have effects on quality of life, longevity, general prosperity, and the flourishing of humanity that is not so different from the death-dealing economic weapon called Covid 19. This sad rehearsal is our warning to smother those policies in their cradle, or see our planet impoverished in the name of saving it.













The Hidden Upside to Cheap Oil

Normal people react happily when they see the prices of gasoline and home heating oil dropping. Driving becomes cheaper (a plus in a country as expansive as the U.S.) and the heating-oil premium homeowners and landlords in the colder climes of New England and the upper Midwest must pay just to stay alive and keep their buildings operational decreases dramatically. The flip side is that domestic energy producers, who have essentially destroyed the Arab oil cartel and severely hampered Russia's attempt to get its balance sheet in order, need to make a profit in order to invest in current wells and in developing new means of production, such as fracking.

On the punitive, Calvinist Left, however, cheap oil is their worst nightmare, combining the freedom of the open road with the ability to withstand the harshest weather Mother Nature can throw at us in toasty comfort. It's clearly the work of Satan. But there's something else at work as well...

Rejoice, climate change activists. Around the world, greenhouse gas emissions are dropping. The demand for energy, until recently the cornerstone of globalisation and economic growth, has plummeted as countries implement sharp restrictions on movement and social activity in an effort to beat back Covid-19.

Oil has crashed in value, approaching levels not seen in decades, as lockdowns put economies on hold the world over. Even before oil was engulfed in its latest crisis, it was already facing an existential threat from new forms of renewable energy. Fossil fuel use hit a record low in the UK last year, as the country increasingly opts for cleaner energy in a bid to rid itself of a reliance on oil, gas and coal by 2050...  So you might be forgiven for thinking that this most recent crash represents the final nail in the coffin for oil. But not so soon, say experts.

Why not? Simple. Expensive and inadequate "green" technologies such as scenery-scarring, bird-killing windmills (invented centuries ago, and replaced during the Industrial Revolution) and solar power (good luck with that in New England, Canada, and northern Europe) are not economically feasible without heavy governmental subsidies and thus far have not proven competitive with fossil fuels.

"Low oil and gas prices will place pressure on the economics of renewable energy sources and, without policy support, some renewables that have seen rapid deployment will have to wait for credit markets to recover, ceding ground to cheap hydrocarbons and fossil fuels," says Reed Blakemore, deputy director of the Global Energy Center at the Atlantic Council.

The double whammy of Covid-19 smashing world economies and public budgets is also likely to harm the prospects of renewable energy.

The economic downturn is dampening the demand for power as millions of people stay at home and heavy industry operates at minimum capacity. Supply chains have been stretched to breaking point, and financing has been frozen, choking off lifelines to renewable energy companies that desperately need it.

Additionally, both governments and consumers have more important things to worry about these days than climate crankism. '"The combination of coronavirus and volatile market conditions will distract the attention of policymakers, business leaders and investors away from clean energy transitions," says Fatih Birol, executive-director of the International Energy Agency.'

This won't stop the Greens from trying to insert their crackpot nostrums into every post-coronavirus recovery bill they can get their mitts on. But continued low energy prices from fossil fuels also mean that consumers, when they start driving again, are hardly going to wish to pay a green premium on things like electric cars when they're trying to restore the green dollar bills to their pockets.

UPDATE: Sales of electric cars crater.

Global sales of electric vehicles are projected to drop by 43% this year as the technology faces a series of overlapping problems, the consultancy Wood Mackenzie finds in an analysis.

Driving the news: "The coronavirus outbreak, potential delays to fleet purchasing due to lower oil price and a wait-and-see approach to buying new models have all contributed to this decrease in projected sales," they write. They see worldwide sales of battery electric and plug-in hybrids at 1.3 million vehicles this year, compared to 2.2 million last year.

Beyond the Virus, the War Over Oil Rages On

In an effort to stabilize the energy sectors, President Trump has interposed himself into the market-busting wrangle over oil prices between Saudi Arabia and Russia:

When oil prices crashed in early March after a dispute between Russia and Saudi Arabia, President Trump put a positive spin on the news. “Good for the consumer, gasoline prices coming down!” he wrote on Twitter as markets tumbled. On Tuesday, Mr. Trump said that falling gasoline prices amounted to “the greatest tax cut we’ve ever given.”

But the president has also nervously eyed the dire threat that American energy producers face from rock-bottom oil prices, and American officials have spent weeks pressing Saudi Arabia and Russia to settle a dispute that has created a global oil glut and further shaken an already-traumatized global economy.

Leaning on two authoritarian leaders he has befriended as president, Mr. Trump spoke this week with President Vladimir V. Putin of Russia and the Saudi crown prince, Mohammed bin Salman, urging them to bolster prices by cutting their domestic oil production.

The president has to tread a narrow path here. On one hand, lower prices at the pump are welcomed by everybody, but a ruinous price war between the Saudi "royals" and Russia's new czar-for-life, Vladimir Putin, is meant to hurt American energy producers just as the country has become energy self-sufficient. Add to this toxic mix the "greens" who would like to see us all living in grass huts and are thrilled with the prospect of destroying the American and Canadian energy industries, and you have a challenging, almost lose/lose situation.

Prices for Brent crude initially leapt by nearly 50 percent after Mr. Trump’s tweets, but dipped again as it became unclear whether his supposed breakthrough would materialize. Neither Russia nor Saudi Arabia publicly committed to such a cut, and a Saudi statement issued on Thursday called only for a meeting of oil producing nations to reach a “fair agreement.” The Kremlin cast further doubt on the possibility, denying a claim that Mr. Trump made on Twitter that Mr. Putin had discussed the matter with the crown prince.

The picture emerged of a president eager to find some good economic news amid the pain of a largely shuttered domestic economy, and of an embattled Saudi leadership feeling financial strain of its own, perhaps seeking the favor of Mr. Trump. Analysts said the major outstanding question was how Moscow, which has been waging a price war with Riyadh, will respond.

A timely reminder that, while the world is preoccupied with the Wuhan virus, the Great Game between and among nations goes on.

 

The Return of Cheap Oil: Blessing or Curse?

Amid all the bad news of late, one trend that in earlier times would have gladden the heart of the driving public is the plunge in oil prices, both by the barrel and at the pump. Baby Boomers happily recall the days of 50-cent a gallon gasoline, and even the once-unthinkable dollar-per-gallon prices of the late '80s and early '90s seem remarkably cheap in retrospect. Even when gasoline prices in California soared into the $5-6 range at the end of the Bush administration, it seemed like there was still nowhere to go but up.

Now, however, they're dropping again, with a national average below $2/gallon. A perfect storm of events has hit the oil industry, most obviously the international shutdown of much trade and commerce and the questionably constitutional orders by state governors restricting public events and travel in defiance of the First Amendment's guarantee of freedom of religion and assembly, in the wake of corona virus pandemic. Throw in as well the ongoing price war between Saudi Arabia and and Russia, with each trying to drive the other out of the marketplace and seriously wounding domestic American oil producers as they fight it out, and you have a very rocky time for the energy industry.

Wait -- it's worse than you think:

Saudi Arabia’s recent decision to crank up oil production represents a dramatic shift in its thinking about energy markets and its own reliance on oil revenues. Gone are the days when Saudi oil reserves were prudently managed for future generations. By no longer maintaining a specific oil-price band or retaining spare production capacity, the Kingdom is stepping away from its longstanding role as the market’s swing producer.

The change reflects Crown Prince Mohammed bin Salman’s (MBS) view that Saudi Arabia has a relatively narrow window of opportunity to monetize its large oil reserves. He has embarked on a policy of capturing market share rather than trying to set the price, once again breaking with longstanding policies that he believes are no longer useful.

Why would the Saudis do that? Since the Arab oil embargo of 1973, which was directed at the West and in particular the United States, for supporting Israel during the Yom Kippur War that year, the Saudis have enjoyed lording it over the infidels and making them dance like marionettes as they manipulated the market. Now, they're doing it again.

If MBS persists with this strategy, he could significantly alter the dynamics of global energy markets. By keeping prices depressed, Saudi policy will not just drive more expensive forms of oil production out of the market; it will also make it harder for renewable energy to compete with fossil fuels – at least in the near term.

The source of this linked article is Project Syndicate, a radical leftist internet publication masquerading as "the World's Opinion Page," based in Prague, funded in part by George Soros' Open Society Foundations and the Bill and Melinda Gates Foundation, and one notoriously sympathetic to Islam. If you read its columns and every day and follow on Twitter something called The Bridge Initiative, a "multi-year research project on Islamophobia" disgracefully based at once-Catholic Georgetown University, you'll have a pretty fair idea of what Islam and its western enablers are up to.

The new strategy became clear on March 7, a Saturday, when Saudi Arabia decided to cut its official selling price and increase its oil production to above ten million barrels per day, with output in April likely to be near 11 million, up from 9.7 million in recent months. When markets reopened the following Monday, oil prices suffered their largest single-day decline since 1991.

Officially, the Saudi action was a response to Russia’s refusal to agree to voluntary oil production cuts at an OPEC+ meeting on March 6. Since 2016, the Russians and the Saudis have been coordinating their production to keep prices elevated at around $50-$60 per barrel. Yet the net effect of this cooperation has been to help the US shale industry boost its own production and sales, thereby capturing most of the world’s incremental demand. Having suffered declining exports since 2016, the Saudis were probably hoping that a reduction in output would shore up prices at a time of weakening global demand, owing to the coronavirus outbreak.

That "probably" is a nice touch. But of broader interest is the notion that "MBS" is actually looking toward a "renewable energy" future, and is trying to cash out now -- and ruin two of his chief competitors -- while the cashing's still good. This presupposes that the "Green revolution" is actually going to take place, something whose odds suddenly look much longer in the wake of the coronavirus and the Chinese culpability in its release.

There are strong arguments for why the Kingdom should pursue this path. For starters, Saudi oil is cheaper to extract and transport than many other reserves. It is also “cleaner” than that produced by Canada’s tar sands, and emits little methane compared to Russian oil. And Saudi Aramco is one of the world’s most technologically advanced and technically competent oil companies. In other words, Saudi oil has multiple comparative advantages over the competition, and therefore is perfectly placed to hold a privileged position in the global clean-energy transition.

In other words, under the guise of "clean" energy, which serves to keep the global-warming nuts at bay, the Saudis are actually pursuing a beggar-thy-neighbor strategy against its two chief antagonists, countries that also serve in Muslim eyes as archetypes of their religious enemies: the still-Christian U.S.A. and Orthodox Russia, the "Third Rome" that traces its spiritual descent directly from Rome and occupied Constantinople. This basically gives the game away:

The Kingdom’s policy shift should give pause to American politicians who boast that the United States has achieved energy independence through shale. In an all-out war for market share, US, Canadian, Russian, and other oil producers will have a hard time competing with the Gulf, given its lower costs and other competitive advantages... MBS may be gambling that he can outlast the competition. But given the structural features of the oil market and the world’s inevitable transition to renewables, he probably sees no other alternative. OPEC quotas and production agreements with the Russians have not delivered the results he needs.

So first we lose a price war with the Arabs, then the entire industry collapses as it "transitions" to unicorn farts and bird-annihilating windmills. That's the future, according to our friends the Saudis. It's up to us to make sure it doesn't happen that way.