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US Energy Policy – Stupid is as Stupid Does! (Vol. 43)

mse | Mar 16, 2022

The Greenies have taken over the White House – there goes Common Sense and Logic!

We are for environmental improvements and reducing the carbon footprint. How to do it, how much does it cost, and over what time frame are the critical questions.  

 

FACT: With today’s technology, there is no clean alternative to replace fossil fuels other than nuclear. Get over it, that is the physical reality. But nuclear is taboo, that leaves none. (It shouldn't be taboo, but that discussion is for another time.)

 

Yes, we can have wind - rain- fire - sun, you name it, but none of these can replace fossil fuels reliably today. There are no panaceas, so set policy for the realities of today. (Technology will change that in due course, but we cannot set policy on hopes and aspirations - hope is not a plan.) The International Energy Agency (IEA) says under the most optimistic transition assumptions that more fossil fuels will be consumed in 2050 than in 2000. Transitions from fossil fuels at best will be very slow.  

 

The Biden Administration knows this, they are not stupid. If that is true, what can be deduced?

 

  1. Policy is intentionally driving up all fossil fuel energy costs to make ‘green’ technology more competitive. There is no debate about the fact that green technology is much more expensive than fossil fuels with today’s technology nor can it fully replace fossil fuels.
  2. Policy is unintentionally driving up fossil fuel energy, because officials don't understand their policies will drive up prices.   

 

Both are stupid, but it must be 1, which is a stupid policy promoted by the ‘greenies’. Why? Because it is highly inflationary to all and hurts the lower income folks badly, AND it does not work. Today’s green technology cannot physically replace fossil fuels. Period.

 

INFLATIONARY. Higher prices for oil, gas and coal affect many things, not just gasoline, (which is the poster child for higher fossil fuel cost). They are used to produce electricity, plastics, higher distribution costs, and many thousands of other items we use every day, all of which hurts inflation. This inflation is primarily from a basic supply and demand imbalance, not monetary inflation as discussed in No Spin #39 (for an explanation of supply and demand and equilibrium prices, see our presentation "#5. Economic Fundamentals: Scarcity & Pricing Supply & Demand" here.

 

DOESN’T WORK. Sun and wind require extraordinary amounts of material to produce energy. There is not enough material to do this and it is prohibitively costly to try. In the 20 years of trying, we have spent Trillions of dollars to produce 2% of the world’s energy by these means. The push for electric vehicles is a well hidden joke. The vehicles are excellent, but are expensive and do nothing for our carbon footprint, see No Spin #1 on Electric Vehicles.  An all electric fleet would require about 50 million new batteries a year for new and replacement batteries. There just is not enough discovered metal and minerals in the entire world to do this. And, if you could, what would be the environmental consequence of disposing of them? And how much would demand for these materials drive up costs, making them even more expensive?

 

IS GOVERNMENT POLICY THE PROBLEM?  Yes, don’t listen to the PBS (political bull s–-t) coming from the administration. Gasoline prices were 60% higher over 2020 prices before the Russia/Ukraine conflict. This conflict has, for now, made it worse, but the fundamental shortage of fossil fuels already existed. Production is down in the US and demand is up as a result of coming out of the COVID recession.  

Increased demand is natural and represents good things happening in the world economy. Decreased production is intentional, driven by government policy. This is both psychological and physical. Shutting down the XL pipeline was a psychological message and detrimental to the carbon footprint (the oil doesn’t disappear, it is shipped by truck or train, which is adding to the carbon emissions as well as being more expensive.) Cutting back on leases was physical, reducing output over time. Increased and unnecessary regulations hurt production by delays and increased costs. 

 

Strategically, cutting back on our investment in energy production, means we are no longer self-sufficient, and dependent on others, especially those who are not our friends.  This is a bad position to be in today for this critical commodity, and can become a weapon used by others against us and our allies.  Europe is particularly vulnerable as they shut down nuclear and coal plants, becoming very dependent on Russian energy. 

 

BOTTOM LINE

 

The greenies have influenced policy to the detriment of this country. That is stupid. We must deal with reality - green technology cannot work today. When it does work, go for it. Until then, reverse course and promote production of oil and gas as fast as you can.

 

LEARN ECONOMICS, THEN VOTE SMART