“The engines can’t take it, captain” – A global Captain Kirk-like plea for more power gets Scotty’s standard line

From the BOE REPORT

Terry Etam

There are a few ways to “know things”. You know how to read, you know how to add, probably, and you know many things.

Some things you can “know” without having to formally learn or experience them. You probably know it would hurt to get shot, though unless the demographic around here has changed significantly you’re not likely to experience that.

Some things you know best by experiencing them; hearing about them, being warned about them, is a start, but sometimes you don’t really know something until you ‘feel it in your bones’. The old adage about not touching a hot stove is one. Children hear that and obey it to the extent they ever obey their parents, but the real education comes at the moment they do indeed touch the stove. Things become quite clear then.

So it goes on the energy front. So much has gone on in the past decade that is enthusiastic speculation about what people think they know, particularly about energy transitions, and not only that but energy itself – where it comes from, how it gets there, who is responsible, how tough it really is to provide.

New Zealand recently gave us a wicked lesson in the process of understanding the gap between being told not to touch the stove and touching the stove.29dk2902lhttps://boereport.com/29dk2902l.html

A few years back, their youthful, idealistic, and globally exuberant leader, Jacinda Ardern, enacted a ban on petroleum exploration in New Zealand. The legislation was cutting-edge energy policy thinking, in alignment with many global leaders whose ears had been stuffed with talk about how oil and gas properties were quickly going to become stranded assets. These policy advocates “knew” this, and passed their knowledge on to leaders who would be visionaries. Want to be in effect a department store manager, running a country like one, or…do you want to go down in history as one of the brave that saved the world from rising temperatures? Appealing to political egos is shooting fish in a barrel, and so off they went, legislating anti-hydrocarbon agendas hither and yon with joyous abandon.

Fast forward a few years, and New Zealand has touched the stove. You can see the minute that it happened. In a June 9 article entitled “Government to reverse oil and gas exploration ban” (thanks to Dan Tsobouchi for flagging; his research and output is invaluable), the NZ government spoke of a startling discovery: that oil and gas fields deplete over time. As they put it: “When the exploration ban was introduced by the previous government in 2018, it not only halted the exploration needed to identify new sources, but it also shrank investment in further development of our known gas fields which sustain our current levels of use…Without this investment, we are now in a situation where our annual natural gas production is expected to peak this year and undergo a sustained decline, meaning we have a security of supply issue barrelling towards us.” In another document, the government put it this way: “The latest petroleum reserves data show gas reserves are declining. There is less natural gas available to produce than previously thought. This drop in natural gas reserves (called Proven plus Probable reserves) is the result of producers lacking certainty that they can economically extract the natural gas in their fields…”

Better late than never, I guess. But this newly-lit lightbulb is only a part of the equation. NZ’s path illustrates just how wrong many energy assumptions are.

The west has been somewhat successful in reducing emissions, which is taken by some as evidence that the ‘energy transition’ is working. It is true that there is a significant amount of renewable energy produced, which is helpful in reducing consumption of other fuels.

But it is more complex than that. The US reduced emissions significantly by replacing coal-fired power with natural gas-fired. That’s not part of the energy transition. Well, it is part of a logical energy transition, but that is not what the Ardern’s of the world intended.

Another confounding factor is that while the west’s emissions may have been reduced, and energy usage has not increased materially (more on that in a minute), the fact is that our consumption patterns remain as formidable as ever; that Walmart remains chock full of everything, that Amazon can get a mind-boggling array of pretty much anything to your doorstep in 24 hours…all this points to the not-much-discussed fact that we simply farmed everything out to developing countries to produce, and then we get annoyed when they construct the power supplies to do so in a way that works for them. A lot of globalists don’t seem all that good at global thinking.

Then, as we saw with NZ, the west’s leaders simply don’t understand energy production at all, at least not hydrocarbon production. There is an assumption that oil companies can be hounded/sued/regulated/protested and that they will continue to invest enough to maintain production (even as the IEA states that no new investments can be permitted to meet climate goals). Wrong. Hydrocarbon companies will not invest in jurisdictions that make their life too miserable. Hence NZ’s about face.

More significantly than depletion though is blind eye given to the trajectory of global energy consumption. Not just oil and gas consumption, but energy consumption, from all sources. It is important to keep these trajectories in mind when considering energy policy.

Here are some fascinating statistics from Our World in Data. From 1965 to 2023, some random reference points for annual energy consumption change over the period:

• Vietnam from 786 kWh -> 13,744 kWh or +1,648%
• India from  1,239 kWh –> 7,586 kWh   +512%
• China  from  2,122 kWh –> 33,267 kWh    +1468%

Consider that Africa and Asia together represent about 6 billion people, and they are not just mining/manufacturing everything for the west, but growing their own consumption as well. Look at Africa’s still-meagre total; one gets the feeling that that situation is not a welcome one, and that the economically-rising continent would love to post numbers like everywhere else.

We can see the impact of the west’s energy/emissions farmout, for the same time period:

• Germany: 39,050 –> 38,052  kWh    -1%
• UK: 42,711 –> 28,501 kWh   -33%
• US: 76,117 kWh -> 77,028 kWh   +1%

Our World in Data breaks it out into digestible and pertinent bigger categories to make the point even more clear:

• High income countries:                38,446 kWh –> 52,831 kWh    +37%
• Lower-middle income countries            926 kWh –> 6,067 kWh   +555%
• Upper-middle-income countries           8,373 kWh –> 29,987 kWh   +258%

While the west seems to have taken a breather compared to the rest of the world, that may be about to change again, and the west might start another growth spurt. We do love our data/videos/Instagram/you name it. Take Texas, for example. As Kinder Morgan pointed out in their Q2 conference call transcript, Texas’ grid operator (the US’ largest power market) predicts that it will need 152 GW of power generation by 2030, a 78 percent increase from 2023’s peak of 85 GW. What’s startling about this increase is that just last year, ERCOT, the Texas grid operator, predicted that 2030 demand would ‘only’ be 111 GW. That’s some adjustment, in just one year.

Over the past 20 years, US electrical demand has grown at about half a percent per year. Recent estimates have US power demand growing by anywhere from 2.6 to 4.7 percent per year through the decade. As a result, according to a Gas Daily report that KIM quoted, US utilities plan to add 133 new gas plants over the next several years. On top of that, gas exports to Mexico are expected to increase by 50 percent in coming years, and US LNG export to grow by some 15 bcf/d in addition to AI forecast gas demand of somewhere between 5 and 15 bcf/d.

The developing world will meet their growing energy requirements any way they can, and not apologize for it. India recently (and proudly) announced record coal production, because they need it, and in addition the us EIA is forecasting that India’s natural gas consumption will triple by 2050, going from about 7 bcf/d in 204 to almost 24 bcf/d.

Here in the west, not only are we getting AI to do everything, but we also see random weirdness that no one saw coming, for example: Chick-fil-A, the huge and delicious fast food purveyor, is launching a streaming service with ‘family-friendly and mostly unscripted programming.’ Just what you’ve all been waiting for: ChickenTV! Because we can!

That’s what us humans do when we have ample affordable energy – we do it all. And when we think we’ve done it all, someone goes and invents ChickenTV. And so will almost every human being that gets the chance. Wealth brings optionality, in many things…even the drive for simplicity. A wealthy enlightened westerner that decides to live ‘off the grid’ will expend hundreds of thousands to build/equip their modern lair with every comfort as well as solar and battery pack arrays. It need not be pointed out that these lifestyle choicers bear little in common with say an African villager who also lives ‘off the grid’ for the reason that there is no grid. Not picking on anyone here; the point is that no one that can afford it will go back to a life of true scarcity that actually reflects a lack of energy as opposed to lower energy consumption in daily life.

Well-meaning people often jump into the fray here, and point out that such consumption patterns are unsustainable. I have no idea whether that is true or not; it seems most likely that we will exhaust some critical materials, and that we need to be very careful with water and habitat management. But simply screaming into the social media void that we need to stop it all is not going to achieve anything at all except cause more nervous breakdowns. Some aspects of humanity are just what they are, and we need to run in the same direction to change the direction of the herd. Go ahead and stand in front of it if you want, best of luck.

What the world desperately needs – energy clarity. And a few laughs. Pick up The End of Fossil Fuel Insanity,  available at Amazon.ca, Indigo.ca, or Amazon.com.