July 21, 2022

Behind The Great Energy Transition

I find that in analyzing the Biden energy policies, this Administration confuses the evident and immediate energy crisis that the country is currently enduring. With a supposed "Climate Crisis” that may or may not occur sometime in the future.

 

Before President Biden spoke yesterday about energy, there were rumors that he might declare a Climate Emergency. Instead, it would have been more appropriate had he pointed out that we're in an energy crisis. 

 

As you know, the President is leather-bent on taking this country away from fossil fuels. When he ran for President in 2019, Biden told a supporter in New Hampshire:

 

"But, kiddo, I want you to just take a look, OK? You don't have to agree, but I want you to look in my eyes. I guarantee you, I guarantee you we are going to end fossil fuel and I am not going to cooperate with them, OK?" 

 

This President wants to make this a centerpiece of what remains of his term in office. This week, he sent Transportation Secretary Pete Buttigieg and Energy Security Chief Amos Hochstein to the networks to endorse the use of electric vehicles (EVs) as one of the chief methods to move the country away from those dreadful carbon-based fuels. 

 

There is no doubt that when you first hear this argument, it is somewhat attractive. For instance, my neighbor's Tesla Model S is quieter than my gas-powered SUV. It sure seems "eco-friendly," as electricity seems to be a greener source of energy. 

 

But is it? I think that's an open question.

 

Let's dig into the numbers. How do we generate electricity in this country?

 

Here, I'll use the numbers from the Energy Information Agency. It turns out that 20% of the nation's electricity comes from renewable sources, from those solar panels on your neighbor's roof to the hydroelectricity generated by Hoover Dam. Add in various types of biomass, plus geothermal, and you have just about all of the current sources of renewable.

 

It's the part of electricity generation that we hear about the most. And that government has been actively promoting for over a generation now, going back to the 1960s. Living in rural America as I do, They tell me that I should put panels on my roof, a windmill on a pole, or use a wood stove. All to cut down on those awful fossil fuels. 

 

However, only one-fifth of our electricity comes from renewable sources. After all the cajoling, tax credits, and promotion, most of our electricity comes from other sources. 

 

Yes, that's correct.

 

Well, then, where do we get the rest?

 

Another fifth comes from nuclear power plants. Something that I'm sure the folks down in Washington are not too happy about either. Not exactly a carbon-based fuel, but not precisely eco-friendly either. 

 

So that leaves three-fifths of our energy production. And that comes from just where?

 

Many of you are already ahead of me, but the vast majority of our electricity comes from Fossil Fuels. Yes, the same Fossil Fuels that Job Biden continues to campaign against. The same Fossil Fuels he asked that young man to look in his eyes and promised to "end their use." 

 

Just so you know, two-fifths of our electricity comes from natural gas and its derivatives, while one-fifth comes from the most dreaded of all fossil fuels: coal. 

 

Yep, the black rock that burns. The energy resource that we have more of than any other country on earth. An abundant, virtually limitless source of energy that, with modern technology, can be nearly as clean as any other energy source. 

 

Yes, sir, after all they've been through, the coal business still provides one-fifth of all our nation's electricity. 

 

 

 

So if three-fifths of all our electricity comes from fossil fuels, then this push toward all-electric vehicles is a three-fifths fraud. 

Electric vehicles still use energy from fossil fuels. It's just that those fossil fuels come from the power plant and not at the gas pump. 

 

This "Great Energy Transition" is no substantive transition at all. It is simply a move from one fossil fuel energy source to another. As long as renewables remain a small fraction of our energy picture, fossil fuels will remain our dominant energy source. We will, by necessity, use the energy from fossil fuels to heat and cool our homes, provide our food, and transport us.

 

The real danger here is that an unwise President will continue to push his energy transition when the economy is fragile and energy is already in short supply. 

 

If pushed to its logical conclusion, as the President seems to want, the Great Energy Transition will mean nothing but electric blackouts and power shortages. 

 

The climate can wait until we address today's genuine energy crisis. 

 

Economic News

 

British Petroleum is out this morning with their annual World Energy Review. BP reports that in 2021 Coal-fired Electric Plants will produce the most power in 50 years. As coal-powered, electricity demand rose by nearly 6% to almost ten ¼ terawatts. Overall, fossil fuels have 82% of the world's primary energy usage.

Today the worldwide financial community has turned its attention to the European Central Bank, as for the first time in 11 years, the ECB is expected to raise its core interest rate. Analysts expect the Bank to charge 1/4% interest.

Here in the US, we will see the latest numbers on those seeking unemployment insurance. Initial claims are expected to remain about where they've been, with nearly ¼ million new anticipated claims.

In earnings today, 83 companies are on the calendar as earnings season is entirely underway. So far this morning have been industrial company Danaher, tobacco company Phillip Morris and investment company Blackstone. All trading higher in the futures markets. We're seeing slight declines in Freeport McMorran and AT&T stocks after their results have been announced.