Over 15 years in the business, easily the smartest people I’ve met in the energy sector reside in Calgary and Toronto:
- “Don’t get caught up in the story of supply. The demand is insatiable. It’s unstoppable. And it’s growing aggressively globally. And the world has become selfish since Covid appeared… you’re protecting and to protect yourself, you will throw away all your environmental concerns… and seek to protect yourself and that means burning more oil… in the developing world there is a struggle to get out of poverty… even it is accelerating because of Covid because of the lack of attention these countries received from the developed world.” Rafi Tahmazian, Senior Portfolio Manager, Canoe Financial, 2022
Like essential products like air, water and food, oil is as important as anything in our world.
Oil is the world’s most critical energy resource, the sustainable fuel behind a $100 trillion global economy and a population of more than 8 billion.
I will never understand this new hatred for oil, especially coming from the West that has profited unimaginably from the oil age that began with Edwin Drake in 1859.
Oil is the black gold that has no substitute.
Oil is the transportation fuel that powers a global car fleet of more than 1.4 billion, compared to a tiny electric car fleet of less than 20 million.
Oil is literally the basis of globalization, the sine qua non of human physical interaction.
The push for renewables like wind and solar to displace oil demonstrates an energy ignorance that can only come from a country where one in four adults think the Sun orbits the Earth.
Wind and solar only compete in the energy sector (20-25% of how humans consume energy), while oil overwhelms the transport sector.
An infinite amount of more wind and solar will do about zero to reduce the daily US oil requirement of 19-20 million b/d, most importantly, a gasoline bottleneck of over 400 million gallons per day.
The foolish goal of “not investing in oil” inevitably means higher costs for everything and rampant inflation because oil is embedded in everything we do or consume.
With demand “about to explode”, petrochemicals are pervasive in our world: more than 6,000 everyday products have petroleum as an integral component.
And, by the way, this includes the production and transportation of renewable energy and electric cars themselves (the so-called “double panacea” technologies for fighting climate change).
As the immense mining revolution required to build more wind, solar and electric cars unfolds, and demand continues to rise, their costs will inevitably rise much more than many want to think.
Indeed, even at the beginning of the “energy transition” we are already seeing some of this, and the need for the “double panacea” of unfairly high subsidies (a reverse Robin Hood taking tax money from poor people to give to the rich). people in the market to buy an electric car) are bound to become politically or financially unsustainable at some point.
Just ask the dangerously unrealistic Europeans how their “double panacea” has fared under Putin’s thumb: “Germany burns coal again as its energy crisis deepens.”
Physics (eg gasoline has 100 times the energy density of a lithium-ion battery) and higher costs than modeled with a good model will eventually force our emerging energy and climate goals similar to the European to withdraw here in the US (for example, only sales of electric vehicles). in California after 2035).
Electric cars, for example, require six times the minerals that conventional petroleum-based cars require, not even as “clean” as advertised.
We should all be surprised that environmental groups are so supportive of this amount of extraction and potential destruction of land, not to mention the child labor inherent in the electric vehicle industry.
Perhaps all of this explains why the world’s largest automaker is already sounding the alarm: “Toyota rethinks electric vehicle strategy with new CEO.”
Our Forbes Expert Michael Lynch has written all about the problems with electric vehicles that no one wants to talk about.
The numbers in favor of oil cars are so overwhelming that an obsession with improving the efficiency and performance of internal combustion energy would be far more useful in fighting climate change than an obsession with electric cars, little practical and too expensive (up 13% year-over-year to $66,000 a unit) for the average consumer.
Indeed, I believe one of our biggest climate and energy problems is the fact that young Western journalists (aided by fossil fuel-guzzling climate scientists and renewable energy consultants who have taken over academia) have usurped completely the climate-energy conversation, not market. Experts controlling the narrative increasingly leads to higher costs and less reliability.
But their secret is hiding in plain sight: they demand a degrowth plan of less money and less people.
This over-privileged lot enjoys a world where they can only focus on climate change and completely ignore the real issues of energy affordability, energy reliability, energy security and the gigantic need for more… in a world who is overwhelmingly poor, more concerned. about where their next meal will come from.
Shocking, I know, but Putin and China love Western energy policy dictated by Swedish teenagers.
And as the world’s leading fuel, that inevitable “more” centers on more oil (along with its fuel sibling natural gas, which combines for 65% of the world’s energy).
Anti-oilers face a very real price Catch 22 that they might have learned in that economics class they never took: “any absolute reduction in the demand for oil will simply lower the price of oil, which will simply encourage more demand for oil.”
Regardless, passenger vehicles account for only 25-30% of global oil consumption, so the EV obsession is limited to reducing our need for black gold.
Not only a growing fleet of automobiles internal combustion engine oil, petrochemicals, jet fuel and heavy duty trucks are just some of the markets to be aware of when it comes to our ability, or lack thereof, to “oil transition”.
With 85% of the world (over 7 billion humans) struggling in the still developing countries, watching the privileged West gobble up vast amounts of oil to install the highest living standards in human history, bet on global oil needs being much higher than western ones. like to tell ourselves.
Even European oil companies, under tremendous climate pressure to say things about the ‘end of oil’ that they themselves must know are false, seem less afraid these days to defend themselves: ‘BP defends strategy transition after curbing oil and gas withdrawal.”
I’ve been saying for nearly a year now that the good thing about Putin’s illegal war is that it has woken up some of the sleepers in the privileged West.
After falling last year for the first time since 1990, China’s rebound from the Covid lockdowns this year should push the world above 102 million b/d of consumption.
Don’t expect an unstoppable increase, but the clear historical trend is that global demand for oil grows with global economic and population growth, because oil is so irreplaceable.
And we will double global GDP and add more than 2 billion humans by 2050.
The dangers of the anti-oil business, however, are hardly going away.
ESG, for example, unimaginably favored Russian oil companies controlled by Putin over Canadian oil companies competing in a free market in one of the freest countries in the world.
Exposed to the world by Putin, ESG has jumped the shark again over the past year; even ESG pioneer BlackRock hasn’t been afraid to push back on the unrealistic.
Our investments in oil must be continuous because it is an indispensable product whose fields face annual natural decline rates of 6-9%.
In other words, the world needs to invest hundreds of billions of dollars every year in oil just to stand still.
Larry Fink is right that environmentalists should seek alliance with our oil companies, not hypocritical hatred of them.
Don’t hold your breath.
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