Failure to develop fossil fuels is crippling the world economy

Biden's nonsensical embrace of "climate change" alarm will harm millions

The world has a deepening shortage of fossil fuels created by the institutional stupidity of Western democratic leaders buying into the nonsense that CO2 causes climate change. Physicists know better. World leading physicist Lubos Motl said it succinctly after reading a recent report from the Intergovernmental Panel on Climate Change (IPCC).

Maybe Biden believes the spam as well.

Biden’s thoughtless statement that he sought to end fossil fuels hasn’t helped. Major sources of oil like the organization of petroleum exporting countries (OPEC) thumbed their nose at Biden’s request to increase output and went further by agreeing to cut production by a staggering 2 million barrels a day, enough to ensure oil price remain firm even if the American central bank is able to trigger a global recession with its rapid increases in interest rates to try and curb inflation, now almost out of control.

It is a vicious circle of institutional stupidity. United States was not alone among western democracies in shoveling cash into the economy during COVID following over a decade of trying to keep interest rates at low or even negative rates through what was called Quantitative Easing (QE) which was a fancy term for having the central bank buy bonds at at least the same rate as the government was issuing new debt effective increasing the money supply. Low rates drove the stock market and real estate prices to unsustainably high levels, transferring gobs of wealth to the established elites at the expense of the poor who had no ability to protect themselves from the inevitable inflation and making it virtually impossible for many to ever afford a home.

The attack on fossil fuels made it worse as exploration and production companies stopped spending capital to expand output and used their cash flow to pay dividends and buy back stock. Higher oil & gas prices resulted driving up inflation since energy is part of the cost of almost everything and not just gasoline which gets most of the inflation headlines. Food, clothing, transportation, home heating, air travel and most hard goods have a significant energy component in their costs and higher energy prices contributes to the global inflation now being experienced pretty well everywhere. No one is spared by institutional stupidity in major economies like the U.S.

Now the inflation is here and racing ahead, requiring higher rates to calm it down and destroying the equity in homes that the QE episode built but causing many to lose their homes or become insolvent in the process

Source: Trading Economics

With inflation now double digits in the EU, 9.9% in United Kingdom and 8.3% in U.S.A. expect some major increases in interest rates to try and calm down inflation. Canada’s unions don’t think higher rates will cure inflation, as set out in this article by the Canadian Union of Public Employees (CUPE). They blame inflation of profiteering.

In reality, inflation is simply more money chasing fewer goods and the CUPE economist has it right that a shortage of supply will cause inflation. The blame is not corporations, however, it is governments strangling output of oil & gas with stupid “climate” policies that pretend CO2 causes global warming. Profit margins of the companies making up the Standard and Poor’s index have not seen much change in profit margins over the past few years with rise since 2020 driven by a recovery from COVID and inventory accounting during a period of rising prices. Profit margins of 10 to 13% have persisted for decades.

Fiscal policies in both Canada and the United States have been designed to disadvantage lower income groups and benefit the elites. In Canada, the ad valorem HST penalizes low income people who pay taxes on virtually everything they purchase, and corporate taxes exacerbate the harm inflicted on them since corporations pass on the taxes they collect in price further increasing inflation. Carbon taxes enacted by the Trudeau liberals have the same lopsided effect, punishing those who spend virtually all of their income on food, shelter, transportation and utilities - once again the poorest segment of society. Token refunds and rebates such as the highly touted carbon tax credit or the HST refund give a tiny portion on the money taken back to the masses to make them feel like the central government cares about their well being, while in fact they are orchestrating a transfer of wealth from lower income groups to the Laurentian elites.

Inflation itself is a tax on the poor, but benefits those with enough capital to own real assets which will rise in price as inflation takes effect. Policies that encourage inflation like low interest rates and deficit spending, or restrictions on the supply of oil & gas are not happenstance but part and parcel of the Trudeau liberal platform. Ottawa is full of talented people so it is fair to conclude this harmful outcome is intended rather than a side effect. The Liberals have made science into a weapon to justify their policies despite the reality that the “science” they spout is political science and bears no relation to actual scientific advances.

Eighty percent of the world’s energy consumption is provided by fossil fuels. Expressed as terajoules, the world consumes over 580 million terajoules annually. As most will know, a joule is one watt per second. Western leaders tout a “transition” to so-called renewables. Let’s review reality. A wind turbine can produce from 0.5 to 3.0 gigawatt hours of energy per year depending on the average wind speed. A gigawatt hour is equal to 3.6e12 joules. To power the world’s current energy consumption with wind power alone would require 580,000,000e12 joules/(3.6e12 joules per gigawatt x ~2 gigawatts per turbine)=~80 million wind turbines.

Each wind turbine requries 335 tons of steel, 4.7 tons of copper, 1,200 tons of concrete and 3 tons of aluminum.

How about solar? On average each acre of solar farm produces 351 MwH of electricity per year, equivalent to 1.26e12 joules.

To power the world’s current energy needs entirely with solar would require 580,000,000e12 joules/1.26e12 joules per acre =460 million acres of land mass. The solar panels have a life span and are subject to damage from the elements including snow and hail. The millions of acres needed to power the globe with solar or wind will come at the expense of food production. World energy usage keeps growing in line with global GDP and today’s needs are a drop in the bucket of what will be needed in another few generations.

Think a “transition” to renewables will save the planet? Think again. Only nuclear has the capability of replacing fossil fuels for the world’s energy needs and the climate nutters promoting “renewables” are just as antithetical to nuclear.

Instead of common sense, the Anthropogenic Climate Change delusion is causing a global energy shortage which will impoverish millions, cost millions of lives and bring down most world economies if the mania does not end soon. Wherever you live if it is a democracy, vote for an administration that will abandon this toxic nonsense at the earliest opportunity.