The coming COP26 conference in Glasgow will not provide the answers to the energy crisis that we all need – Letter from Great Britain- [10-23-21]

“The Financial Jigsaw” has been serialised here and is replaced by this weekly “Letter from Great Britain.”  NOTE – If anyone would like an electronic copy of the complete book, I should be pleased to email a free PDF on request to: [email protected].

I came across this excellent essay about our current global energy crisis which explains a lot about what’s going on behind the narrative.  I reproduce part of it here and at the link you will find plenty more information – he speaks my own language:

“I am increasingly convinced that we’re about to have a global energy crisis. Almost every day, we hear of a different policy plan to reduce energy production. We learn of new mandates, new taxes, more cancelled pipelines, more cancelled permits, and more penalties. What we don’t hear about is where the replacement energy comes from.

The wind doesn’t always blow and sometimes it is cloudy. My car won’t drive on unicorn farts and billions of people in developing economies want a Western standard of life—complete with a Western level of energy consumption. These people refuse to pay for “green energy,” especially when the “carbon economy” is so affordable. Or maybe, they have the pragmatism not to build “green energy” while the technology isn’t fully proved-out.

Maybe they’re looking at spiking gas prices in the UK, spiking electricity prices in Europe, factory shut-downs in China, rolling blackouts in California and asking if the “green economy” is right for them. Developing nations intend to consume more. Western nations intend to consume more. China intends to consume more. At some point, declining production will slam into rapidly increasing demand. It will only be solved by higher energy prices. The clearing price will stun people.

What made the 2008 financial crisis so severe was that it just kept on going. The Fed would throw more liquidity at it, but it didn’t matter. There was a crisis of confidence as no one knew who held which toxic debris. It didn’t matter how much liquidity there was, the gears of commerce froze up and couldn’t un-freeze.

What if the price of energy gets prohibitively high—a price where it bankrupts companies? What if there is no energy available at any price? Won’t the politicians’ blame the energy companies and enact excess profit taxes, further disincentivizing production? Who wants to produce energy when you’re the enemy? What if the feed-back doom-loop continues, much like in 2008, but it just keeps on going with no end in sight? What if the tone-deaf billionaires cheer it on? When climate becomes a religion, logic is no longer utilized.

Excluding a brief spike in 2008, the global economy has experienced four decades of affordable energy, powering global growth on a scale that was unimaginable a few decades ago. Cheap energy is the fuel of economic growth. Even for those brief moments when prices have increased, there was always plenty of fuel—it just cost a bit more. What if fuel were no longer available? What if the great gears of global commerce seize up? I worry that the longer these billionaires and their political puppets interfere in energy production, the more likely we are to have a global energy crisis.

What if the coming energy crisis is the first crisis that the Fed will not be able to fix? If anything, more liquidity will simply cause greater demand for energy, at a time when none is available.  What if the Fed is ultimately forced to reverse course and raise rates prohibitively high to reduce energy demand? The Fed cannot cure Covid, and they cannot increase energy production. What if raising rates only increases the pain on the rest of the economy? For my entire career, the Fed was there to sooth the markets; what if they’re suddenly part of the problem? Remember, inflation is political, and the Fed is a political animal. What if governments idiotically try to fight inflation and energy production simultaneously?

Over the past few weeks, we’ve seen the first few signs of the coming crisis. Various countries ran out of energy. These were regional problems with regional causes. However, the underlying problem was the same—they reduced the “carbon economy” before they had sufficiently built out the “green economy.” Oddly, these warning signs have mostly been ignored, with the countries most afflicted, focused on continuing to purge traditional energy sources.

When nations ignore a brewing crisis and focus on making it worse, it is likely to get worse, a whole lot worse. I suspect that the coming energy price moves will stun everyone—including myself. When there is no solution to the problem and the politicians are causing the problem, market participants will panic. If the Fed is now against the speculators, as opposed to backstopping them, it will get wild. It seems increasingly likely that a crisis is brewing as energy prices scream out of control.

I have been a bit early in calling for the end of the Ponzi Sector, but I have never wavered one bit in what would do it in. Inflation is coming. It will be driven by energy inflation. It will shred the Ponzi Sector. In the not-too-distant future, we will have a moment where oil goes parabolic and the NASDAQ detonates. This isn’t a tomorrow thing, but it may not be far off, unless there is a dramatic course change.”

Is the current super-spike in natural gas the Bear Stearns Moment? Is the pending oil spike the Next Lehman Moment?? I have a sneaking feeling that at first, the market will wobble on each new high in energy. Then the bottom will fall out of every non-inflation asset as energy prices go parabolic. The Biden/Fink Energy Crisis will make Jimmy Carter’s energy crisis look like the work of an incompetent peanut farmer. Read all the detail and links here: https://adventuresincapitalism.com/2021/09/29/will-esg-create-the-next-lehman-moment/

THIS picture is uncannily similar to the experience of the Labour government elected with a small majority in October 1974.  At that time, Prime Minister James Callaghan was grappling with the fallout from the quadrupling of oil prices by the OPEC oil cartel following the Arab-Israeli war of 1973.  Inflation was rampant and his solution was to impose wage restraint. That triggered more than 2,000 strikes across the country in what is now referred to as the “winter of discontent”.

A look at the polling carried out in the run-up to the 1979 election show the Labour government rapidly became unpopular as inflation took off from 1974, but approval ratings recovered by the start of 1978 as it abated. By the summer of 1978, the prime minister was considering an autumn election, but Labour’s lead in the polls was very narrow, so he waited until the spring of 1979, hoping that things would improve. However, during that winter, the government’s approval ratings crashed as a result of the mounting industrial unrest, and Margaret Thatcher won the general election in May 1979.

Labour’s problem at that time was a familiar one to all incumbent governments – a failure to manage the economy properly as far as the voters were concerned. This carries the implication that the success of current Prime Minister Boris Johnson in the next election will depend on the extent to which the economy recovers after the double whammy of Brexit and the pandemic.

At the moment, the economy is slowly recovering and unemployment has been falling slightly but this is temporary.  The most recent report from the Bank of England’s Monetary Policy Committee flags slower growth and rising inflation next year, making a rapid economic recovery doubtful – in other words “stagflation” – the worst of all worlds.

Research by IMF economists has concluded that recovery from major shocks such as wars, pandemics and serious economic recessions is slow and sometimes does not happen at all. Their analysis used data from 190 countries over a period of 40 years to examine this issue and concluded that: “the magnitude of persistent output losses ranges from around 4% to 16% for various shocks”.  If this happens, Boris will seek re-election in a very bleak economic environment, stretching his ability to applaud recovery and to “level-up” Britain in practice as opposed to in rhetoric.

AND this manufactured energy crisis is exemplified by India’s problems in this short article.  “Delhi could face a power crisis. I am personally keeping a close watch over the situation. We are trying our best to avoid it. In the meanwhile, I wrote a letter to Hon’ble PM seeking his personal intervention,” he tweeted.

Jain went on to complain that the crisis is manufactured because screeching liberals in the U.S. and throughout the West are pushing unintelligent political leaders to wean their countries off of affordable, plentiful fossil fuels without having the resources and infrastructure in place (or the technology) to produce an equal amount of power using renewables.  The issue of not having enough coal in India is “a man-made crisis, just as the crisis of medical oxygen supplies during the COVID second wave,” he said.

“But if nothing else, India’s situation illustrates just how far away humanity is from being able to survive without coal, since global coal production accounts for 40% of energy produced, especially in major emerging economies like China and India,” Zero Hedge reported.  It may not be the best source of power, but without coal, there will be plenty of people who will freeze to death this winter.” https://www.naturalnews.com/2021-10-12-india-facing-widespread-power-outages-coal-shortage-plants-offline.html

THE RUSH to offset the climate change agenda with renewables is flawed as this article explains: “The current gas, coal, and power crisis in Europe and Asia is also set to accelerate oil demand recovery in the winter if gas-to-oil switching becomes more widespread.  By early 2022, demand for all fossil fuels is expected to have reached or exceeded pre-pandemic levels, highlighting the challenges of the energy transition to secure reliable – and preferably affordable – energy for the world.

“The energy transition and decarbonisation are decade-long strategies and do not happen overnight,” Cuneyt Kazokoglu, head of oil demand analysis at consultancy FGE, told Reuters.  Last year’s slump in fossil fuel demand had nothing to do with the energy transition: it had everything to do with the lockdowns and economic decline, Kazokoglu said.

A rushed transition without considering the still enormous role that fossil fuels play in the economy and consumers’ lifestyle risks exposing the global energy market to supply crunches and price spikes.” https://oilprice.com/Energy/Energy-General/The-Energy-Transition-Will-Take-Decades-Not-Years.html

SO – what is really behind all this artificial manoeuvring?  Could it be preparation for the coming Central Bank Digital Currency (CBDC) initiative?   Here is an article with some short videos explaining what might be happening.

“Why would our governments push whole sections of our economy into ruin? Who benefits from all this? Is there any other picture than the simple enrichment of some at the expense of others?  In practice, Blackrock, Vanguard and State Street impose their choices on governments for maximum profit. The following video on Blackrock sums up their modus operandi perfectly”. https://theexpose.uk/2021/10/14/why-would-our-governments-want-to-ruin-the-economy/

VACCINE REACTIONS:  “The latest official UK Public Health data shows that the fully vaccinated accounted for 83% of Covid-19 deaths in the past four weeks, whilst also accounting for 72% of Covid-19 hospitalisations and 56% of alleged Covid-19 cases from September 18th through to October 15th.” https://theexpose.uk/2021/10/21/83-percent-covid-19-deaths-among-fully-vaccinated/

To be continued next week.

Click to visit the TBP Store for Great TBP Merchandise

Author: Austrian Peter

Peter J. Underwood is a retired international accountant and qualified humanistic counsellor living in Bruton, UK, with his wife, Yvonne. He pursued a career as an entrepreneur and business consultant, having founded several successful businesses in the UK and South Africa His latest Substack blog describes the African concept of Ubuntu - a system of localised community support using a gift economy model. View all posts by Austrian Peter