Energy
There’s a lot of things that don’t make sense these days, especially any talk about how the economy works, better to start asking what is the economy. I suppose there’s someone, somewhere, who has a better understanding, but I’ve not found them, instead, just the same old tropes are repeated over and over, even though it’s quite clear they don’t explain what’s happening. It’s the equivalent of secular professions of faith, but then there’s all sorts of institutions and processes of power built atop this faith and you will be cast-out for not professing.
One of the queerest things to try and understand these days is global energy use. Over two centuries, the burning of fossil fuels, first coal, oil, than natural gas, and now all three combined, altered the global landscape and the lives of billions of peoples. Industrialization was/is fueled by the burning of fossil fuels. Today was an interesting day of news on this front.
Looking at oil first, the Sauds, who only a couple years ago announced big plans to spend a $100 billion dollars on boosting their production by a million barrels a day, now say they've stopped the project. “The decision was taken by the ministry of energy and was not driven by any technical or operational issue at the company.” So say the Sauds, but there was plenty of skepticism they could ever do it, though you’d never see that in the pages of the FT or Journal, where one profession of faith is of unlimited supplies of cheap oil without end, Amen.
Another article is titled, “The days of $100 oil prices are over,” and even better subtitle, “Demand will continue but potential world supply is likely to peg back the cost.” This is the FT explaining why the Sauds, 10% of global oil production, announcing they will not expand production capacity by 10%, is of no concern. Well, we have had a war raging in Europe for two years now involving one of the world's other big oil producers and recently ships being attacked around the Arabian peninsula, and after a brief price spike, oil settles quickly down. So, why not?
There's only been one big change in oil supply over the last 20 years, American shale added almost 10% to global production in 10 years. How much that cost, well anyone's guess, as like every other aspect of the global economy it’s drowned in debt. Debt is another of those things that doesn’t work like anyone says, just more and more without end, Amen.
The other energy news is Biden administration in an election sop to Climate folks will pause LNG (liquid natural gas) export growth. The news in global natural gas supply over the past two decades has again been American shale and in the last decade its growing export as LNG. The FT writes,
“The US’s seven operating terminals can now produce as much as 87mn tonnes of LNG a year — enough to satisfy the combined gas needs of Germany and France — and five more projects already approved and under construction will add another 63mn tonnes of capacity.”
So, even with the “pause,” there’s an almost doubling of LNG coming down the pipe already. The FT notes, “Biden is not the first president to declare an export licence hiatus: Barack Obama, under whom Biden served as vice-president, previously paused approvals from 2012 to 2014.” That's funny, though not as funny as the comment of a leading Climate strategist,
“The most elemental economic analysis will tell you that if you’re exporting a lot of something, the prices are going to go up for people back home,” said Bill McKibben, co-founder of 350.org, a climate campaign group, who was one of the most vocal advocates of the freeze. “Very few Americans are eager to have their country fracked in order to sell cheap gas to China.”
That’s what goes for Climate politics in energy drenched America.
According to IEA's most recent statistics, oil remains 40% of global energy use, combined with coal and natural gas, fossil fuels is 65%. But IEA does a slippery thing, hey, it’s the IEA founded by Henry Kissinger, and separates electricity, like electricity has no fuel source. Anyway, electricity is another 20% and the majority of that electricity is still generated using fossil fuels. So its more like 80% of global energy use is fossil fuels.
Not an article of faith, industrialization equates economic vibrancy with ever more energy use. For example, the FT article saying no more $100 oil states, “China’s crude consumption has more than doubled over the past 20 years.” There's been no better example of economic vibrancy in the last two decades than China, vibrancy directly tied to more energy use. FT adds in that time, “US gasoline demand has gone up by just 8 per cent, according to US Department of Energy data.” Far and away greatest energy user on earth, perceived US economic well being remains tied to growing energy use, though it seems not enough to keep Trump from being elected once, maybe twice, but he's against China too.
Less than a billion people account for over a third of total global energy use, the US at 350 million people uses 20% alone. If you add China to that billion, a third of the global population uses over 50% of all energy, which means the other 2/3rds divide up the other half. They are considered economically underdeveloped. Economic vibrancy through greater energy use is not a profession of faith, it is all we actually know.