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 – 4.37pmEscalating 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.
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).
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.
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.
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.