In a Nutshell

In a Wall Street Journal article on the rising price of natural gas resulting from the current spate of hot weather, there’s this regarding the broader role of natural gas prices in inflation.

Pricier natural gas adds not just to the cost of dialing down the thermostat but also to that for making fertilizer, steel, cement, plastic, and glass.

And, through that fertilizer price increase, the cost of food—directly in the cost of wheat-, corn-, soya bean-based foodstuffs, and indirectly in the cost of beef, chicken, and other meat animals that are fed these plants.

Energy Crisis—It’s What We Deserve

Ignorant peasants that we are, we’re too dependent on fossil fuels. High prices and energy shortages are our due. The words of folks like the Sierra Club’s personage are just—to coin a phrase—code words for “stop arguing, and do it our way.”

Here’s Kelly Sheehan, Sierra Club’s Senior Director of Energy Campaigns:

Concerns about energy shortages in Europe and the spiking fossil fuel costs Americans are experiencing are both symptoms of our continued reliance on fossil fuels[.]

Shape up, guys. She added this:

As long as we rely on volatile global commodities like oil and gas, we’ll always be vulnerable to geopolitics and the whims of greedy fossil fuel executives.

Biden to Oil Producers: Produce More

Also Biden to oil producers: you can’t drill, though.

The Biden administration plans to block new offshore oil drilling in the Atlantic and Pacific oceans….

Produce more, but…. This is on top of the existing slow-walking and outright sitting on the myriad permits required to act on existing leases.

Oh, wait….

The proposal released by the Interior Department on Friday evening would allow as many as 11 oil lease sales for offshore drilling over the course of five years.

As many as 11 of them—a couple a year over those five years. Never mind that Biden’s administration cannot be trusted to grant the permits required for those leases to have a chance.

No, He’s Not

Energy Secretary Jennifer Granholm—who thinks it’s laugh out loud hilarious that the Biden administration could impact the cost of energy to us Americans—made the patently erroneous claim that President Joe Biden (D) is doing everything he can to reduce [gasoline] prices for American families.

Oil is a global market, and so Biden is helpless alone?

High school economics: increase the supply of something relative to demand for it, and prices for that something come down. Conversely, reducing supply relative to demand drives up the price.

Germany’s Energy “Crisis”

The Russian “slowdown” of natural gas deliveries to Germany is beginning to convince the German government that they’re overly dependent on Putin’s whims for the nation’s energy.

Minister of the Economy Robert Habeck:

The reduction in gas supplies is an economic attack on us by [Russian President Vladimir Putin]. We will defend ourselves against this. But our country is going to have to go down a stony path now.

That stony path includes what, exactly? Habeck again:

The prices are already high, and we need to be prepared for further increases. This will affect industrial production and become a big burden for many producers.

An Incoherent Biden Diktat

It’s in the offing. This time, President Joe Biden is threatening to inflict his “emergency powers” on American oil producing companies if they don’t produce more oil.

President Biden may resort to using emergency powers if American oil companies don’t increase output at their refineries, the president told oil CEOs in a series of letters Wednesday.
Biden’s statement blames oil companies for running “historically high profit margins” even as Americans experience surging gas prices.

Never mind that they cannot just turn on the faucet and more oil comes out of the tap. It takes lots of money and quite a bit of time to reopen capped wells, and it takes even more money and lots of time to drill a new, producing well.

Cajoling Producers

In a Friday Wall Street Journal op-ed centered on the high and rising cost of fuel and the deleterious effect that’s having on our businesses and our economy, Collin Eaton, David Harrison, and Doug Cameron had this remark:

The administration has also tried cajoling US oil companies into increasing production, but few have chosen to do so, instead sticking to leaner budgets urged by investors.

That’s laid off to the maxed out refineries in the US, so there’d be no place to ship increased production, anyway. That’s a player, certainly, but it’s a relatively minor one.

A Critical Item

President Joe Biden (D) wants half the new cars sold in the US to be electric, and he wants and 500,000 new charging stations for them, both by 2030. He considers reliable EV charging stations to be critical to getting us switched over to battery cars.

Charging stations are necessary (assuming the switchover itself is necessary; it’s not, but that’s a separate story), but they’re far from sufficient. The important thing here is reliable electricity running to each charging station—electricity from the grid. But that requires hydrocarbon-powered electricity generating plants, and it requires the electric grid, itself barely able to handle current loads—see the rolling blackouts that are routine in California and that have become a risk in Texas—to be upgraded to handle the vastly increased loads imposed by all those battery-powered vehicles, whether charged at the charging stations or in the home garage.

One Way to Make the Question Moot

The US 5th Circuit Court of Appeals is hearing a case concerning whether the President personally has the authority to suspend new oil- and gas-lease sales. The particular case centers on climate change concerns as the rationale, but the authority is much broader than that, or it’s non-existent.

The State plaintiffs argue that

a 1987 law dictating the ways in which oil and gas leases will be sold stipulates that a sale must be held at least four times annually in states with eligible land. … “…President Biden put his campaign promises above federal law: By executive fiat, he halted oil and gas leasing on federal lands.”

A Two-Edged Sword, and another Thought

Russia is a, if not the, major exporter of energy to Europe, and that helps hold Germany especially, and Europe generally, back from fully supporting Ukraine against Russia’s invasion of that nation.

The two-edged sword is this.

If Russian gas to Europe stops flowing entirely, “this would do severe damage to Europe’s economy and also undermine global growth,” Mr [EurasiaGroup’s Director, Energy, Climate & Resources, Henning] Gloystein said.

That damage, were it to be inflicted by Russia’s President Vladimir Putin, should prod Europe, and especially Germany, decisively away from Russian gas (and oil) altogether, as it would make clear—or should make clear—just how many weapons, including economic, the men and women of Russia’s government are willing to use in order to club Europe into submission.