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2022-06-16 07:00 by Karl Denninger
in Energy , 1219 references Ignore this thread
Biden, Threats And Energy
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I spat my espresso when I read this...... 

"No more subsidies for the fossil fuel industry. No more drilling on federal land. No more drilling including offshore. No ability for the oil industry to continue to drill.  Period.  End."

That's what candidate Biden said, and he made good on his promise as soon as he was inaugurated.

Such a position also means nobody will invest in refining capacity, particularly when you have states such as California which have banned the sale of passenger vehicles using petroleum-based fuels starting in 2035 and all trucks (medium and heavy duty), where possible, in ten more years.

Why does that shut down refining now?

That's simple: Capital cost for improvements and new construction have to be recovered over decades of time and the service life of equipment like that is typically 30, 40 or more years.  If you tell me there will be no demand for the product in 10 years you have quadrupled the capital cost recovery required each and every year from now until then and that in turn means the price will wildly escalate and nobody may buy.  There is no reason for a private concern to take that risk and you cannot compel them to do so.

If you think this is some "unexpected" result you're nuts.  Tell me how many nuclear fuel reprocessing plants are online today in the United States.  In 1977 this was banned by Jimmy Carter and while Reagan reversed that E/O when he took office it did not matter as the former investments that had been made were destroyed by Carter's action and nobody in their right mind would do it again, given that Carter ruined their investment by executive fiat.

There is basically zero fabrication and development on the nuclear fuel front today compared with requirements; we only produce about 5% of what we need.  This isn't because we don't have it -- we do have it.  It's because Carter screwed industry out of billions of dollars and nobody in their right mind is going to let that happen to them twice.  The entire kerfluffle over waste disposal is of our making; the safest and best thing to do with high-level nuclear waste from reactors is to put it back into a new fuel pin (the fissile portion in commercial power reactors is only 5%, so you have 95% of the fuel pin contents available for such waste) and burn it up.  Over time this process reduces the high-level waste that is dangerous for 100,000 years into lower-level waste that is dangerous for a hundred or two years which we can reasonably expect to be able to keep out of the environment using existing technology.

The same is true when it comes to petroleum, coal and natural gas.  The latter, I remind you, is essential to make fertilizer, without which crop yields will be half or less of what we produce today.  The far left, along with those who go along with it on the right, either do not understand any of this or don't care and they both ignore the history including what happened in the 1970s and the impact that persists forty years later when it comes to civilian energy production.

If you want to see energy development resume here in the United States there is only one way to do it: Pass into law that (1) it will and may continue and expand, (2) Executive Action cannot curtail, impair or stop it again and (3) a serious supermajority of both houses of Congress will be required to change said law.

Since Biden would never sign such a bill and it will take 2-3 years once it is signed before the investment can bear fruit if you think the insanity in energy prices and availability is going to end before 2026 or thereabouts you're crazy.  The one thing we could do now is to bar the export of refined products; we are currently exporting about 25% of refined petroleum product we produce .vs. 5% a couple of years ago and that could be done today -- and would have an immediate and real impact on gasoline and diesel price.

Further, let's go here and solve the problem for the next 500 years.  That we can't do in a day but we can do it in a decade.

Biden can threaten all he wants but he cannot force private capital investment to take place and nobody in their right mind will make such investments when mere executive whim can turn said investments into dust as happened as soon as Biden took office, exactly as was the case in 1977 with Carter.

Behind every unit of economic output is a unit of energy.  This is not a matter of debate or "public policy"; it is hard, material fact that has stood since the beginning of economic time and no amount of feelings or desires can change it.

Would you like to eat?

Would you like the food to show up at the grocery store?

Would you like your A/C and heat to work?

Would you like to be able to get to work?

The above are your choices and, so far, you've answered all of the above with "No!"

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Indianarube
Posts: 610
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NW Indiana
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Thanks Karl. Very succinct and on point. If a person orders shit, they get to eat shit. Eighty one million voters ordered the feces platter. Now we all get to enjoy the effects, probably for decades to come.
Greenacr
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And now Biden is threatening to use the Defense Production Act to force Oil Companies and Refiners to produce more. Not sure that action will do anything meaningful other than possibly provide Biden with some political cover.

We are in the long slow decline...
Prof_dilligaf
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"The far left, along with those who go along with it on the right, either do not understand any of this or don't care and they both ignore the history including what happened in the 1970s and the impact that persists forty years later when it comes to civilian energy production."

I usually lean evil with the left, but here I'm gonna go with ignorance. In a total shock, the ones braying the loudest about "DA SCIENCE!" never have a clue about the technical details of how anything works. In that, they are not at all different than most of this country today.

Which leads me to have say, sadly, TG's perfectly reasonable energy plan has zero chance. When Muricans hear "nuclear" or "coal", their ovine minds switch instantly to the "fearful bleating about nukuleer waste and global warmening!" program and then you'd be better off talking to a squashed apricot.
Tickerguy
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@Greenacr -
Quote:
And now Biden is threatening to use the Defense Production Act to force Oil Companies and Refiners to produce more. Not sure that action will do anything meaningful other than possibly provide Biden with some political cover.

The DPA can't compel you to use what you don't have. Further, we're exporting 25%, roughly, of our refined product right now -- vs 5% a couple of years ago.

Why? Because Europe wants them and is willing to pay more than they can be sold for here.

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Stop consenting and it is forced to stop. Always.
No violence required.
Mjc1960
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Refineries are sensitive to the input stock and produce specific outputs. Changing them takes investment and time. Also steel and skilled labor.

I think the refineries we have left are producing near capacity now. Why wouldn't they if they are so profitable.

Most of the refinery capacity we have was built in the 70's.
Just like the rest of the supply chain, it's all been outsourced.
Tickerguy
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Yep @Mjc1960, and not one dollar will be spent on capital investment in this area when you can't recover the cost over another 30-40 years. California has made clear you won't be able to do and that The Feds haven't slammed their dicks in the door on that (which, as interstate commerce, is 100% in their wheelhouse) you won't get any more capacity build-out either.

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No violence required.
Greenacr
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It would seem that the only long term hope for the fossil fuels industry is for CONgress to pass laws (signed by the President) that provide guarantees for the Industry in the future. That would require complete control of the legislative and Executive Branches and thus may be a pipe dream.

It looks as though the Congress is working in a bipartisan way to pass a legislation to enable the growth and manufacture of Chips here in the US. Perhaps that provides a blueprint.

Probably need to undergo several years of blackouts and gas prices >$10/gal before any action might be considered.
Pilot
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That export amount is MOST of the growth we have been eaking out due to higher prices. Its also because we cannot refine the oil coming from frakking(which is almost ALL of our 'growth") due to its API rating. Im not 100% sure on this statistic, but in the US we have built no new refineries in something on the order of 50-60 years. Worse, Shit for brains and the Idiot lefties are recently making it worse for all of us due to exactly what Karl is saying.

We need an IMMEDIATE Manhattan Project/Apollo type program to go Nuclear.

We need IMMEDIATE cessation of exports including ALL NG, Oil, and refined products

We need an IMMEDIATE program to use our vast NG resources to convert gasoline
and diesel vehicles to NG use. It IS DOABLE NOW. At the minimum do it for Trucking!

We need to also move towards Fischer Tropsch with Coal.

We could do all that and have it working inside of a year IMHO IF we had some real leadership, political will, and a Congress/Gov't that actually functions.

I have little confidence in that at this point.

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"Alas, alas, that great city of Babylon, that mighty city! for in one hour thy judgment come"
Tickerguy
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@Pilot -
Quote:
We need an IMMEDIATE program to use our vast NG resources to convert gasoline and diesel vehicles to NG use. It IS DOABLE NOW. At the minimum do it for Trucking!

CNG is a non-starter due to density and fuel range for other than local delivery and such (e.g. trash pickup trucks, city buses and similar.) LNG is a non-starter for other than long-haul trucking due to boil-off, which cannot be avoided.

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Thelazer
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Defense production act = nationalize the oil company's.
Big Daddy Govt Is drooling, pretty soon the ration's and fuel coupons are next.

I bet the Big Guy's getting 10% of that also.
Lizardqueen
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I've been trying to explain this to idiots - that you can't just snap your fingers and "drill more" on a whim when oil gets expensive. The morons running this dump have made it so no one will ever invest in oil exploration and infrastructure again without a long-term guarantee, as you said.

They did the same thing to landlords during the pandemic. By fiat, they choked off their businesses by telling the tenants they didn't have to pay rent. That told the landlords that they didn't have the normal legal protections covering their back to run their business by, so they all either sold out, converted to Air BNBs, or cranked the rent through the roof to self-insure against the next time the idiots do that.

Now everyone is bitching about the high cost of oil/gas and the high cost of rent. And no one seems to understand why.

I swear, the average IQ in this country is not even room temperature.

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Boredfree
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western slope colorado
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Until people feel this in their belly (hunger) I doubt much will change.

The past couple of years have proved Americans are pussies who will do as social media tells them to do.

Our society is celebrating child abuse (clot shot for kids, hormone therapy so children can transition) and it should come as no surprise our society is fucked.

People keep buying guns to protect themselves, yet they continue to let the thing they should most fear(government) grow. We don't need to shoot anyone, we just need to BE strong enough to stop supporting our eventual executioners.

Stop using social media, stop buying crap, and for god's sake, shut off the television.

People are telling me how fucked we are and I think to myself, "No, you might be fucked, but my wife and I aren't." We aren't fucked because we aren't beholden to the golden calf of materialism but to living a rich, full life.

Life will become more challenging as the services we take for granted fail. On the other hand, the opportunities to help others will increase exponentially. This is how we will rebuild failed communities into real communities.

Our strength is our neighbors. When we come together to face a challenge, we grow together. Working together to survive people worry less about superficial crap like race and more about the results of the person's efforts.

The hood rats TGers like to make fun of are already living this way. They have a community of like minded people who look out for each other. They don't hesitate to do whatever it takes to protect what they have. Shoot, steal, it doesn't matter, only the 'family' matters.

The hood rat lives for today understanding nobody gives a shit about him except for his crew: and they only care for him as long as he is useful to the gang. People on the edge haven't time or energy to appease Kens and Karens, they just leave that shit lying in chalk, so to speak.

The 'polite' society needs a lot more hood rat mentality if we are going to succeed. In the 'hood you're either a player or a victim. Your choice.


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The problem is most people want to point a finger rather than their thumb when dealing with challenges.
Oldchemist
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It will be interesting to see how this all plays out. If Biden uses the war powers act will the feds supply the capital to build extra capacity?

The government has sort of a precedent for this. They forced everyone to get health insurance through Obummer care and forced government employees to take the jab. Give an inch and the feds take a mile by forcing people to deploy capital they may or may not have.
Calrissian
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London, UK
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... nothing of significance will be done. The society is too stupid.

Its just a matter when the lights go out.

... with Europe - especially the UK, leading the way. I'll be sure to let you know when I'm typing on my laptop, in the glow of my battery powered lanterns.
Doladin
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Incept: 2022-01-15

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I'm sick of greenie communists saying that solar and wind energy will only improve and become viable as more research is done. Not only is that not necessarily true, but that courtesy is never applied to nuclear, coal or gas. Apparently nuclear never advanced past Chernobyl (which, mind you, isn't a particularly unsafe place to live, which you wouldn't know thanks to the anti nuclear propaganda)

Dare I say that people will miss Trump? It was all too easy to parrot the new York times and say he is just a big baby with his fat finger on the button... But realistically, he was a genius with foreign policy, including energy, and had foreign nations queuing to sign deals with him.

He achieved all that with constant negative press and backstabbing. Perhaps going from Trump to Biden will have people appreciate that energy sovereignty and diplomacy is not just saying platitudes and lying, which is all that's required to win votes at home. I guess the game is more difficult when you don't have the press covering for you.

I have strong schadenfreude looking at the feminist NWO whore government's of Sweden and Finland. Yeah, it's all too easy to be a popular little puppet in the rigged game, but woah you sure realise you're out of your depth when you're at the table with Putin and Erdogan.

Reminds me of the Canadian diplomats that thought if trump can tweet mean things, any idiot can! They lobbed a twitter grenade at the Saudis on some woke platitude... And immediately had one of the largest sovereign wealth funds divest from everything Canadian!

I don't mean to shill Trump. I just miss having a strong leader that cared for the people. At this point I'd take a milquetoast guy as long as he isn't proactively trying to destroy the middle class for some satanic goal

Make no mistake, they want us back as peasants. EVs are not designed to work, they're designed to kill internal combustion cars which grant people freedom and independence. High electricity prices are meant to depress our social mobility and manufacturing ability.

Hopefully this coming recession can wake a fee people up. A few are slowly coming around to the clotshot... But numbers are pathetically low, we're borderline irredeemable
Hreardon
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Great post, Karl. This topic is one I wish more Americans were educated on.

I feel like I'm reading passages out of Atlas Shrugged when I read Biden Admin idiocy like this.
Winston2020
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But Karl, you're using actual science combined with critical thought! That is verboten in our politically correct "science" era. Don't ya' know - Nuclear power BAD!?

Here's a perfect example of the "you've got to be f'ing kidding me" purely agenda driven idiotic -GARBAGE- discussed in the great book, Science Fictions: How Fraud, Bias, Negligence, and Hype Undermine the Search for Truth, in this case a search for a desired PC correlation that doesn't prove causation.

JUNE 15, 2022
Female leadership attributed to fewer COVID-19 deaths
by University of Queensland

https://medicalxpress.com/news/2022-06-f....
Winston2020
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Calrissian said: "... nothing of significance will be done. The society is too stupid. Its just a matter when the lights go out."

Man, do you have that right! The IQ bell curve combined with the fact that most even on the right hand side of that curve apparently never acquired the LEARNED skill of critical thought and reasoning guarantees that the general public can be easily fooled by manipulative scumbags and have been throughout history. How do you think we got here?

"Despite the favorable opinions of undergraduates and alumni, a closer look at the record...shows that colleges and universities, for all the benefits they bring, accomplish far less for their students than they should... Many cannot reason clearly or perform competently in analyzing complex, non-technical problems, even though faculties rank CRITICAL THINKING as the primary goal of a college education... Most have never taken a course in quantitative reasoning or acquired the knowledge needed to be a reasonably informed citizen in a democracy." - Derek Bok, former 20 year president of Harvard University in his book "Our Underachieving Colleges"

"I think people in power have a vested interest to oppose CRITICAL THINKING. You see, if we don't improve our understanding of critical thinking and develop it as kind of second nature, we are just suckers ready to be taken by the next charlatan who ambles along... there are lots of ways to gain power and money by deceiving people who are not skilled in critical thinking." - Carl Sagan, noted cosmologist, in radio interview, May 1996
Mannfm11
Posts: 8233
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DFW, Tx
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I have been posting short aswers to this nonsense for years here. I call it the climate scan and I have made 2 short points, $6 gasoline fast and starvation. I didn't think it would hit this fast, as I thought it would take a couple of years.

The tax breaks aren't that big in the oil business. Depletion for small producers keeps the small guy in business and allows creation of capital for drilling. Up front writeoff, because all you have is a hole in the ground you hope will produce enough fast enough to get your money back. This isn't a building. Tax breaks are a lie. You can't capitalize a hole over 20 years that might not even pay back.

The left has never understood minerals or capitalization. They make up their science as well. Cost of development, depletion and maintenance of supply are an ongoing model. It never makes sense to sink costs to carry producing inventory that will last far into the future. Time, cost of capital and continued development and maintenance of supply are models. Development of resources are costly and must be maintained.

I think the oil producing states should seceed. Many of them are also the food producing regions. Why should we starve, because fools are running the game?

Policical science teaches absolutely nothing about economics and markets. I will bet you 60% of the Democrats in elected positions are lawyers whose undergrad was made up of PS to law. It is a bullshit degree and we have a government full of educated fools. The President was a flunky lawyer who likely never practiced law, having mastered the art of lying early in life.

We are either dealing with idiots pushing bullshit science or these people are intentionally attempting to subdue the people through starvation. There isn't a middle ground. We are 2 years behind the 8 ball. The left seems to be more interested in reducing population through destroying conventional sex than looking to maintain the living. We are dealing with NAZI's with NAZI plans. Next, food will be gone.

One thing the virus scam did was temporarily destroy the market for oil products. We lost another year. Was that a planned outcome? Bankrupt half the business, shut down development, rig the election and destroy the economy. We are distraced by pedophiles, while being econmically raped. We are abandoning life for something that is a roulette wheel chance of working, leaving us with a starvation model. Even if we could build the pipe dream they have, we could never maintain or expand it, as that requires real resources.

I heard the biodiversity nonsense was really genetic engineering and patents, not what we are led to believe it means. We are the last frontier. Are the jabs the path to a new man, maybe a bunch of slave model people? They are gambling with the survival of the human race, potential suicide and at best a return to prehistoric times. They have dug up lost cities. Has this happened before?

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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith

Djsnola
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New Orleans
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Im sure this is the end of the expansion of any refining capacity for a very long time but there are some significant plant expansions at the marathon and valero and shell refineries in the river parishes area upriver from new orleans. my guess is thats the last we will see in USA. still dont see how this green energy bull is believed by so many people when its clear we dont have the ability to do this transition with the current electric grid or any of the other infrastructure needed. do they want us all on mass transit, walking and bike riding by the middle of the next decade?
Mannfm11
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DFW, Tx
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@Boredfree: This becomes an irreversable fuck up fast. When it gets that far, it will be too late. It might already be too late. Oil is just one problem. The inflation/deflation tiger is loose. The Dow is down 500 in pre open. They just doubled Fed funds to 1.5%, a rate that should have never been pierced to the downside. A depression is one way to produce a surplus, but they generally occur in times of surplus, over expansion. This one will happen, because we are riding on credit, not capital. You need energy to expand. The resources to support prices aren't there.

People are going to be shocked how fast this all blows up. The kitchen sink has already been thrown at the credit bubble. If we had drilling, oil prices would likely collapse fast. Since they have already destroyed supply, that might not happen. Used resources have to be replaced and they are long cycle processes.

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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith

Reason: spelling
Cmoledor
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Just gets uglier every day. Fuck .gov

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Ingar
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To see the future that America's current energy policy will bring, we should look at Africa. Here is a land populated by people who never produced anything except from the exertion of the human muscle and not much of that. They never harnessed the wind for windmills or sails, nor did they harness the energy of flowing water for a mill, nor the stronger musculature of a donkey, horse, or elephant. The energy potential of these forces and animals were force multipliers and enabled Europeans and Asians to benefit greatly from their use. Our current Luddite regime in Washington,AC/DC will reduce the scale of our energy usage and thereby reduce our standard of living and technological progress.
I may get some flak from African apologists regarding the above observations, and I would be happy to buy one of them a one-way ticket to any African shithole country of their choice if given a renunciation of American citizenship and a bonded promise to never return to America or any part of Europe.
Superdude
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Kid Rock of all people agrees with you:
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