Tag Archives: oil

Who Wins In The War On Coal?

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On Wednesday, The Conservative Review posted an article about the war on coal and natural gas that is being waged by the Biden administration.

The article reports:

Oil is king when it comes to energy policy, but coal and natural gas are just as important. In the case of all three fossil fuels, Western governments have engaged in an all-out war on exploration, production, and generation, banned Russia’s exports of those products, and then gave a monopoly to China, inducing the worst possible outcome for the American consumer and our national security.

Despite the two-decade war on coal by the climate Nazis, coal is still the largest source of electricity around the globe and is the second-largest source of energy in general. In the U.S., coal was once king, composing roughly half of our electricity source just 15 years ago, but has dropped precipitously because of the natural gas boom and because of destructive eco policies. Yet it still accounts for 21% of our electricity source, so shocks to the system are going to harm American consumers.

The article includes the following chart showing the rise in the price of thermal coal:

So who is making money on the increase?

The article notes:

…Given that coal accounts for 35% of global electricity use and Europe gets 70% of its coal from Russia, the coal crisis is now worse than the oil crisis. And guess who stands to benefit? China, of course. Thanks to the disdain for our own coal by our own politicians, the evil communist regime is now the global champion of coal production and exports.

America is the Saudi Arabia of coal, but the environmentalists are not willing to let us produce coal. Instead other countries use the same amount of coal as they would if we produced it, except it’s not from us.

The article includes the following chart showing the changes in coal production:

The article concludes:

Between the war on leasing and restrictions on fracking, transportation, pipelines, and export terminals, this administration is stifling the cleanest, most efficient fuel that could lower prices of electricity and serve as a bulwark against China and Russia. Thus, LNG prices remain unnaturally high because the climate Nazis would rather we feel the pain than actually end dependence on bad actors.

Much as with COVID, where we saw a government that cried over the human death toll but downright declared war on anyone who would treat the virus early, those who complain about the energy crisis are the ones inducing it. Crushing the American consumer is not a bug of their plan, it is the primary feature, greasing the skids for the next step in the “Great Reset.”

Please follow the link above to read the entire article.

 

 

 

A Solution That Is Being Ignored

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On Sunday, Townhall posted an article suggesting how President Biden could end the Russian invasion of Ukraine. The article suggested following some of the example set by President Reagan.

The article reports:

President Reagan famously ramped up military spending. He increased the defense budget by over 40 percent, and that included the creation of his space program called SDI. The media mocked it and nicknamed it the Star Wars program and relentlessly attempted to brand Reagan as a dunce who was a former actor who knew nothing about foreign policy. We know in hindsight that the Soviets were enraged that the U.S. could own space and potentially shoot their weapons right out of the sky with the SDI program. In response, the Soviets ramped up their spending on similar programs. 

But, Soviet money didn’t grow on trees.

A lot of the money grew, so to speak, in the wheat fields of Russia. Wheat has long been in the top three biggest Soviet exports and President Reagan unleashed our farmers to produce grain. 

We need to end the restrictions on American energy production.

The article continues:

Another aspect of Reagan’s Cold War strategy was taking the reins off of American oil producers and ramping up our oil production. It not only gave us a great advantage to produce our own energy here, it also dramatically lowered the price of oil on the world market. Oil was and still is Russia’s top export. 

In addition to domestic production, Reagan worked behind the scenes to encourage Middle Eastern oil producers to increase the supply on the world market. The Soviets took a HUGE hit in the pocketbook when their oil suddenly became worth a fraction of what it was when Jimmy Carter was president. 

President Reagan also waged a PR war against the Soviets. 

The most famous moment was Reagan’s speech at the Brandenburg gate when he told the Soviets to tear down the wall that was separating the free people in Western Europe from those imprisoned in the oppressive communist system on the other side of the wall and razor wire. 

Reagan also sent funding and arms to freedom movements around the world that were resisting the Soviet Communist takeover of countries across Africa, Asia, and Latin America. 

And it worked. The USSR is on the ash heap of history. 

If we do not learn the lesson of President Reagan vs the Soviet Union, America will wind up on the ash heap of history. Unfortunately, the Biden administration is racing toward that heap.

The State Of The American Economy

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Townhall posted an article today about some of the economic indicators that show that the American economy is rapidly recovering from the self-inflicted recession.

The article reports:

Breaking news: The US economy is roaring! Over the last few months, we have witnessed the sharpest economic snapback in US history. While many are still out of work, the future looks increasingly promising for those seeking employment. One would think that we were still mired in the deepest throes of April’s COVID-19 crisis if you take heed of the media’s narrative in recent weeks. It is clear the Democrats and Joe Biden are making the pandemic their closing argument for the 2020 election. But why? The economy is a losing argument for the Left.

The article cites some of the economic indicators that signal a strong recovery:

The commodity market is a clear window into the cost of goods and the level of demand that exists. As the Coronavirus shut down economies all over the world, global goods demand collapsed. Most notably was the oil market, as energy fuels the economy as a whole. Supply was steady, but a massive collapse in activity that forms demand left producers with a supply glut. The supply/demand gap was so large that oil futures (commodities trade primarily in the futures market) actually went negative, a historic event.

Just 7 months later the market has not only stabilized, but also has rebounded significantly. Oil, itself, is up over 100% from levels seen this Spring. This is a sound indicator of the resumption of robust economic activity. We are now escaping from economic contraction and are closing in on expansion. As consumers travel more and demand comes back for finished goods, the oil market will continue to flourish. This is one of many reasons why the Third Quarter GDP measure, to be released at the end of October only days before the election, will show the most significant rise in US history. The commodities market isn’t limited to oil. There are other very useful economic gauges within the basic goods market.

One of the most important, in terms of assessing global activity, is copper. Copper is a basic material used throughout manufacturing. The copper market collapsed this Spring along with all other raw goods during the crisis. At its low, copper was trading down roughly 35%. As activity has roared back to life, copper has been on an absolute tear. As of this writing, copper is up over 50% above its COVID lows, and is, in fact, higher than the market was trading pre-COVID. That’s a very promising signal emanating from the commodity market.

Please follow the link above to read the entire article. There is a large body of indicators showing that the economy is on the path to full recovery. The majority of states still closed down are blue states, and the leaders of those states will have to answer to the voters. Meanwhile, the economic policies of the Trump administration are working their magic.

This Is Not A Surprise

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Yesterday The New York Times posted an article about recent events in Venezuela.

The article reports:

For the first time in a century, there are no rigs searching for oil in Venezuela.

Wells that once tapped the world’s largest crude reserves are abandoned or left to flare toxic gases that cast an orange glow over depressed oil towns.

Refineries that once processed oil for export are rusting hulks, leaking crude that blackens shorelines and coats the water in an oily sheen.

Fuel shortages have brought the country to a standstill. At gas stations, lines go on for miles.

Venezuela’s colossal oil sector, which shaped the country and the international energy market for a century, has come to a near halt, with production reduced to a trickle by years of gross mismanagement and American sanctions. The collapse is leaving behind a destroyed economy and a devastated environment, and, many analysts say, bringing to an end the era of Venezuela as an energy powerhouse.

First of all, American sanctions are a very small part of the problem. When the government began taking over industries, it did not know how to run them successfully and there was no real incentive for innovation and progress. Innovation and progress are much more commonly associated with the free market than socialism. This was entirely predictable.

In November 2013, I posted an article reporting the following:

On Friday the Associated Press reported that PDVSA, the government-owned oil producer in Venezuela, seized control of two oil rigs owned by a unit of Houston-based Superior Energy Services. The company had shut down the rigs because the Venezuela oil monopoly was behind on payments.

…Nicolas Maduro, the successor to Hugo Chavez, has not taken over any industries during the six months he has been President of Venezuela. This is the first move he has made in that direction. When Hugo Chavez began taking over industries, one news analyst observed that it would be difficult for him to keep those industries running at their profit levels without the knowledge of the companies that owned them. The seizure of these two rigs, which are repair rigs, is an illustration of that point.

Before socialism, Venezuela was one of the richest nations in South America. They had a booming economy. Now people are starving. The is the fruit of socialism. People are designed to work for a reward. When there is no reward for extra work, there is no extra work done. The Pilgrims attempted a communal system of farming when they originally settled Plymouth. They abandoned the idea and gave each family their own plot of land to farm after they nearly starved to death. America tried socialism already. It didn’t work. Now we have a candidate who embraces socialistic policies running for President. If Joe Biden is elected, America will eventually go the way of Venezuela.