AFR: Net Zero “Strangling” Oil and Gas Producers

Guest essay by Eric Worrall

When will the food shortages begin? Bankster support for Western Net Zero declarations is killing oil and gas investment, driving up the price of gasoline, electricity and home heating. My question – how much damage can affordable energy production sustain, before food production begins to fail?

Net zero tightens noose on energy players

Angela Macdonald-Smithand Elouise Fowler
Nov 12, 2021 – 4.37pm

Escalating climate pressures are starting to strangle capital flows for oil and gas producers, with fresh initiatives at the COP26 summit and Australia’s new 2050 net zero emissions goal only expected to further dial up the difficulties.

Peter Fredricson, acting chief executive at Papua New Guinean oil and gas producer, Oil Search says bank appetite to lend to the sector has dropped since early 2021 as environmental, social and governance (ESG) factors climb up the agenda, driving up the cost of capital.

“I’ve been quite surprised by the speed with which it has developed,” Mr Fredricson told AFR Weekend, pointing to funding as a key reason why Oil Search’s proposed $21 billion merger with Santos makes sense.

“We’ve recently gone to the market for a refinancing of a syndicated facility and I have to say, we were disappointed with the number of banks that were prepared to be involved this time round.”

Increasingly “fickle” bank debt markets for oil and gas companies and the uncertain outlook for the cost of capital for the sector were singled out this week by independent expert Grant Samuel as reasons for Oil Search shareholders to support the deal with Santos despite it falling short on value.

Structural underinvestment

“They’ve all got them now,” Mr Fredricson said of the bank lending restrictions, while noting plenty of debt capital is still available for investment-grade oil and gas producers in the 144A bond market in the US. Oil Search is unable to access that market given its 100 per cent reliance on PNG for revenue.

Goldman Sachs says a divergence in the cost of capital for high-carbon and low-carbon investments is one factor behind what it describes as a “structural underinvestment” in key energy, materials and heavy transport sectors.

The bank estimates the spread in the cost of capital between petroleum and renewable developments has widened by more than 10 percentage points in the last five years, contributing to underinvestment in oil and gas and some other carbon-intensive sectors.

Goldman Sachs says that is equivalent to a carbon tax of $US80 per tonne of CO2 for offshore oil projects and $US40 per tonne for LNG, and is driving a historic turning point in energy investment, with global renewable power spending now overtaking oil and gas developments for the first time in history.

Read more: https://www.afr.com/companies/energy/net-zero-tightens-noose-on-energy-players-20211111-p5981w

History shows it is entirely possible for countries to stupid themselves into collapse.

Food production in ancient Rome crumbled towards the end, because corruption and greed amongst Rome’s rulers, and an expanding welfare state, drove taxes to unsustainable levels. There were other factors, such as a deterioration in climatic conditions after the end of the Roman Warm Period, but plenty of nations survived the dark ages – it was the failures of Roman society which delivered the fatal blow.

Food production in the Soviet Union was depressed, because the Communists refused to liberate the farming sector from the shackles of collectivism.

Now banker supported government climate activism, strangling capital supply for affordable energy production, could be about to create a Western food crisis.

Cheap energy and economic liberty are the reasons our world can support seven billion people, with only a fraction of that population working in agriculture, at least in Western countries.

Before cheap energy, almost everyone was a farmer. Any interruption to the supply of cheap energy could cause the current system of abundant Western food production to fail.

I have no doubt this crisis was engineered, by people who genuinely believe renewable energy will sweep in and replace fossil fuel, once the old energy system is destroyed. But green energy is a pipe dream, an engineering impossibility.

The question is, what will the architects of the gathering energy underinvestment crisis do, when they realise their green energy revolution has failed? If history is any guide, admitting their mistake and rushing to undo the damage is not at the top of the list of likely responses.

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ResourceGuy
November 13, 2021 2:09 pm

So a trillion dollars will flow to the Russian Arctic development projects and pipelines instead. Meanwhile there are no solar tariffs in the EU on forced labor solar components made with coal power plants. The world is a cheap magic show of sleight of hand and misdirection plays. Democracy was lost as another victim of the process.

n.n
Reply to  ResourceGuy
November 13, 2021 2:55 pm

The very model that drove environmental and labor arbitrage. Demos-cracy is aborted in darkness.

mike
Reply to  ResourceGuy
November 13, 2021 3:46 pm

Without oil and gas it’s impossible to make the high volume nitrogen based fertilizers that are essential to the modern agri-industry.

There aren’t enough bulls in the world to create the necessary alternative excrement both figuratively and literally.

Last edited 14 days ago by mike
H. D. Hoese
Reply to  mike
November 13, 2021 5:56 pm

Nitrogen is also a demon. Regardless of the diversion controversy and the truth that over fertilization can be a problem calling the Louisiana coast “delicate and nitrogen lean” should earn an award up with the best of the climate hysteria. It’s only the most productive in the Gulf of Mexico and also among most others. Didn’t happen with “lean” nutrient supplies.

“…., there is no better illustration than the “Hypoxia Zone” of what high nitrogen levels can do to delicate nutrient balances evolved over millennia in nitrogen lean ecosystems” from — Kearney, M. S., et al., 2011. Freshwater river diversions for marsh restoration in Louisiana: Twenty six years of changing vegetative cover and marsh area. Geophysical Research Letters. 38, L16405.      https://doi.org/10.1029/2011GL047847   Open Access

Nitrogen was reported to have become “demonized” in the “peer-reviewed” literature–Nixon, S. W. And B. A. Buckley. 2002. “A strikingly rich zone”–Nutrient enrichment and secondary production in coastal marine ecosystems. Estuaries. 25(4b):782-796.

Dave Andrews
Reply to  mike
November 14, 2021 8:36 am

Without oil and gas modern medicine will return to the Dark Ages.

Petrochemicals provide the chemical building blocks for most medicinal drugs: nearly 99% of pharmaceutical feedstocks and reagents are derived from petrochemicals and their derivatives.

Many detergents and other cleaning products used in medicine are derived from petrochemicals.

Plastics are also widely used in medicine, the most common being polyethelyne which is derived from petrochemicals, and serve a wide variety of purposes such as
*providing inexpensive disposable syringes, tubing and single use supplies to reduce
the risk of infection
*forming implants and artificial joints as well as advanced materials that can be used
inside the body with lower risks of rejection.

Natural gas provides ethane, propane and methane. Methane is used as fuel but also to provide hydrogen to make fertilizers. Ethane and propane are used to make petrochemicals.

griff
Reply to  ResourceGuy
November 14, 2021 12:04 am

Only climate change makes the Russian Arctic investment possible, ironically…

Redge
Reply to  griff
November 14, 2021 12:21 am

Only climate change alarmists make the Russian Arctic investment possible, ironically…

Fixed it for ya

You’re welcome

pigs_in_space
Reply to  griff
November 14, 2021 12:47 am

Now the Griff nutter has become an expert in all things Russian.

I actually live there, and can assure you the warmest period was the 1930s when the north west passage was ice free most summers.
This autumn has been freezing. If Griff ever ventured out of his silly little UK base and visited northern Russia in winter (somewhere north of us regularly has temps of -40>-50C) he would find that going for Arctic oil is not a fun place to be….(warm with swarms of nasty insects in summer too!)

Russ Wood
Reply to  pigs_in_space
November 16, 2021 4:41 am

There was a picture a couple of days ago of ships frozen in the NorthWest passage, waiting for an icebreaker to release them. Winter is here, at least around the North Pole.

ResourceGuy
Reply to  griff
November 14, 2021 1:00 pm

Did you ask the Russian engineers about that?

Ron Long
November 13, 2021 2:10 pm

I personally hope that everyone that voted for a “Net Zero/Green New Deal” politician slowly starves in the cold and dark. Sorry, but I only see doubling down on stupid for the whole green wienie theme.

Wade
Reply to  Ron Long
November 13, 2021 2:54 pm

Rules that apply to everyone do not apply to the select elite. That means the ones who create these untenable rules will never ever have to live by them. Neither will the ones who keep the selfish rulemakers rich. Sadly, no matter how much the elites and the rulemakers kick the people in the groin, far too many will go back and sincerely thank the rulemakers for that kick.

Redge
Reply to  Wade
November 14, 2021 12:27 am

5 May 1789

Vive la révolution

Retired_Engineer_Jim
Reply to  Ron Long
November 13, 2021 3:57 pm

And what about those of us who voted against them, but got stuck with them anyway? November 2022 can’t come quick enough.

Barnes Moore
Reply to  Retired_Engineer_Jim
November 14, 2021 6:11 am

Except that we need to elect reps who actually have a clue. Too many republicans actually buy into this nonsense as well. I live in Florida and see that my representative, John Rutherford is on the House Conservative Climate Caucus. When reading about the CCC, it seems they are taking a rational approach to dealing with energy issues, at least for now. However, I would bet that they are being heavily lobbied by a myriad of green activist groups and are not hearing much from us deniers. And Rubio is on the Senate Climate Caucus. Both will be hearing from me. I generally provide a link to Willis E’s “Where’s the Climate Emergency” https://wattsupwiththat.com/2021/04/25/wheres-the-emergency/ and also suggest they read Steve Koonin’s book.

Chaswarnertoo
Reply to  Ron Long
November 13, 2021 11:27 pm

I want to encourage them to stop exhaling ‘carbon’, right now.

Michael in Dublin
November 13, 2021 2:12 pm

This is the stuff of the worst nightmares – unfortunately we are not going to wake up and find it was merely a dream.

Reply to  Michael in Dublin
November 13, 2021 3:43 pm

Don’t you worry about inflation. Joe Biden and AOC have a time-honored way to handle it: Throw money at it. 🙂

Retired_Engineer_Jim
Reply to  Curious George
November 13, 2021 3:57 pm

Yes, the POTUS stated today that the infrastructure bill will cause inflation to abate.

Zig Zag Wanderer
Reply to  Retired_Engineer_Jim
November 13, 2021 5:15 pm

This is 100% correct. Printing more money always reduces inflation!

Tom Halla
November 13, 2021 2:12 pm

Really self destructive government programs usually only end with a change of government.
The model behind Nixon’s War on Cancer was pushed even harder by Carter, that trace amounts of industrial chemicals were causing a cancer epidemic. The minor little problems with this model were that cancer rates were not Increasing, except for smoking related lung cancer, and the LNT model is intentionally impossible to disprove.

Reply to  Tom Halla
November 13, 2021 3:15 pm

A really self-destructive government soon becomes a really destructive government. Germany 1938 and on, Italy 1938 and on.

Geoff Sherrington
Reply to  Tom Halla
November 13, 2021 11:06 pm

Tom,
The definitive study of this USA chemicals_cause_cancer scare of the 1970s, fabricated by government departments, is detailed with 590 pages of excellent research by Edith Efron in “The Apocalyptics”, copyright 1984.
It is recommended as compulsory reading to educate people in preparation for this latest fad scare of climate change. Here is a taste of a few pages. Geoff S
http://www.geoffstuff.com/apoc21to32.docx

Gregory Woods
November 13, 2021 2:14 pm

 But green energy is a pipe dream, an engineering impossibility.

Truer words have never been written….

markl
November 13, 2021 2:25 pm

Food cost and supply will be the immediate victims of fossil fuel shortage with countries dependent on food imports being the first to suffer shortages or exorbitant pricing. One can do without a new car, appliance, clothes, electronics, or a myriad of other products dependent on affordable energy but eating isn’t negotiable. Heating at certain latitudes will be next with deforestation to very quickly follow. Personal transportation will dwindle to necessity and vacation travel will cease. Business and commerce travel will be limited. It won’t take long for people to demand the good old days. It will take longer to correct the problem than it will to feel the affects of it.

RickWill
Reply to  markl
November 13, 2021 4:09 pm

The toughest part will be power going out on the gameosphere. That is the window to the world for the next generation. This is where the real world intersects with the meta world.

The meta world does not exist without electricity.

The world will probably tolerate some old people dying of the cold but imagine when access to twitter, facebook and the rest of the meta world becomes intermittent. That will upset a highly vocal group.

Zig Zag Wanderer
Reply to  RickWill
November 13, 2021 5:17 pm

That will upset a highly vocal group.

But if social media is blocked because of a lack of electricity, none of them will be able to complain. There’s a silver lining to every cloud…

Last edited 14 days ago by Zig Zag Wanderer
PCman999
Reply to  markl
November 13, 2021 6:05 pm

…. and all those food supply problems will be blamed on climate change! Dum and dummer and dummest, until the world collapses.

John Hultquist
Reply to  markl
November 13, 2021 6:47 pm

” … with deforestation to very quickly follow.

Did not the COParties agree to stop forest destruction?

Rich T.
November 13, 2021 2:36 pm

How to destroy western civilization. Back to the DARK AGES we go. Maybe time for a change in governments before it is too late

Redge
Reply to  Rich T.
November 14, 2021 12:29 am

In the UK at least, there is no alternative, they’re all socialists now

Vincent Causey
Reply to  Rich T.
November 14, 2021 12:47 am

Change in government won’t do much (except perhaps in the US). Because now the capital markets themselves are starving the oil industry of investment funds, the fossil fuel society needs just won’t be available, even if a national government tries to row back on the carbon abatement commitments. In fact, fossil fuel shortages will drive an even more frantic investment into unreliables.

Robert Hanson
Reply to  Vincent Causey
November 14, 2021 10:32 am

fossil fuel shortages will drive an even more frantic investment into unreliables

Or so they hope! 🙁

Dave Fair
Reply to  Vincent Causey
November 14, 2021 11:08 am

No, Vincent. With shortages come price increases. As prices increase, profits increase. As profits increase, investments increase. Look what is happening worldwide as shortages of FFs cause price increases: Governments are rushing to purchase, produce or otherwise lock in supplies of coal, oil and gas at almost any price. They are not rushing in to build more unreliables.

You are assuming that Western governments can force all worldwide financial institutions to stop all monies from going to FF projects. Governments can distort markets for only so long as average people don’t perceive that the government policies are harming them. Looking at current U.S. poll numbers, people realize that government policies are screwing them, big time. I assume that most investors think there is a good chance of a change of U.S. government control next November.

Investors put their money where they perceive profits are to be made. Warren Buffett explained why investment money is going into unreliables: Government tax breaks. Government mandates and tax breaks will cease as it becomes apparent to most people that such policies are wrecking our energy systems, much less realizing they are wrecking the middle class.

As otherwise stated by Abraham Lincoln, propaganda only works for so long; reality intrudes.

Last edited 14 days ago by Dave Fair
SxyxS
November 13, 2021 2:45 pm

Goldman Sachs has trippled its financing and investments in terms of green energy.
Of course this money will be missing somewhere else.
Goldman Sachs also recentlylaunched the global Clean Energy Index.

And who helped Al Gore creating Generation IM LLP in 2004?
David Blood from? Goldman Sachs.
And I’m pretty sure that Goldman Sachs and David Blood already knew at this point that Al Gore, who has no clue about science,movie making or investment,will make the documentary “118 minutes full of lies and failed predictions” (aka An inconvenient truth) and would get a Nobel peace prize and Oscar for the best fairy-tale.

Thomas Gasloli
Reply to  SxyxS
November 13, 2021 3:04 pm

It is easy to “invest” in renewables when government is providing a guaranteed profit. But, investing in renewables over real energy reduces the productivity of the economy and reduces the time that will pass before government runs out of other-peoples-money. In the end it all goes bust.

RickWill
Reply to  Thomas Gasloli
November 13, 2021 4:28 pm

before government runs out of other-peoples-money.

Governments can never run out of the money they create. However the buying power of the money can deteriorate. This is what is happening with the USD right now. US climate ambition will inflate the USD away.

USD as global money is losing its gloss. At commodity trading level, CNY is gaining favour.

Both Bitcoin and Etherium hit record highs this week.

It has taken all human history for ALL gold to reach a value of USD10tr, It has taken just a decade for ALL Bitcoin to reach a value of USD1tr. Will be interesting to watch the next decade as western nations pursue the impossible of trying to run sustainable economies off unsustainable energy collectors powered by fairy flatulence.

Joao Martins
Reply to  SxyxS
November 14, 2021 3:36 am

Just observe the evolution of Goldman Sachs financing investments after the flop of COP26: it will be a barometric measure of the outcome of it. If they smell that the green (ideologic) stuff came out weaker, they will reduce; if they smell that nothing change, they will continue in the same line.

Dave Fair
Reply to  Joao Martins
November 14, 2021 11:16 am

I don’t know, Joao; ideology and group-think are strong motivators. I think sheer inertia will keep the Leftist memes going for awhile in government and high finance.

bonbon
Reply to  SxyxS
November 14, 2021 5:15 am

Blood and Gore went to London, became Crown Agents. Did Gore register under FARA?

fretslider
November 13, 2021 2:48 pm

“how much damage can affordable energy production sustain, before food production begins to fail?

Our recent energy problems caused a shortage of CO2 needed for production and packaging. So I would say it won’t take that long

Dave Fair
Reply to  John Hultquist
November 14, 2021 11:25 am

Sec. Kwarteng said “In our ongoing response to manage the impact of global gas price rises, we will continue to protect businesses and consumers.” Typical government actions: Create a crisis and tell people you will handle it. Yeah, handle it poorly and create the next crisis of unintended consequences.

Note Kwarteng said they would work with the producer to develop “sustainable” methods of CO2 production. In other words, a Leftist ideological solution to a problem of the Leftists’ making.

Rich Davis
November 13, 2021 3:00 pm

One thing I think I know about the elite overlords…they are hypocrites to the core. So I really doubt that if oil and gas prices rise and investment in exploration looks to be profitable, that the fossil fuel companies will have trouble finding somebody who wants to invest. All the green virtue signalers will have subsidiaries lending the money.

Zig Zag Wanderer
Reply to  Rich Davis
November 13, 2021 5:19 pm

China will happily invest, unfortunately.

Graham
November 13, 2021 3:01 pm

We all know ( here at WUWT ) that fossil fuels will still be used in copious amounts for the next 100 years .
Unfortunately the UN and a lot of western politicians cannot think for them selves and most do not know how food gets to the supermarket or how the cotton is grown and other materials for clothing is made and materials for building houses is produced .
The first priority for any one anywhere in the world is nutritious food ,adequate clothing and adequate shelter from cold and heat.These are the very basic needs for every person on this planet.
A large number of countries have to import large amounts of food, lots of cotton .wool and other material for clothing,and large amounts of timber ,steel etc to house their populations.
Where will the electricity come from to drive all the tractors ,on the farms orchards and the trucks that carry all supplies to and from the ports .
No country in the world can electrify their transport and their agriculture as they cannot produce enough electricity unless they opt for nuclear .
Do these people think that the world is going back to sailing ships to move even these necessities around the world?
As supply chains fail around the world and shortages of basics develop populations will not stand for excuses from politicians and they will vote them out .

RickWill
Reply to  Graham
November 13, 2021 4:33 pm

A problem now is that supply chain issues are being blamed on Covid. That is hiding the real issue of funding new real energy developments.

I expect people will need to freeze to death before a light is really shone on the problem.

Chaswarnertoo
Reply to  RickWill
November 13, 2021 11:32 pm

This why I have two woodburners and a three year log supply.

Reply to  Graham
November 13, 2021 10:23 pm

I think in fact that if one thng is coning out of FLOP 26, it is that whether for reasons of greenwash or the reasons of spiralling fuel prices, nuclear is increasingly being seen as a better bet than the falsely named ‘renewables’.

The USA and Canada and Australia may be sitting on 100 years of coal, but Europe is not.
The reason may not be Green, but simple supply and demand – at current gas prices nuclear power is starting to look cheap.

In the end it doesn’t matter if your concern is CO2, peak oil, or merely Arab and Russian cartels holding the west to ransom, divesting away from fossil makes sense, Especially in electricity generation. That doesnt cover all needs, but it covers a lot.

Nuclear is only expensive because of political regulation. Political change can slash nuclear costs.

The signs are that a sea change is on the way. To date being anti-nuclear has bought Green votes, but in future being pro nuclear may buy working class votes, and a large sector of the educated middle classes.

Robert Hanson
Reply to  Leo Smith
November 14, 2021 11:31 am

It takes a long time to build a nuclear power plant, even after all of the government regulations are finished. Can’t be done overnight ie not in time to forestall coming blackouts.

Dave Fair
Reply to  Graham
November 14, 2021 11:29 am

Vote or “Storm the Bastille.” #Yellow Vests #Let’s Go Brandon #FJB [Might as well get them all in while I’m at it.]

Rud Istvan
November 13, 2021 3:01 pm

I am more sanguine about future fossil fuel investment. If there is money to be made, the investment will happen. Banks are not the only source of funds, were they all so foolish as to actually stop lending to such projects.

As predicted, COP26 has failed. Even IF CO2 were a real problem, renewables are not a real solution—as is increasingly evident. And nuclear is not a full solution, since many things (airplanes, farm and construction and forestry machinery) cannot be electrified. And since other things (plastics, N fertilizer, tires) depend on ‘fossil fuels’ NOT used as fuels.

Rich Davis
Reply to  Rud Istvan
November 13, 2021 3:55 pm

Yes, COP26 failed so on to Sharm El-Sheikh, Egypt for the COP27 failure!

Cue the clowns: “the world only has 12 months to avert disaster, this is really, truly, seriously the very last final chance!”

Red94ViperRT10
Reply to  Rich Davis
November 13, 2021 7:01 pm

We really mean it this time…

Redge
Reply to  Rich Davis
November 14, 2021 12:33 am

Tis but a scratch, just a flesh wound

It doesn't add up...
Reply to  Rud Istvan
November 13, 2021 4:03 pm

A big question here though is who will be making the investments? We have already seen China’s strategic approach to key resources expected to be in demand for renewables, batteries and other green paraphenalia, in which it has been building controlling stakes. The West is in the throws of re-creating a super powerful OPEC which will make the oil embargos of the 1970s seem trivial. It took more than a decade to build up non OPEC production and then to break its pricing power in world markets in 1985/6. This investment abstention will wind up having unpleasant political consequences, not just economic ones.

Indeed, they are already with us as we watch China sucking up vast quantities of LNG with Yamal cargoes crossing in the Med and Suez with some cargoes coming from Qatar to Europe. The UK recently imported LNG from Peru via Panama. Meanwhile Russia is starving Europe of pipeline gas and LNG. Normal arbitrage mechanisms are not working, and neither are normal market ones as Biden is forced to ask OPEC to ramp up oil production having thrown a wrench into US domestic production.

The Chinese LNG purchases are expensive in the short term, but they are crippling industry and consumers in Europe and other importing areas, as well as providing a warning of the consequences of trying to persuade China to abandon coal.

This is a geopolitical game where the West is repeatedly shooting itself in the foot. It alsmost certainly will be in no fit state to do any shooting when China moves into Taiwan, and if Russia indulges in further expansionism. The loss of Taiwan will give China a massive monopoly position in chip manufacture. The West will lose the ability to even calculate where it stands.

Zig Zag Wanderer
Reply to  Rud Istvan
November 13, 2021 5:23 pm

As predicted, COP26 has failed.

Oh no it didn’t. They agreed to another taxpayer-funded boondoggle next year. I challenge anyone to demonstrate that this isn’t the main goal every year.

Robert Hanson
Reply to  Zig Zag Wanderer
November 14, 2021 11:36 am

It totally succeeded in it’s actual goal of continued virtue signaling, while kicking the can further down the road, which was all that anyone with any sense expected.

Dave Fair
Reply to  Rud Istvan
November 14, 2021 11:35 am

COP26 didn’t fail! Didn’t you read the closing “Agreement” that said …? Didn’t you read the U.S./China pact that said …? On to COP27, where everything will be finally solved at the last second to save the world!

Gerard Flood
November 13, 2021 3:55 pm

Well done, Eric Worrall! “The question is, what will the architects of the gathering energy underinvestment crisis responsible, powerful industrialists do to support those of us fighting on the front lines to defend Australia’s national security, and the West’s superlative patrimony of truth-based Science, Health, Justice, Charity, Human Rights, the arts of superlative Beauty in music, vision and literature etc? These industrialists stood aside and allowed Tony Abbott and his leading “Hard Industries” advocate, Sophie Mirabella, be ousted by Australia’s nationally-aggregated and coordinated Left [including the Left’s ABC, the local Catholic “Education” Office etc] targetting their individual electorates. Until more responsible people – of those who do perceive the truth and threats of our common challenges for reform – commit their resources of intellect and ‘willfulness’ to the critical theatres of conflict, our nation’s future remains in increasing hazard. We are unavoidably geostrategically far from our traditional allies, we have been de-industrialising for half a century, now with a massive Industries Capacity-Deficit, and we are led – avoidably – by lying fools, “useful idiots”, and children. Time may very well be “running out” for Australia.

Last edited 14 days ago by Gerard Flood
Zigmaster
November 13, 2021 4:19 pm

Whilst what you say is relevant on a localised basis on a global basis there will be countries that will exploit this opportunity. China, Russia and India will control demand for and supply of fossil fuels. Europe is making itself totally reliant on Russia while places like Australia and Canada will find that supply shortages caused by falling exploration and expenditure mean that domestic fossil fuel prices will rise.
It was always assumed that driving up energy prices eg with a carbon tax would redirect investment to renewables but because only fossil fuels ( or nuclear) provide reliable power demand has remained high.
I suspect that with what’s happening in Europe and elsewhere there are serious misgivings by governments the way things are going. The best thing for sceptics is for there to be widespread outages and huge price increases to ensure that these climate zealots get punished at the ballot box

DMacKenzie
November 13, 2021 4:21 pm

Big Investment houses like Blackrock are using investors’ money. What they are “big” at is skimming a couple of percent per year management fee, in only 25 years they have half of their investor’s life savings….and when their investors move because some other fund is getting better returns, they will find themselves needing to change their strategy.

Stanley
November 13, 2021 4:35 pm

Here we go…..Australian fertilizer, explosive and industrial chemical group Incitec Pivot (IPL) plans to shut its Gibson Island fertilizer plant in Brisbane, Queensland in December 2022 when a prevailing feedstock gas supply contract expires.

Geoff Sherrington
Reply to  Stanley
November 13, 2021 11:18 pm

Stanley,
Life progresses. I was part of the initial crew when this urea plant was built, being in the laboratory servicing farmer clients as to their optimum fertilizer types and quantities. Geoff S

November 13, 2021 4:51 pm

Venezuela went from prosperity to poverty in about a decade. Chris Condell has provided a timeline:

Venezuela timeline.jpg
Robert Hanson
Reply to  Eric Worrall
November 14, 2021 11:57 am

a majority of Venezuelans still believe in socialism”

Questionable, but its hard to tell, since the electoral fraud is so rampant. I think there is a good chance that the current government has been voted out several times over the years, but the fraud kept it from being registered. Then the protests are kept in line by armed force, from both official groups and government sponsored vigilantes.

pigs_in_space
Reply to  Dan Pangburn
November 14, 2021 1:10 am

The cockroach in Belarussia ticks all the above boxes, apart from the unarmed citizens are being imported cheap from the middle east to the Polish border.
Putin’s Russia ticks nearly all the boxes including suspending the constitution.
What comes next is going to be ugly, once the old USSR Babushka generation have all died (been liquidated) by Covid.
(unarmed citizens massacred by decades of deliberate under investment in proper health care)

bonbon
Reply to  Dan Pangburn
November 14, 2021 5:05 am

Looks like Washington’s boy Guaido is all used up….

Dave Fair
Reply to  Dan Pangburn
November 14, 2021 11:43 am

The great President Ronald Reagan said (approximately) that the loss of freedom is only a generation away.

November 13, 2021 5:00 pm

Raising the cost of energy raises the cost of EVERYTHING. The earth does not charge.

Robert Hanson
Reply to  Dan Pangburn
November 14, 2021 11:59 am

Not really, just anything that needs to be transported. Or processed. Or manufactured. Or….

DocSiders
November 13, 2021 5:39 pm

If Germans suffer enough this winter, the world just might learn how insane it is… discontinuing reliable low cost energy capacity before high cost unreliable “Renewables” are even in place…..and doing all of that for NO GOOD REASON.

The reason it is being done is to consolidate more Power in the hands of the already too powerful Globalist Socialist Oligarchy that made up the fake Climate Crisis and continues to shove it down our throats.

griff
Reply to  DocSiders
November 14, 2021 12:02 am

why would they suffer?

Last winter Watts was full of dire predictions their entire energy grid would collapse in the face of a cold spell… and nothing actually happened

pigs_in_space
Reply to  griff
November 14, 2021 1:20 am

Nutter Griff again has no idea what he is on about, in his greeny propaganda infested UK
!
All of Germany is under a foggy windless bout of ‘alternative weather” this week.

If Griff had actually flown into Germany like I did this week, landing from 10 000m shows very clearly there was NO green energy in Germany this week….no solar and no wind!
Not a single windmill was turning (as lots of them stick up on hills above the fog!)
That means sweet F-A power Griff!

We have heavy frosts of -4C in central Frankfurt, but this is only the beginning of a cold winter where lots of people less wealthy than the norm will freeze.

Germany only survives this by buying high priced electricity from coal fired Poland, lighting its own coal firing , and buying high priced electricity from Nuclear France.

Back home (further north) I am being hit with electricity 60% higher than normal, with a 15% subsidy to those stoopid windmills and now at 60N bl..dy SOLAR PANELS!!!

There are now protests in the Baltic states about the price of power and France is starting to introduce “energy cheques” as a blatent electioneering stunt.

Rainer Bensch
Reply to  griff
November 14, 2021 4:34 am

See? Global Warming is good.

Martin
November 13, 2021 8:07 pm

Maybe the fossil fuel industries should band together and create their own bank which would lend exclusively for fossil fuel infrastructure projects?

bonbon
Reply to  Martin
November 14, 2021 4:59 am

The Belt and Road Initiative has already done that, the World Bank being useless.

Paul Johnson
November 13, 2021 9:05 pm

It seems that many banks and funds have abandoned any fiduciary responsibility towards their clients. How long until some rogue fund emerges investing only in fossil fuels, resulting in superior financial performance?

Reply to  Paul Johnson
November 13, 2021 10:07 pm

It is already the de facto case. Many funds on the high alpha side invest in almost anything, including tobacco, derivatives and what have you on the basis of simply providing best returns.

since e.g. oil majors have seen around 30% uplift this year alone, they must have ben invested in by someone…

I spent a little time hanging out with people in this game. Perhaps the most salutary lesson I learnt is that if a sector is about to go down, the best sign is people in the financial press being paid to extol its past performance, so the smart money can unload it to the punters who believe the financial press….

Why would those in the know give away their hottest tips, or indeed, wroite books about investing if they had made so much money out of it?

The financial markets are regulated to stop just short of outright criminality.
If greenwash means funds can pick up oil stocks cheap, they will go slong with it.
They have their own ways of assessing value.

Pat from kerbob
November 13, 2021 10:17 pm

As I see it, there is only one true hockey stick and that is human population of earth over the last 10,000 years, imperceptibly rising for 9,700 years and then goes exponential in the last 300, entirely due to affordable abundant energy.
As renewables are crap, if you kick out that energy leg of the stool the only reasonable result is a mass die off of the carbon infestation

November 14, 2021 1:42 am

A full tank of diesel yesterday cost nearly 100 euros here in Belgium, the highest ever. More than 1.7 euros per litre.

Robert Hanson
Reply to  Hatter Eggburn
November 14, 2021 12:06 pm

Much of which is taxes rather than cost of production.

bonbon
November 14, 2021 2:36 am

This book was commissioned in 1776
https://en.wikipedia.org/wiki/The_History_of_the_Decline_and_Fall_of_the_Roman_Empire
as the blueprint for the British East Indie Company recently becoming the British Empire in 1763. Oddly enough it does not mention oil.

Even more odd, the methods of Julian the Apostate as model are still today in play.

COP26 is the last gasp of that 300 year Roman retread. And look at the chief Speaker, Prince Charles’ and the rest. What theater!

Where is Shakespeare when we need him?

2hotel9
November 14, 2021 2:47 am

Net Zero is doing precisely what envirotards want it to do. When are we, real human beings, going to bring this shit to a screeching halt? They want a revolution? They want fewer people on the planet? Fine, let us give them what they claim to want and remove them from our planet.

bonbon
Reply to  2hotel9
November 14, 2021 3:02 am

Bezos expects the Earth to be a cleared reserve with people in space :

https://www.youtube.com/watch?v=67KZfeZyw_U&t=2477s

You could not make this stuff up!

https://cathedral.org/wp-content/uploads/2021/11/P21006_IGNATIUS_FORUM_PROGRAM_v5a.pdf

2hotel9
Reply to  bonbon
November 14, 2021 3:45 am

I like reading science fiction, too. Unlike the brain damaged Bezos I understand it is fiction.

bonbon
November 14, 2021 2:51 am

What will they attempt when GFANZ and the Great Reset, Green New Deal implode the physical economy? Why, start war of course – the Roman way.

Notice the hypersonics and constant barrage of assaults on the English language – ‘hybrid aggression’ , ‘malign actors’ , and even ‘cyber warriors’ .
Some say the first victim in war is truth – indeed it is language.

Rome continued as Venice, the Second Empire, (Britain being the Third) and was identified by the League of Cambrai which came within an inch (Vatican betrayal) of obliterating it.

Today only concerted action of the 4 Great Powers, USA, China, Russia, India can deal with this collapse and avoid a descent to barbarism. Trump was exactly on that track in 2016 – getting along with these 3. Note the unparalleled assault – that originated, guess where – the City of London (Steele et al).

observa
November 14, 2021 4:33 am

 My question – how much damage can affordable energy production sustain, before food production begins to fail?

Is this a trick question? They’ll blame the food production drop on climate change and call for fossil fuel bans to fix it. We warned you deplorables this would happen and you’ve brought the food rationing upon yourselves for not heeding us.

Andy Pattullo
November 14, 2021 8:35 am

I haven’t seen much written about laziness of thought and it’s contribution to this conundrum.  We are clearly at a turning point. 

Western wealthy society is collectively trying to blow out the flame of cheap reliable energy and has no replacement in the wings. Wind and solar have been around long enough to prove their inadequacy and ridiculous expense but haven’t yet fully disclosed their massive environmental cost to western society. Battery backup is more a feeble joke than a real possibility. Developing countries will pay lip service to the prevalent climate religion but, not surprisingly, will continue to use any and all resources they can afford to develop. We should encourage rather than inhibit their efforts.

The consequence for wealthy, energy intensive economies is almost certainly going to be some form of collapse in production and services. It is not a consequence only for the West because we are primary providers of many key staples to developing economies, most notably food. As a prime example, the pointless diversion of 40% of the corn crop to fuel ethanol in the US was a major contributor to food price rises in North Africa and the subsequent civil strife the progressive wing-nuts like to call the Arab Spring. Only a zealot could see increasing hunger and civil war as a benevolent outcome.

Out world is interconnected and our decisions will clearly affect others. But for the wealthy nations and those who lead them the collapse will be an immediate and painful exercise in rethink and adaptation. It won’t matter how many political, religious, celebrity, child zealot, environmental and journalistic voices are unified in the chorus of climate change and the green new deal. Reality will bite and bite hard. There will be poverty, cold, hunger and almost certainly civil strife. Politicians and other policy makers will be seen as the enemy. Fellow civilians will be seen as competitors for resources rather than neighbors. All forms of tribalism will emerge and grow.

The socialists who are naively driving us down this path, and who dream of a world without competition where equity and collectivism rather than merit and individual effort are the measures of success will soon be plunged into a world where only the ability to compete, produce and innovate are valuable. Merit and ability will be everything. 

All of this seems obvious from history and from the fundamentals of how our society works. Basic economic principles, social dynamics and the laws of physics cannot be suspended for any form or religion or belief system. So why are we on this path? How can so many people in positions of influence, power and awareness be so wrongheaded in their decisions about our future? How can they stand on the railway track watching the approaching train and believe it is the light of a golden future?

Perhaps it is because success breeds laziness of thought. When generations grow up in a society that makes all necessities easily available, when idleness becomes not a luxury but an industry to entertain the masses, when decisions you make every day bear no real existential consequence, and when society collectively comes to worship image over substance, then perhaps the natural outcome is society that has lost the motivation to think deeply and logically about their decisions and actions. 

What is easy becomes the most natural decision. Consume now, pay later. More entertainment, less work. In the end believing something that you actually know to be completely without foundation becomes the lazy and easy answer to everything. 

For those of us who have not yet surrendered to lazy thought, and I believe that is most who visit and contribute to this site, there may be nothing more to do now but to plan for lives in a changed and excitingly dysfunctional world. There may be no way back but forward. The turning point may be long past and we may now be on the roller coaster of at least partial energy system collapse. What we can do is to make contingency plans for how we respond and how we rebuild the energy based society we have enjoyed so long, once the idiots have been properly punished by the citizens they failed and removed from public life.

The Earth will of course be saved. It was never at risk. The climate will continue to change – most likely toward the colder rather than warmer in the near term, and the environment will adapt as it always has to small and large changes in the driving forces we humans understand only a little.

Robert Hanson
Reply to  Andy Pattullo
November 14, 2021 12:17 pm

A little too rosy I think. One year Ancient Rome had a population of over a Million. A year later it was less than 100,000. The barbarians taking down most of the aquaducts forced people to leave. For us it’s not water, but the grid. Once that fails, everything a modern, technological society needs fails with it.

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