“Stranded assets.” You know what those are. Probably you’ve read a hundred or more articles over the past few years confidently proclaiming that oil and gas fields and coal mines owned by large energy companies will soon become worthless, as production of energy shifts to “cleaner” and “cheaper” things like wind and solar. The owners of the fossil fuel properties won’t be able to sell them for even a dollar. The assets will thus be “stranded.”
The “stranded assets” predictions unsurprisingly come from the same crowd who are also ordering up the electric car future. For just a tiny sample of recent pieces making the stranded assets point, check out this from Nature Climate Change, May 26, 2022 (“The transition to a global low-carbon economy entails . . . the fast phase-out of fossil-fuel production, which will necessitate the write-down of major, functioning capital assets and reserves reflected as assets on fossil energy companies’ balance sheets.”); or this from MIT News, August 19, 2022 (“As the world transitions away from greenhouse-gas-emitting activities, . . . fossil fuel companies and their investors face growing financial risks (known as transition risks), including the prospect of ending up with massive stranded assets.”); or from the Guardian, November 4, 2021 (“Half world’s fossil fuel assets could become worthless by 2036 in net zero transition.”).
If you are thinking of buying in to any of that, you might enjoy the frankly hilarious piece by Michael Lynch, titled “A Cautionary Tale For Oil Companies’ Navigating The Transition.” The piece has a date of November 2022, but is linked at RealClearEnergy today.
Lynch’s piece is somewhat long (14 pages), and filled with decades’-old super-confident predictions of our energy future, all of which failed. I’ll give you just a sample:
- Rawleigh Warner, CEO of Mobil, 1977: “The oil business has come to maturity, and with this maturity comes a new set of challenges…oil companies have no other choice. They must diversify or go the way of the buggy-whip makers.”
- Standard & Poors, 1980: “Diversification [by oil majors] into alternative energy fields should offer promising new opportunities for increasing profitability.”
- Standard & Poors, 1984: “Diversification out of the oil business has been disastrous for most of the majors….”
- Ford Chairman William Clay Ford, Jr., 2000: “I believe fuel cells will finally end the 100-year reign of the internal combustion engine . . . Fuel cells could be the predominant automotive power source in 25 years.”
- Jurgen Schrempp, Chairman of the Board of Management of Daimler-Chrysler said the company would be a market leader and later predicted sales of 100,000 hydrogen fuel cell vehicles in 2005.
- Lynch on hydrogen fuel cell vehicles: “[T]oday, a quarter century later, sales are in the four figures.”
- Senator Richard Lugar and R. James Woolsey, 1999: “Cellulosic ethanol is a first-class transportation fuel, able to power the cars of today as well as tomorrow, use the vast infrastructure already built for gasoline, and enter quickly and easily into the transportation system.”
- Lynch on cellulosic ethanol: “[C]urrent production of cellulosic ethanol is so low data is not reported by the government.”
It goes on and on from there. There’s one very safe bet on the energy future, and that is that the utopian dreams of would-be central planners will fail. The $300-400 billion of subsidies said to be in the “Inflation Reduction Act” for “renewable” energies is not nearly enough to enable those things to prevail over fossil fuels in the market for energy. The energy supply will inexorably move to whatever best supplies consumer needs at the lowest cost.
Remember,New York City should be impassible due to piles of horse dung.
“The $300-400 billion of subsidies said to be in the “Inflation Reduction Act” for “renewable” energies is not nearly enough to enable those things to prevail over fossil fuels in the market for energy.”
But it sure will be a gold mine for wind/solar industries. No doubt they contributed a lot to Biden’s election and now they’ll reap their payback.
Almost undoubtedly but hobbled by an enormous waste of resources along the way.
I could almost agree, except that I think the “central planners“ are not really interested in what the market wants, they are interested in what they want, and the market to be damned. And I think it’s unfortunate because they don’t care what the market wants, nor what the damage will be done to humanity and civilization as we travel down the bleak road to their vision.
Anyone else remember hearing, “The Stone Age didn’t become obsolete because of a Lack of Stones, or the Bronze Age because of the lack of Copper & Tin, or the Iron Age because of the lack of iron ore.”
Stones and copper and tin and iron ore are still out there, just technology moved on to the better and cheaper sources. And they didn’t have to make any laws to do it.
I really enjoy the art work at the top of most articles- but I really wish the artists would be mentioned.
I don’t think most AI have names.
oh, OK- I didn’t realize it was AI- a similar image isn’t AI- it’s me back in 1970
We’ll just call it Dave
Dave’s not here.
No, it’s me, Dave !
One such artist is called DALL·E 2.You do the rest.
This was not AI. This is a stock photo/art. Profile of source. https://www.123rf.com/profile_rolffimages/
The “artist” is Charles Rotter
His sources are a trade secret.
Oh dear. In practice exactly the reverse has and is still taking place.
The energy supply has inexorably moved to whatever best supplies political and crony capitalist needs at the highest cost to the consumer.
This is deliberate. The real question is why?
Why? Money and power.
“In practice exactly the reverse has and is still taking place.”
Are you sure? Seems like natural gas has achieved great market share gains in the electricity supply chain (MWH provided) while the subsidized sources are still small pie slices on a chart.
Natural gas has made market share gains largely due to massive government created expenses added to coal plants causing many to shut down permanently.
On an even playing field, coal would still produce much more electricity then at present, and far more than natural gas.
AND the ‘energy” source, coal, can be stored on site. Months of supply.
Natural gas generation facilities can be shut down by attacks on pipelines by terrorists or accidents and the shutdown could last for months. See Nord Stream 1 and 2.
The author concludes “The energy supply will inexorably move to whatever best supplies consumer needs at the lowest cost.”
Unfortunately, this is blatantly false given the ratio of solar/wind (i.e. intermittent) utility installation vs. fossil fuel, nuclear or hydro in the past 2 decades.
A prediction of a free market visionary. But we have practical politicians.
I would say more “free market fantasist”.
Nor is more solar/wind the product of “practicality” in any sense except self enrichment: board seats for alternative energy companies are available to useless ex-politicians whereas board seats for fossil fuel companies are not.
It’s just a matter of time. It may take quite a while and serious economic collapse and needless suffering of millions.
“Only one principle will give you courage: . . . no evil lasts forever; nor indeed very long.” – Epicurus
As someone who has been watching serial bubbles since 2000 – I would say that “quite a while” is very possibly longer than a human lifetime and is certainly longer than a normal career.
At which point, there is no point being “right”.
Support with a chart
See here for 2022:
Natural Gas: 21%
Very little difference in prior decade.
“In 2022, we expect 46.1 gigawatts (GW) of new utility-scale electric generating capacity to be added to the U.S. power grid,”
46GW = about 2%. Large percent growth of small percent contributor.
What I wrote above is “the ratio of solar/wind (i.e. intermittent) utility installation vs. fossil fuel, nuclear or hydro in the past 2 decades.”
The posted data is for new installation in 2022 alone; a look at the past 2 decades of new installation shows the same thing.
Overall, solar went from 2000 MW to 120504 MW from 2010 to 2021 while wind went from ~2500 MW in 2000 to 135843 MW in 2021. The total of 355847 GW compared to 1200000 GW overall – that’s a big, big jump considering net electricity consumption/generation is almost flat.
So no, your statement of “Large percent growth of small percent contributor.” is wrong.
As the Soviet Union found out you can’t control the markets forever. On the other hand you can defy them for quite a long time
In the 1950s, after the Korean War, the industrialized North Korea was richer than largely agricultural South Korea.
I don’t consider the South/North Korea comparison very useful.
Just imagine what a complete embargo on all world trade would do to pretty much any country – particularly the US.
For Korea, it is especially bad because they don’t have any fossil fuel energy to speak of outside of some coal. No oil or natural gas at scale for sure.
An embargo of all world trade for the US?
Everyone would need to keep their cell phones, computers and TVs longer.
The coal, steel and other industries will need to be rebuilt.
There would be no rare earths to make all the EVs and no more imports of solar panels and bird choppers. So an end to the insane forced transition to unreliables. (EV cars are unreliable)
The welfare state would by necessity need to be reduced to force currently worthless leaches to work for a living in factories, etc.
North Carolina could start making clothes again. (Norma Rae anyone? She sure did great for the textile workers, didn’t she?)
New England could start making shoes again.
Pittsburg could return to a US steel center and make SMR reactor vessels and valves and piping AND?
How horrible that would be!
OK, so bananas no more?
Pineapples no more? Until Hawaii starts growing them again.
German and Japanese cars no more?
How about no pharmaceuticals? Something like 80% of all drugs used in the US are manufactured using intermediate inputs from China.
Anyway, while I would agree that the US could be self sufficient in more things than most other nations – the reality is that a full trade embargo would mean enormous economic pain for everyone because the import substitution would not happen quickly or painlessly.
And a full embargo would make the US poorer and weaker immediately.
Yep, and we know that only the Chinese know how to make those things, AMERKINS TOO STUPID.
The precursors are probably being manufactured in factories disassembled in the US and moved to China. Or with give away or stolen technology, Or both.
So again, like steel, the US would need to recreate the industry.
Obama: Manufacturing will never come back
Under TRUMP, with only 2 years of a RINO controlled House and Senate, manufacturing jobs started coming back.
hardly false, on a worldwide basis it has moved to whatever best supplies consumer needs at the lowest cost… we are swimming against the tide in the US …
Every supplier tells the same “mines cheaper” story. At one time politicians promoting nuclear had “too cheap to meter”, and they went with Magnox reactors which proved costly. Big Wind likes to quote their levelised cost of electricity (LCOE), while ignoring the costs of intermittency such as the backup infrastructure needed when the Wind does not blow. In the case of Ireland gas consumption has risen even as more wind generation has been added to the grid which has seen increased output. Ireland is at the end of the line of a gas pipeline from the UK and Norway. It’s political class is putting all its eggs in the intermittent generation basket and using natural gas to cover the shortfalls.
are we expecting the tinkering with the marketplace to produce social engineering to stop?
It’s all a big money laundering scheme, just like the funds going to Ukraine. Vast sums are cycling back to the politicians, shell company LLCs, and media companies pushing The Narrative.
I believe the real goal of Net Zero is to drive the prices of fossil fuel production stocks down through government force and media propaganda. The people behind it then buy the artificially low stock, then watch as Net Zero falls apart and the stocks rise again. Simple trash and cash play.
Aren’t those stocks dividend stocks? Doesn’t the scheme you describe appeal more to people looking for capital gains instead of income on existing/inherited capital?
I don’t see a problem with getting capital gains and dividends.
BTW there’s an ETF called DRLL that focuses on non ESG stocks primarily dealing with energy. So far their dividend yield is 1.21% and 1 year performance is 10.31%. That’s better than most investments.
I would also love getting capital gains and dividends.
The higher the principle, the less the capital gains matters, so long as it beats inflation long term. I-Bonds were about 10% for a while, now they’re closer to 7%. Oh well.
Series I Savings Bonds6.89%
For savings bonds issued November 1, 2022 to April 30, 2023.
Exactly. Similar in principle to Pump and Dump, just inverted.
“I believe fuel cells will finally end the 100-year reign of the internal combustion engine”
Does a Hydrogen fuel cell produce energy by combustion, e.g. Hydrogen plus oxygen?
Two articles to read:
Hy-wire was introduced in 2002
Based on article 1:
Yes, a Hydrogen fuel cell produce energy by combustion, aka “redox reaction”
If I read it right, Fords statement was technically nonsense.
I’ll keep reading so I broadcast less nonsense myself.
Much learning has happened. I used to associate FC with combustion – one valid angle – but battery-electric might be a a better comparison.
Willie ford was an idiot, who won the gene pool lottery. Think Detroit Lions.
Dear WEFers, Greenies, etc., do not preach to me about the future until you can demonstrate that you have a good grasp of the past. So far, you haven’t shown any.
Another word diluted down to a homeopathic level of meaning
Don’t be late to the larger subsidy trough.
Drax plugs into US renewable power opportunity (yahoo.com)
My own “Energy future” is my new fireplace insert and a whole house on demand generator powered by NG that is yet to be acquired.
The former to cut down on the cost of Natural Gas, the later deal with the failure of the local electric utility to clear the lines that run to where I live of dead fall and overhanging limbs.
Lost power 5 times this year already and I’m sick of it!
Costco, 22KW for less than $5,500.00. Transfer switch included.
Give me a call and I will help you install it. I did mine 16 years ago, only a 12 KW with transfer switch cost me the same then, so inflation wise more power for less $ now. At 8600 ft. elevation output is about 8 KW, but I have LPG heater, water heater, dryer and stove so can run my whole house on far less than 8 KW, actually running barely over idle. 1.3 gallons per hour usage. I have 2 500 gallon tanks. And yes, it has been on 3 times this winter but that is due to Cedar Mountain only having one line in since the US Forest Service will not allow a loop line to be installed. Two short (under 2 hours) tree outages and one scheduled maintenance outage.
Now I do have to shovel the snow from around the ventilation openings, we have gotten a crapload of snow this year, and snowing again now, with up to 18 more inches over the next 24 hours. Shoveled the deck and blew all my driveways today from last nights 16 to 18 inches. Using a walk behind blower so if I don’t keep up I will need to pay someone to clear the snow. I am too cheap for that, and am retired, so it only costs me gas. That global warming is really dumping on us this year.
as far as I can tell every single solar panel and wind turbine is a stranded resource … in 10-15 years they are all worth 0 …
Actually they will be worth less then 0 since they, in general, have no funds set aside to “decommission” the crap. Just like everything else to de with “unreliables” the feds will probable put a tax on ALL electrical generation to create a superfund to remove the blight.
Just drive through Tehachapi in California and look at all the over 30 YO bird choppers still there. Just search Tehachapi Wind Resource area.
The notion of stranded assets provides an interesting backdrop to what is occurring in Australia.
Most heavy industry can no longer afford to operate in Australia so is declining and manufacturing has shifted to other parts of Asia. That results in loss of baseload.
Accordingly, Australian households are a significant component of the demand but are being subsidised to buy Chinese made solar panels and place them on the roof. Two Australian States, Western Australia and South Australia, now have enough rooftop solar to reduce lunchtime grid demand to zero. This is causing stability issues so the regional grid operators have developed a method of adjusting distribution substation voltage to limit the amount of rooftop onto the grid. In these times the wholesale price is negative and that forces grid scale intermittent generators out of the generating pool.
In Australia, the achieved capacity factors for grid scale wind and solar is declining due to economic curtailment – meaning prices more negative than the subsidy payment. That reduces their ability to make a return on investment. The economics for rooftops is still favourable because they are not exposed to the negative pricing and are still being subsidised by net consumers. They are only forcibly curtailed when there is a risk of grid instability.
In Australia, it is increasingly likely that grid scale wind and solar will be stranded assets. Dispatchable capacity is still required. Some of that can be taken up with batteries but they offer limited support in terms of duration.
The regional distributers are locating battery packs throughout the suburbs to take advantage of the high rooftop output. These are now termed solar sponges. The distributers, with support of rooftop PV owners, are an increasing component of the generating system. They can see the merit in local generation at the demand centres.
THe distributors have long recognised the potential of rooftop solar. If the households start installing batteries, their future will be bleak. Householders will realise they can just go off-grid. That is not a silly idea in Australia.
the only stranded assets will be worthless windmills & solar farms once the subsidies are eliminated – the world is broke and subsidies cannot continue – Siemens, as reported in WUWT, the world’s largest manufacturer of offshore windmills did not receive a single order in Q4 and reported a billion in losses – meanwhile Exon et al reported record revenues & earnings without any subsidies.
Whatever the doomster disappointment it won’t be measured by BP but the Energy Institute-
BP ends 70 years of publishing Statistical Review of World Energy (msn.com)
Only in an uncontrolled economy. (Although this is true in the long run, as the controlled economy crashes. There’s a lot of misery and death before then, however.)
The folks clever enough to see the fossil fuel industry as doomed are just the right kind of folk to start investing in tulip futures.