There has been an incredible push to renewables around the world in the last 10 years, with the last 3 at an accelerated increase of funding. With the majority of stimulus money earmarked for renewable energy projects. 

There was a steady move to renewables with some good headway towards the countries goals of providing power using renewable resources. There are members of the King Operating research team that have been following the data for years. One surprising data point surfaced last year indicating that the more renewable energy is implemented there will actually be an increased demand for more fossil fuels to support the transition.

The goal of reducing our carbon footprint is exactly what we should be doing for the world’s environmental safety. A cohesive plan using all forms of energy to achieve a lower carbon footprint is the only way to achieve these goals. 

The new Covid world economy resulted in more stimulus packages generated around the world, and the largest portion of energy projects went to renewable infrastructure. The problem is the plan did not account for inflation or the pain points of higher energy costs. These resulting consequences have now turned the world’s focus to solving the world’s energy crisis by focusing on what is the mission-critical part that was missing. The delivery of the lowest kWh to the consumer. 

OPEC has published its reports that the world oil demand will reach over 100 mbd in Q2 of 2022 with demand sharply increasing in Q2. Saudi Arabia has announced that it will see a budget surplus starting in 2023 and solidify into the foreseeable future.. 

The Saudi Arabia government budget forecast.

Published in Reuters this morning. 

Producer club OPEC offers the most robust prediction for a demand rebound, putting the recovery date at the second quarter of 2022.

 
Oil use rises above 100 million barrels per day in 2022
 
FGE Oil Demand

 

In the more distant future, with most forecasters predicting a peak in fossil fuel demand within the next two decades and the IEA recommending against new projects to ensure net-zero emissions, broader supply gaps could fuel more price shocks.

 
McKinsey fossil fuel peak

“Prices for fossil fuels will remain volatile”, said Nikos Tsafos, a senior fellow at the Center for Strategic and International Studies (CSIS).

“The risk of a supply-demand imbalance is greater in a market that is shrinking where the case for further investment is weak, which could produce short-term rallies.”

The Bottom Line

Our King Operating research team has determined that the renewable infrastructure implementation has suffered a major setback of decades to achieve the climate goals. The world’s economies could not take the Covid and renewable stimulus packages without string up the inflation monster. The world forgot that energy is the single most important element to elevating humanity out of poverty, and now we are going broke trying to implement renewable solutions too fast and without a plan. 

Coal demand and production are increasing around the world. It is the worst fuel for the environment but the lowest and fastest way to fix the energy crisis we are in. Natural gas is now going to be the next fossil fuel to start key Geopolitical disputes and wars. The demand for natural gas is going through the roof as it is the second easiest form of energy to come online economically. 

We can pull together as a world and make the change to renewables, but it will take a reset in the mindset that we need to move at “warp speed”. An organized plan would achieve the lower carbon footprint goals sooner. Let’s pull together and get to the ultimate goal of being carbon-neutral as a team. That will take intelligent conversations from all parties. 

So, the real question is “When will we get back to focusing on renewable energy?” 

The answer: “When we can sit down and talk about renewable and fossil fuels in the same plan?”. So you tell me.  

Buckle up, get your delta wing flight suit on, we are in for some interesting times ahead. 

Send me your thoughts and I would like to hear from you about your thoughts on the current market. 

Jay R. Young, CEO, King Operating

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