More Polarization – Africa/Asia Investing Hundreds of Billions in Hydrocarbon Infrastructure Out of Necessity, The West Arranges Deck Chairs on The Titanic

From the BOE Report

Terry Etam

I’m sure we’re all used to polarization now, particularly if you choose to pickle yourself in media brine. Buying butter can be an act of war depending on whom you choose to disclose that information to, and for reasons unfathomable to me a great many of us choose to announce such purchases via Instagram/TikTok/Twitter, in between endless bun fights about anything and everything. Hey, look at what I’m eating, and #$%^ you. 

Energy is of course at the forefront of polarization, with one rich/righteous group trying to kill the world’s dominant fuel system and a far larger group at risk of decimation without expansion of that system. The former group refuses to acknowledge – or does not realize – that it is a subset of the latter, and we therefore get front row seats to western governments vehemently contradicting themselves on a daily basis.

Energy polarization is fascinating because it is so all-encompassing and the stakes can’t be higher. To top it off, the west, not at all done with colonization, has decided for the umpteenth consecutive century that it will dictate how the world shall develop.

Spoiler alert: regular readers know where this is heading, but the disclosure is still necessary if for no other reason that the problem keeps getting worse. Think of this as a chronicling for historical records of this great lemming-leap we are witnessing live and in real time. 

You should know how the world is being brought to its knees energy-wise, and you should tell your friends.

It is important to note first that Canada’s energy industry is in fact moving mountains to comply with the wishes of our federal leaders. The marching orders have been given, and the oil patch has shifted accordingly. Some won’t believe that, because death of the industry is an imperative (AOC, T Berman, D Suzuki, Greenpeace, Ecojustice, 350.org, and on and on), but the facts are that the oil patch is abuzz with energy transition/emissions reduction work. Progress is happening at a staggering pace.

Huge utilities – hundred-billion-dollar-plus behemoths that are not known for agility – are spearheading carbon sequestration pipelines, storage hubs, and associated infrastructure. For example, TC Energy and Pembina are looking to join forces with Shell and the oil sands producers consortium to construct one mega-carbon capture system. Enbridge is teaming up with a group of First Nations to develop carbon capture solutions. All of them are building solar farms and putting up wind turbines.

Oil and gas producers are also charging full speed in that direction. Entropy Inc., a subsidiary of a Calgary natural gas producer, has developed technology that enables smaller scale carbon capture/sequestration, has raised hundreds of millions in capital, and has customers banging on the door looking to implement their technology. Ironically, a mish-mash of conflicting policy from the provincial and federal levels is holding back progress, because despite the speed at which governments profess to want an energy transition, they clearly don’t know how to achieve it in such a rapid time frame. To the surprise of absolutely no one.

At the smaller end of the scale, the junior oil/gas sector has been almost entirely usurped by new energy technology companies developing new ways to produce hydrogen, reduce emissions, and reinvent old ways of doing business (repurposing old oil fields (Proton Technologies), recycling waste material (Rundle Ecosystems), etc…and write if you want that I’m ignoring your enterprise and I’m sorry but there are literally hundreds of similar initiatives and my head only has room for a few at a time).

Yay, look at us, energy transitioning! The world is saved. 

Oh yeah, about that. Did anyone actually think this unbelievably large (and expensive) oil/gas industry refocusing is helping reduce polarization?

Haha, sorry. Haters still hate, and the bar keeps rising. I read the transcript of a Feb 2022 meeting of the federal Standing Committee on Natural Resources. Called to participate were some energy economists, TC Energy, and a few obligatory climate activists. The panel confused TC Energy with an oil producer, the NDP/climate activists hurled insults at the oil/gas sector, and the economists debated the efficacy of current government policies without touching on the fact that those policies are no more than rearranging the Titanic’s deck chairs.

The world is running out of fuel. The world is also not going to get to net zero 2050 (mineral shortages alone guarantee that), but the west’s cheap-energy wealth allows us the luxury of pretending this all will happen magically while ignorantly pounding our energy providers into the ground (though they don’t say so overtly, encouraging capital flight from the industry is all we need to know).

The west is so comfortably wrapped up in itself because of our staggeringly competent energy system – one which can afford such moral-high-ground emissions schemes – that it pays scant attention to much bigger problems brewing elsewhere. 

Western governments have even created a new type of polarization, because we just didn’t have enough apparently. European governments, pioneers of the rapid-energy-transition imperative, have now found out that that fork in the road was a very wrong one indeed. Europe is in a blind panic to secure adequate energy supplies, and in an act of humiliation that will surely go down in history is continuing to buy energy products from a beast that is currently annihilating a neighbour with artillery shells because Europe has no other choice than to transact with a madman. Western Europe consciously and purposely turned its back on hydrocarbons, and as a direct result Ukraine remains under inhuman bombardment, indefinitely.

North American leaders have been shielded from global energy mayhem due to the fact that current leaders have not been able to strangle the industry as quickly as they would like. Sure, they are trying; Biden immediately began to pressure the industry in the US by cancelling new oil/gas leases on federal lands (a move recently reversed as Europe’s panic becomes visible), and Trudeau was and is committed to winding down the industry.

In the climate plan of the other week, the federal government said: “Sending a clear regulatory signal now should discourage further investments in assets that could become stranded.” That statement is a direct reference to “fossil fuel” investment, an astonishing statement of singular stupidity – if the energy transition were to happen as the government hopes, would oil/gas assets be the only ones stranded? How about airports? How would they even know what will be ‘stranded’? How do they discourage investment in things that might or might not still be necessary? 

Now, from a global perspective, which is what we should worry about in the interconnected energy world, more than a few billion people might not care at all if Canada chooses to self-immolate. But no, we can’t leave them alone, can we? The west knows best, and while we may be woke to our eyeballs about racism and whatever else, the underlying urge to dictate to developing countries what will or will not be allowed remains a pillar of elite western thought.

“Let’s heed the UN’s dire warning and stop the east African oil pipeline now,” bleated a headline in a British newspaper authored by a New England climate activist (Bill McKibben) who founded anti-oil organization 350.org and was proudly handcuffed fighting Keystone XL. 

Let’s take a quick tour of another form of polarization that has evolved from the energy dialogues. Here in North America and western Europe, we continue to hike fuel prices and harass consumers into reducing consumption by brute force, on moral grounds – governments simply despise our fuel system. They want hydrocarbon producers diminished and ultimately dismantled, and the sooner the better.

Here’s the view from the other side of the world, in a few headlines, that reflect the polar opposite of our western narrative – a desperation for survival. “India risks widespread power blackouts this summer”, because coal stocks are low, and natural gas is unavailable. “Electricity shortfall hits 6000MW”; Pakistan is unable to generate enough electricity because it cannot compete with western Europe in a bidding war for natural gas. “Despite Oil and Gas Reserves, Africa Feels Pressure of Rising Energy Costs”; Africa relies heavily on imported petroleum products and is fearful of natural gas shortages that will impact fertilizer supply.

India, Pakistan and Africa are populated by 2.8 billion people, and they are running out of fuel. Running out of fuel means running out of air conditioning, food, and transport options. It is serious business. And there are a few billion more in that camp as well, I simply stopped gathering headlines after a few minutes.

Mercifully, the “advice” of western activists is being ignored. Africa is currently constructing the Dangote refinery in Nigeria, owned by an African, that will supply over 12 percent of Africa’s product demand, increase fertilizer production at an associated facility, and reduce the continent’s reliance on imported fuels. 

Asian governments are currently building out $350 billion worth of new natural gas infrastructure. That’s in addition to adding renewables as fast as they can.

The problem is that these investments will not arrive soon enough. The world is short of hydrocarbons now, and the world’s top experts at oil/gas production are largely fleeing the industry or focused on the “energy transition”. Fuel shortages are expected in many parts of the world within the year. 

In the context of that potential humanitarian disaster, the guidance of our western leaders should leave anyone sick to their stomach. And it’s not like our hydrocarbon sector is even fighting the feds – they are focused resolutely on reducing emissions and on meeting government mandates, no matter how unhinged. Yet the Standing Committee on Natural Resources listens quietly to strategies put forth by activists to get oil/gas people to exit the industry, not entice people into it. There are no words. 

We’re all sitting here watching a train with billions of people in it heading for a bridge that is out.  Our leaders are grinning in photo ops with beneficiaries of the trillions they are shoveling at ill-conceived and over-rushed schemes towards a target that the mining industry has essentially deemed as impossible.

Nassim Taleb has a great analogy for long periods of complacency, where everything is great until one day it isn’t. A turkey leads a comfortable (if confined) life for every day of its life until the last one, when things go very badly indeed. Think of these endless columns of energy observations as much the same thing. The tragedy is that we’ve been warned the axe is coming. 

Slava Ukraini! Find out how the world got into such a calamitous energy state, and how to get out – pick up  “The End of Fossil Fuel Insanity” at Amazon.ca, Indigo.ca, or Amazon.com. Thanks for the support.

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Read more insightful analysis from Terry Etam here, or email Terry here. PS: Dear email correspondents, the email flow is welcome, but am having trouble keeping up. Apologies if comments/questions go unanswered; they are not ignored.