Unintended consequences don’t mean unpredictable results. The drive among developed nations to replace fossil and nuclear power with renewables has had political support. Windmills and solar panels dot the landscape. Leaders and the media tell us these are the power sources of the future. Given these forecasts, only fools invest in fossil fuels. Everyone knows Nuclear power is so dangerous people have to be crazy to operate a reactor of any kind. The sooner we get rid of these relics of our unenlightened past, the better.
Nowhere has this Green mantra taken hold with more incredible speed than Western Europe. Coal mines and power plants abandoned ghosts. After the flooding of the Japanese Fukushima nuclear power plant, Germany decided to close all its nuclear plants. The world was made aware of how virtuous these nations had become. They may spend a little more, but it’s worth it to save the world.
Of course, the spoilsports asked what would happen if the sun didn’t shine or the wind didn’t blow? Not to worry, the greens answered, we’ll have backup batteries and some natural gas plants to tide us over.
Murphy’s Law states, “Anything that can go wrong will go wrong.” This summer, the sun didn’t shine, and the wind didn’t blow in western Europe. What’s the result?
According to CNBC, “Wholesale gas prices have spiked across the region, with the U.K. being hit particularly hard.” U.K. power companies are facing collapse. The batteries don’t exist. How do you cope with a 250% rise in natural gas prices?
Pay up or close down is the stark choice facing many companies. Consumers are startled by soaring prices. Now everyone asks how we got in this fix?
The dirty little secret is that if things went south with renewables, they relied on natural gas and coal to fill the gap. The problem with this is they have discouraged any investment in obtaining these fossil fuels. It isn’t that Europe doesn’t have coal deposits. Natural gas is present in the North Sea and on-land shale. Oil and gas companies have the technology to extract the fuel at a reasonable price, but they can’t fight the political climate. This condition leaves imports as the only solution.
Unfortunately, Europe isn’t alone in its fuel deficit. After the Fukushima flooding, the closure of its nuclear plants made Japan dependent on massive Liquefied Natural Gas (LNG) imports. Anyone visiting China is stunned by the pollution in their cities from burning coal. As Natural gas emits less than half of the carbon dioxide of coal and far less pollution, China and other developing countries see it as a needed transition fuel. In short, the growing worldwide demand for cleaner, reliable power has made natural gas a go-to solution, significantly increasing demand.
Where then does the world get more supply of natural gas? Russia is the largest exporter and is on the verge of completing the Nord Stream 2 pipeline to Germany but hasn’t increased overall supply. In any case, Russia has always worked to maximize oil prices. It will do the same with natural gas. Without more investment, it’s hard to see a significant Russian expansion. This funding won’t be easy with all the sanctions. In any case, new supplies will take time. Europe’s climate policies have put it in a rough spot.
While Australia and Qatar are one and two in LNG exports, the fastest-growing exporter until recently was the U.S. In fact, under Trump, the U.S. was the world’s most significant oil and gas producer. The pandemic and the Biden administration’s hostility to fossil fuels have curbed investment and reduced supply. Already contracted, Australian and Qatar production can do little to help in the short term.
This state of affairs leaves the world hoping for a warm winter. A cold one could be catastrophic. Even if you can still burn coal, its price is the highest in a decade and headed up. If you think the U.S. won’t feel the pain, think again. Natural Gas prices here are the highest in thirteen years. What’s scary is that we just entered fall.
We might face the terrible choice of restricting LNG exports to keep us warm here. Of course, this would mean breaking commitments to our overseas customers, many of which are our allies. It would give another meaning to Icy Joe. No matter what, we will see a much higher price for heating and everything made from natural gas. Our rising inflation will get another push skywards.
This foreseeable crisis is the result of governments dictating solutions through subsidies and rules. Instead of establishing a level playing field and letting the market select the solutions and pace of change, we’ve, in effect, anointed solar and wind power as the power sources of the future. All we need are super batteries that don’t exist to overcome their drawbacks.
Does anyone ever consider the market may not agree? It might come up with other solutions making our massive investments unworkable—trillions down the drain. Remember getting oil and gas out of shale was a fantasy until it wasn’t. Properly viewed, nuclear power could be highly competitive. We saddle these reactors with unjustified costs. Nuclear power is safe in comparison with other energy sources. While the many utilities are shedding nuclear plants, Australia decided nuclear subs are better. They ordered eight. After all, there are 160 atomic ships with 200 small reactors and have never had a problem.
These numbers show small reactors are safe. Modular reactors paired with hydrogen production might turn out to be the wave of the future—power without greenhouse gases. China or someone else may decide it’s in its interest to go this route and sell it worldwide as a cheaper and easier to use alternative. Where would it leave those dictating wind and solar? Nuclear is just one possible solution. Fusion could make everything obsolete.
I think we are about to get a lesson in humility. Elites are more likely to dwell in what exists than visualize the actual evolution of things. The market is nothing if not surprising.
For those in colder climates, buy warm clothes now. With our present shortages and rapidly rising prices, act with haste or freeze. Consider yourself warned.
Since March, when I posted “The Dog Ate Biden’s Homework'” it’ should have been evident the Biden Administration is unable to look at situations with the clarity needed to anticipate problems resulting from its activities or lack of actions. The border, Operation warp Speed, the $1.9 trillion in additional spending, the Afghan withdrawal, and its legislative program revealed a fundamental lack of understanding of possible consequences. If I could timely write about these things sitting in Phoenix with only information generally available, how could our Government be constantly caught off-guard with the billions spent for information?
Have you heard of the worldwide natural gas shortage? Has the administration given any indication it’s even aware of the problem? In a few months, it will claim the issue came out of nowhere. You’ll know that isn’t true.
Continuing the Government’s misunderstanding of the Covid epidemic, Dr. Fauci appearing on Face the Nation, cast shade over Christmas gatherings. With the Delta variant spike retreating in the face of widespread immunity from vaccines and natural immunity, does the good doctor think the coming Christmas will be anything like the last one? Even last year, it wasn’t as bad as he predicted. The chart doesn’t lie: