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September 13, 2024 - 7:00pm
One of the remarkable features of the last year is that despite the widening war in the Middle East and the best efforts of Opec to control supply, oil prices keep falling, with a barrel now trading on world markets for less than $70.
On the face of it, this is good news for Kamala Harris. Gas prices are a simple metric used by Americans to assess the course of inflation, since they scan them daily as they sit in traffic or drive past filling stations, keeping an eye out for bargains. And with prices now beginning to approach the levels they were at when Harris took office as Joe Biden’s vice president, this should be promising for the Democrats.
However, this optimism on inflation is counterbalanced by the usual warning that when oil prices slump, it could signal a looming recession. The signs of a softening in the US economy are growing ever more abundant, with last week’s employment report just the latest data point indicating that the boom is petering out.
Still, a slowing economy doesn’t make for a recession. With inflation falling but real wages still rising, it appears as if the US could be in for that rarely-found holy grail of both governments and central banks: a soft landing. As for the rest of the world economy, there’s still plenty of dynamism, with several countries in South and South East Asia, as well as Africa, expanding at impressive rates.
Still, with the three big beasts of the world economy – Europe, China and North America – either stagnant or decelerating, and North American oil and gas production rising faster than Opec can cut output, the global market for oil is oversupplied.
In addition, the substitution of coal for oil in the production of China’s electricity, and the pace of Beijing’s simultaneous transition to renewable energy, is proceeding faster than most anticipated, curtailing the country’s demand for fuel imports. Chinese consumers now buy more EVs than ICE cars, reducing household demand for oil. That will only accelerate, and the day in which the world’s second-biggest economy — or biggest, depending on the measure one uses — ceases to import any oil or gas may not be far off.
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SubscribeThe NetZero fairytale spell has finally broken in Australia. EV sales have plummeted and the people are warming to nuclear energy propelled by the recession and the cost of living crisis. Regular people do not care about NetZero targets – they care about reliable and affordable electricity, and feeding their families. Australia has the biggest uranium deposit in the world, ahead of Kazakhstan. And, we have gas, coal and oil in abundance. Whilst the MSM is desperately pushing (Chinese made) solar panels and wind turbines, Australians are investing in gas, coal, oil and uranium. I hope the rest of the world catches up soon. “Luxury beliefs” are going out of fashion.
“South Africa largely ended its chronic problem of electricity blackouts last year ”
Really? I was in Cape Town Dec 2023 and load shedding blackouts happened most days.
That is an area people can afford to invest in domestic solar.
So I think we are exagerating here.
From the newswire Sep 13
“The Hague became the first city in the world to ban advertisements promoting fossil fuel products and carbon-intensive services including cruise ships and air travel. The Dutch city’s local council passed legislation early Friday that takes effect on Jan. 1, 2025. The decision follows a call from United Nations Chief Antonio Guterres for governments to abolish such ads, similar to actions against tobacco that began in the 1960s.”
Meanwhile the debate over the future of energy is rife with observations that don’t seem to add up. It is generally accepted that most first world countries are woefully short on green infrastructure in electrical grids and EV charging stations. We’re told there’s not nearly enough installed solar and wind capacity.
There are plenty of examples of massive government spending on green projects with little or no return. There are corporations making a fortune from credit schemes and subsidies handed out by governments keen to ‘put there money where there mouth is’ on the Green Economy. China, the world’s largest emitter, is the runaway leader in green tech manufacturing as well as the necessary exotic ingredients. Media pundits continue to push the climate ‘crisis’. We are lead to believe that higher political office is out of the question for those candidates lacking a viable ‘climate action plan’.
Heavily indebted. Poorly performing economies. Government mandated economic adventures bereft of basic capitalist principles such as ‘supply and demand’. Are we actually experiencing the effects of the conspiracy theory that cannot be named – Degrowth Communism? Almost everyone agrees that there’s not nearly enough green energy supply to meet the demand so perhaps the Degrowth goal to lower demand to meet supply is in play? Not enough EV charging stations? Fewer cars is the answer. Ban those travel ads? Why not? You shouldn’t be travelling anyway.
It is not a conspiracy. It is being rolled out. Shrinking cattle stock, chasing farmers from their lands, inexplicable congestion in air traffic, cancellations, failing public transportation because of heat, cold, leaves on the rails, shortage of train drivers, shortage of whatever, increasing population versus closure of hospitals, schools,concentration of business activities in few multi-nationals and to top it off the new UN treaty of coming September 22 to roll out ESG goals. If you can travel by private jet and live in a gated community with special food deliveries why bother about the circumstance of the proles. Everyone should (re)read Orwell’s 1984 so he/she knows what is coming towards us. Then you also understand why Trump is not going to win the election as explained by Eric Weinstein.
Solar and wind will always be considerably more expensive and inefficient than “fossil fuels.”
Often relying on toxic chemicals themselves, they’re erratic and unreliable, and occasionally unsafe.
The largest economies in the world don’t have the carrying capacity to electrify everything – grids in North America are elderly and frail, and far too small to handle the surges in demand “transitioning” requires.
The laws of thermodynamics – that energy can’t be created nor destroyed – remain in effect for every energy source that isn’t radioactive.
So happy talk of transitioning is exactly that. Solar and wind will no more replace petroleum and coal than changing one’s clothes will replace one’s gender.
The world has not reduced its consumption of fossil fuels at all. It has just added a small amount of expensive and unreliable “renewable” energy. The transition is fake.
It was 80% of the energy mix 20 years ago, and it’s 80% today.
Great analogy with the ‘transitioning’ of energy and gender.
Aka wishful thinking in 2024. I’m planning to transition to Giselle Bundchen, but the mirror isn’t having any of it 🙂
Obviously the answer is to follow the current thinking…and change the mirror.
If you do an internet search for most expensive energy prices in the world, countries with the highest penetration of wind and solar are all at the top of this list.
Yes, intensity is key in energy. Dunkelflautte (not sure if i’ve spelled it right) is the big problem wih renewables, and whilst i keep hear8ng about potential breakthroughs in baytery technology it remains elusive. I always thought nuclear was our best bet. Nick Clegg has a lot to answer for ….
Totally wrong, there are many sources of renewable energy, nuclear, hydro , wind , solar, geothermal, they are now cost competitive with fossil fuels which will be a diminishing resource in the future. Solar and wind are making huge inroads in many countries. As development continues and with economy of scale, costs will go down further. Depending on fossil fuels for the future would be suicidal in the long term for the economy, not to mention the environment. The US needs to upgrade its electric grid big-time, it’s in a state of neglect. Countries that fail to make the transition will be left behind and at the mercy of Opec which manipulate the price of oil. Even fracking is a short term solution, just postpones the inevitable decline of fossil fuels.
they are now cost competitive with fossil fuels
News to most people who have looked at the economics,engineering and physics.And the old canard of diminishing cosst due to technology & scale-unfortunately the reverse has been the case over the last decade -a bit like “battery technology will come to the rescue”-ie lets bet the house on a hope-fabulous.
“the inevitable decline of fossil fuels.”
There is no decline in fossil fuels, there is only the war against fossil fuels.
Agree, but I suspect they’ll turn on the liquidity spiggotts for one last hurrah which will deliver lower marginal uplift, as well as reinvigorating inflation. For the first time I believe they won’t be able to tame the inflation dragon, interest rates will go double digit and govt debt exposure will bring us to the apogee of the sovereign debt crisis. So i’m staying in cash, if the spigots go on then i’ll ride the last equity wave in 2025, before moving into hard assets held in my name (financial repression will also be brought in) and commodities ready for the reset which i think happens around 2027/8. I may, of course, be hopelessly wrong, but that’s the fun of investing. Developing a thesis, running with it, and seeing how the die fall.
This is the first thing I’ve heard about South Africa ending load shedding. That’s huge news, and no other media outlet over here has mentioned it at all.
yeah-tell that to a mate of mine who came back from a cricket tour a few months ago!!!!or my neighbour (south african) who came back last month from a trip.
Really? When prices and production are manipulated in either direction usually depending on which way the political wind is blowing I am not so sure much can be read into it any more.