Guest Post by Chris MacIntosh
We are reminded of the below words of wisdom…
We noticed lately an uptick in analysis and commentary that is questioning the climate change narrative. Pieces like this one:
Clearly this climate change narrative/ideology too shall pass like every fad, but it will take time. This is ok. It just means that we will see the fossil fuel sector (oil, gas, coal, and related services) continually outperform the S&P 500 over the next 10+ years.
Take China… It Doesn’t Care…
I assure you, China doesn’t care about the ESG nonsense. What’s interesting is China’s dependency on coal – some 64% of their electricity comes from coal.
China produces (from domestic sources) about 85% of the coal it consumes (granted, this includes both coking and thermal coal).
With respect to coal, China has two big problems, and few appreciate the magnitude of the problems.
Firstly, China only has 35 years of coal reserves at today’s consumption levels, and secondly, the grade of those reserves is deteriorating. In other words, it is taking more coal to produce the same amount of heat.
Not only this but China wants to increase coal-fired power stations by 20-30% over the next 10 years or so. Where is all this coal going to come from if the volume and quality of China’s reserves are deteriorating?
This Bloomberg article highlights the deterioration in China’s coal grades.
From the article:
China’s coal imports, including low-grade lignite, climbed to an all-time high of 44 million tons in August, while domestic production of 382 million tons was also a record for the time of year. Imports over the first eight months have nearly doubled to 306 million tons, more than the country usually takes in a whole year.
The increases in supply come as the government seeks to avoid the power shortages that have crippled the economy in recent years. China’s rush to extract more coal has also degraded the quality of its domestic output so that more fuel is needed to generate the same amount of heat.
When energy security is discussed, few pay second thought to coal (particularly in light of today’s climate change ideology). China is going to have to source an increasing amount of coal from other countries, and there is only a few they can source it from (unlike oil).
How about the US? Only 17 days left ?!
While US government shutdowns make the headlines, quietly in the background the US only has 17 days of supply left in its strategic reserve.
Apart from the obvious (the US for all intents and purposes has no strategic oil reserve), there is a hell of a lot of buying that has to occur to build those reserves up. In other words, we aren’t going to see any selling pressure hereon in from the strategic reserve but rather a whole lot of buying. We suspect that Vlad Putin is well aware of this.
Would this be an opportune time to hit back at the US? Rockets, bombs, tanks — that is the way old fashioned wars were played. Yeah, it is still how regional conflicts are played, but wars on a global scale are likely to be fought using energy as the weapon of choice.
What is going on here?
We know it is just a chart but when we have seen this before (and we have seen a lot), “9 times out of 10” it has resulted in significant upside occurring within the following 12 months.
And finally, the Cherry on the Cake…
Europe’s Carbon tax goes on full speed. I know, you just can’t make this stuff up.
The climate change ideology force is strong…
The European Union has been accelerating its push to become the first climate-neutral continent. A new policy coming into force on Sunday will be a first step toward nudging other parts of the world to follow suit.
The measure will eventually place a levy on carbon-intensive imports so that European companies forced to comply with the continent’s strict climate laws won’t face unfair competition from producers outside the bloc. From Sunday, the start of the first phase of the so-called Carbon Border Adjustment Mechanism, importers from six carbon-intensive industries will be required to start reporting on their emissions.
This just leads to higher costs, more inflation, higher interest rates, and the like. Not to mention more companies shifting operations away from Europe.
We’ll see more of this.
Speaking of the “alternative energy” theme, you don’t have to be a technical analyst to figure out this isn’t bullish.
Source: MSCI World Alternative Energy Index
We think a whole lot more pain is coming, especially when folks realize that the renewable energy theme doesn’t work (as they were led to believe).
Investment implications?
Here is an index we created. It is the Dow Jones Global Titans Oil & Gas Index (30 of the world’s biggest oil and gas stocks like Exxon, Shell, Total, etc.) vs the DJ Global Titans Index (top 50 stocks in the world).
Let’s cut to the chase: the next 10 years will see a repeat of 2000-2010. The outperformance may well last for a lot longer than this. The essence is that we don’t have to be concerned at all about energy related stocks underperforming the general stock market for a very long time.
The biggest challenge will be to stay on this trend and not get knocked out by the lure of the beauty of Miss Volatility or all of the “the world is coming to an end” banter we are subject to daily.
Editor’s Note: The Western system is undergoing substantial changes, and the signs of moral decay, corruption, and increasing debt are impossible to ignore. With the Great Reset in motion, the United Nations, World Economic Forum, IMF, WHO, World Bank, and Davos man are all promoting a unified agenda that will affect us all.
To get ahead of the chaos, download our free PDF report “Clash of the Systems: Thoughts on Investing at a Unique Point in Time” by clicking here.
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal
-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
The horrendous leftist efforts to manufacture predetermined outcomes (agenda), don’t stand up against facts and/or reality. Twisting or misinterpreting data to fit your “model” isn’t “science.” There is no anthropomorphic climate crisis, and these evil bastards know it.
Leftists and manufacturing in the same thought? Sumthin tells me that gumbo ain’t kosher!
“The only thing leftists know how to manufacture is false narratives “?!? reeeea?
Not a big fan of the “reee…” bullshit. It just seems very fake and gay…especially since I’m aware of its origins. I do, however, agree with your quote. That’s as real and straight as it gets.
Once this current ‘Tulip’ nonsense dies out then real science can make more efficient fossil fuel engines that make fucking sense.
That 17 days is going to hell in a hurry once Joe fires up AF1 for a couple of trips to nowhere for a nobody to accomplish nothing.
I just cant wait for the free energy, that the U.S. gubment already has a patent on, to become a reality.
https://patents.google.com/patent/us10144532b2
A few holes to poke in this article but I do generally agree with it.
1. US is now producing more oil than ever, including under Orange Jesus. That needs to be factored into the SPR but is not. If we can’t import oil our own oil will no doubt get used domestically.
2. Natural gas production is also higher than ever. Climate Nazis hate this so FJB can’t boast of it.
3. As the author stated coal supply is not a problem.
Bottom line, all of our energy shortages and prices are artificially created by government and business. Mostly government.
AB yes but the US is now allowed to export domestic O & G. The priority is and will be on profit not om providing affordable energy for Americans.
Retards in govt., liars in the energy sector. Sell insulation, develop next-gen insulation products. Use fuels wisely, maintain equipment properly, fuel conservation etc.
“I’ve got a plan. Well, I’ve got part of a plan.”
“How much of a plan do you have, exactly?”
“Like 17% of a plan.”
“BWAHAHAHAHA!!!”
That’s how the Russians and everyone else see our “Strategic Reserve”. It’s a fucking joke. Always was. There’s just enough fuel there for running away!