October 18, 2021

The IEA director just announced that energy prices are likely to keep going up unless we have greater investments in renewables. 

Posted today on Oilprice.com.

He said, “There is a looming risk of more turbulence for global energy markets. We are not investing enough to meet future energy needs, and the uncertainties are setting the stage for a volatile period ahead.”

Birol outlined his views in the institute’s World Energy Outlook for 2021, which has been published amidst an energy price crisis in Europe and Asia.

Oil prices passed remain at $82.88 a barrel on the Brent Crude Index, slightly below its $84 peak on Monday, however this remains a marked increase on its trading cost of $73.07 on September 20 prior to its multiple rallies in the following weeks.

Ok, we need to sit back and look at how we got here and how we solve the energy crisis. California and Germany have the highest energy prices in the U.S. and the EU respectively. And both have gone into extreme debt to pay for the renewable energy platforms. Germany is also having to reduce some of the energy tax placed on their citizens to pay the higher installation of renewable energy through printing more money. 

We are facing a worldwide energy crisis with inflation and a commodities boom of biblical proportions. The triple threat of inflation, commodities boom, and the energy crisis are all related and mean that what we were doing in a poorly executed plan to renewables does not work. The lower-income countries cannot afford to print money, pay for the migration to renewables and keep their citizens moving out of poverty on affordable energy. That is why we are seeing the backlash of more coal and oil demand now due to the energy crisis. Look at India as the second-most populous country on the planet and they are using 70% coal. How can they migrate without printing money and causing out-of-control inflation? 

The more we go to renewables without a plan to include nuclear, fossil fuels, and a proper renewable mix, the more we will damage the world’s environment. Even more than if we had started the migration with a plan that would provide a fiscally sound solution with the most negligible impact to the environment. 

So let’s make some suggestions on how to get to a renewable goal we all can live with. 

Russia and Saudi Arabia have publicly stated that they are lining their pockets over the next several years and even suggested creating a national gas counterpart to OPEC to give them total dominance over the pricing structure for natural gas. With both countries balancing their national debt structure or having their national funds at all timely high do you think they will increase production to reduce the price if Japan, the United States, and other countries ask nicely? No way. 

In fact, they would probably use the quote from General Anthony McAuliffe in the battle of the bulge on December 22, 1944 responded to the German surrender demand. The response “Nuts” has gone down in infamy.

So don’t be surprised when you hear either country respond to the request to increase production in oil and gas as “Nuts”.  We should work together first as Americans to cut our energy consumption individually to contribute to energy demand. Secondly, let’s fire up the country like the space race for new technology to get the world on the move to renewable carbon zero energy. We can do anything as Americans if we would talk to each other. 

Michael Wirth, chairman, and CEO of Chevron (NYSE:CVX) speaking with CNBC said it with clarity.

“We need to navigate an orderly transition that doesn’t put economies, consumers and societies at risk,” he said.

Doubling down on renewable energy at the pace we were using is going to be a mistake. Our current path will remove any gains we have made to the environment. A balance of investment capital must be implemented to achieve carbon net-zero.

Buckle up, 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

Take our Wealth Creation Survey

Leave a Reply

Your email address will not be published. Required fields are marked *