Crude Observations

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Open Letter to Joe, Justin and whoever is in charge of the EU


Stop. Just stop.


What part of the Titanic movie was so hard for you to understand? The poor street urchin and grifter seducing the hot bored society girl or the behemoth unsinkable ship sinking to the bottom of the ocean because of monumental stupidity and hubris.


Please tell me it’s the latter, because if it’s the former, then what you are doing is intentional.


Look, I get it. The climate matters. CO2 matters. Reducing CO2 matters. Doing something to stop man made climate change matters. But so do the 8 billion’ish people inhabiting this rock and your actions are making their lives harder. And on average probably shorter.


I know, I know. You’re rich. You actually don’t give a shit. But you should. Because what you are doing is going to cause long lasting damage to people’s livelihoods, prospects and economic livelihoods.


We are in the midst of a full-blown energy crisis years in the making and your pious actions in defence of the energy transition and the need to green everything you can lay your hands on to appease your task masters at the IPCC, the UN, the WEF, the ESG and the PTA has only served to make matters far worse than they ever should have been.


Energy prices aren’t going up because some idiot dictator decided to be Hitler in Ukraine. That’s a smoke screen. The reality is much more insidious.


It’s years of underinvestment exacerbated by an elite ruling and intellectual class that it out of touch with what enables our ridiculously privileged way of life.


It’s subsidies and sins and false prophecy coming home to roost.


It’s people in positions of power lacking even the most basic understanding of how the energy sector works, why it’s so big and why it is so important to the prosperity of the world.


It’s those same people trying to shift the blame to energy companies, excoriating them for “price-gouging” and being profiteers and blaming them for reacting to the self-same policies that governments have enacted and then calling them “unpatriotic” and threaten to punish them (and thus consumers) with windfall taxes that will only serve to increase the cost of the thing you are trying to get cheaper. See how stupid you sound? Some people are suddenly thinking that maybe price controls are the answer. Good lord. Wait, what’s that? You now want to restrict the export of refined products? And drive up the prices further? Sheer genius! Aaaaaarrrrrggggghhhhh!!!!!!


Here’s a hint.


It’s not us. It’s you.


And I think it’s well past time that you have a refresher course on some things that are pretty important in how the world actually works.


The course is called “It’s cheap energy stupid” and it’s something we don’t currently have because of a conflagration of many factors, many of which can be laid in your laps, not those of private businesses that of necessity need to take their cues from government.


Basic example. Oil companies produce oil. For the past ten years you have been telling them that their industry is going to be phased out, by government fiat, by EV sales, by carbon mitigation measures, by greenwashing, by subsidies, by electrification, by renewable energy. And it’s all going to happen, miraculously, by 2050, if not 2035, maybe 2030. Hell it’s happening now.


And it doesn’t matter if the producers believe you (hint – they don’t) – they have to react to you. So instead of producing more, they are returning money to the people who actually supported them these last number of years – bondholders and shareholders.


And now, all of a sudden, it’s politically expedient for you to have lower energy prices, preferably before November, so it’s drill baby drill, why aren’t you drilling, can you please drill, drill or we will punish you.


Except circumstances being what they are – supply chain, war, Saudi and OPEC supply constraints, labour issues, access to capital, inflation – it turns out that many companies can’t! Or won’t.


Tough luck for you!


Where do we go from here?


It’s so hard to figure out the direction of the energy market these days, especially since the people supposedly in charge so clearly have zero clue how anything works.


So let’s go back to basics.


First and only lesson.


Cheap energy matters.


Cheap energy makes life easier. Expensive energy makes life harder. See how this works?


Cheap energy creates prosperity. Expensive energy destroys prosperity.


Energy is the economy. Cheap energy helps the economy grow. Expensive energy holds back growth.


Cheap energy drives innovation, even in the energy sector. Seems counter intuitive but it’s true. Businesses are never as innovative as when they are trying to squeeze profit form a stone.


Cheap energy drives improved health outcomes whether through higher societal wealth or simply through ubiquitous availability that allows for water treatment, home heating/cooling, access to powered facilities.


Cheap energy enhances life expectancy. Expensive energy … not so much.


Cheap energy feeds the world. Expensive energy leads directly to starvation.


Cheap and plentiful energy encourages human rights, democracy and helps prevent war. Expensive energy encourages hoarding, nationalism, dictatorships and the suppression of minorities.


Cheap energy narrows income inequality. Expensive energy destroys this.


Cheap energy has allowed each successive generation to be better off than the one preceding it. Expensive energy is going to unwind 150 years of progress. Well done!


Energy, in all its forms, drives the prosperity and life expectancy that we all have come to expect in our lives. It is mind-boggling to me that this simple fact seems to evade so many people’s consciousness.


Want to know the kicker? All this prosperity? All this wealth? Your life? My life? My kids’ lives? Erik in Copenhagen’s life?


It’s all been made possible by cheap and abundant fossil fuel energy.


Repeat after me. Cheap. Abundant. Fossil fuels.


Oil. Gas. Coal.


That’s right.


The fact I can see you are surprised at all this is pretty telling.


In particular, the monstrous contributions to society that have come from fossil fuels is something that is too often glossed over given the demonization the sector has had to endure in an accelerating fashion over the last few decades.


It is unproductive and it has to stop.


Fossil fuels, for better or worse, are part of the landscape for energy for decades to come, because without them, we get what we currently have.


Runaway inflation. Market volatility. Recessions. An energy transition that runs the risk of being stopped in its tracks – not because no one wants to do it anymore, we all do, but because we simply cannot afford it. Look, I know someone will read this and say “we can’t afford not to”, but that’s a platitude. If we want to build something new we have to pay for it and guess what – COVID debt, massive stimulus debt, rising interest rates and runaway inflation (caused by high energy prices) means we can no longer afford nice things.



We will have to wait.



How long? I don’t know, at east until we can get some cheap and abundant energy back in or lives.



And it may take a while, because in this current environment, it is all too apparent that the demonization practiced by the media, the environmental movement and your lack of knowledge has been all to successful.


But there are glimmers of hope. The sector is fighting back and calling out the misguided ideas. As they should.


I read the other day where an oil and gas CEO suggested that as an industry, far too much time has been spent thinking about what an oil and gas company looks like after the transition and not enough attention has been paid to the actual transition. That it’s time to get back to business.


While governments spend their time flailing around trying to justify their hypocritical and contradictory policy positions, companies like Exxon are calling out these same governments for their energy moronity (heh) and proposing practical ideas that will get companies re-engaged in production and save the government from having to drain the Strategic Petroleum Reserve like a senior’s bank account at a casino.


In the meantime, the energy driven inflation environment is accomplishing in 6 short months what EV and green enthusiasts have projected onto pro-energy politicians and leaders like Jason Kenney for years.


In a short sentence – the soul crushing recession that run-away energy prices is about to deliver will set back the energy transition by years if not decades. And if you can’t see that, you are as blind as you think climate change deniers are.


Change is only going to be achieved with one thing, money. Without money, it dies. And as it stands, governments will run out of money far sooner than they will run out of will. And that is the death sentence. Once the subsidies are gone, it all falls apart.


Once governments are forced to pay the piper and acknowledge all the excess spending they have made and need a plan to dial it back in a rising rate environment (hey – big tip, when rates go up, it’s not just mortgages that cost more, it’s also deficit financing – oops!), it is only a matter of time until programs are unwound, funding is rolled back or cut and the party ends.


And then into the breach will come the energy companies and the jurisdictions that control the production of energy and the prosperity of the world.


And please, do us all a favour – stop relying on other countries to supply you. Why would you do that when you have what you need n abundance already. It’s not about ethics even. That was always a stupid argument. It’s about securing the future for your citizens. Saudi Arabia and OPEC doesn’t care about us – never did, never will. They just want our money to… you guessed it, build up their own prosperity. Russia obviously doesn’t like anyone. Time to be a bit selfish.


Opportunity knocks for North America (less so for Europe, sorry), because in addition to being “addicted” to cheap energy, we are also a place that can produce it in abundance and we already have an ecosystem of world-beating companies just itching to be acknowledged for that.


And it’s not just in the production of fossil fuels. It’s the production of Obama’s infamous “all of the above”.


Oil. Natural gas. Coal. Wind. Solar. Geothermal. Nuclear (remember that) Heck, even water.


All of these resources can co-exist and evolve together. Get out of the way and let the existing suite of regulations do their job. Stop with the misguided flapping around and allow the energy industry to continue to supply the critical cheap and abundant energy to an insatiable market and trust in its ability to evolve, adapt and deliver the energy transition in a manner that isn’t destructive to the global economy and is unfettered by political timelines.


It can happen. But you need to understand the industry first. And then get out of the way. I know it’s hard. But we don’t need you to provide guidance and direction because to be brutally honest, your track record and ideas are a flaming paper bag of dog poop on a doorstep.


Energy is the economy. Prosperity depends on an abundant supply of cheap energy. Allowing it to be produced elsewhere and controlled by someone else erodes our prospects, depletes our national wealth and will ultimately see you tossed out on your ass when you lose elections.


If you won’t do it for us, do it for yourself, we know you’re good at that at least.


Here endeth the lesson.

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