Don't Believe The Geniuses Claiming To Know Our Energy Future

Manhattan Contrarian ^ | 26 Feb, 2023 | Francis Menton

[MtnClimber]

“Stranded assets.” You know what those are. Probably you’ve read a hundred or more articles over the past few years confidently proclaiming that oil and gas fields and coal mines owned by large energy companies will soon become worthless, as production of energy shifts to “cleaner” and “cheaper” things like wind and solar. The owners of the fossil fuel properties won’t be able to sell them for even a dollar. The assets will thus be “stranded.”

The “stranded assets” predictions unsurprisingly come from the same crowd who are also ordering up the electric car future. For just a tiny sample of recent pieces making the stranded assets point, check out this from Nature Climate Change, May 26, 2022 (“The transition to a global low-carbon economy entails . . . the fast phase-out of fossil-fuel production, which will necessitate the write-down of major, functioning capital assets and reserves reflected as assets on fossil energy companies’ balance sheets.”); or this from MIT News, August 19, 2022 (“As the world transitions away from greenhouse-gas-emitting activities, . . . fossil fuel companies and their investors face growing financial risks (known as transition risks), including the prospect of ending up with massive stranded assets.”); or from the Guardian, November 4, 2021 (“Half world’s fossil fuel assets could become worthless by 2036 in net zero transition.”).

If you are thinking of buying in to any of that, you might enjoy the frankly hilarious piece by Michael Lynch, titled “A Cautionary Tale For Oil Companies’ Navigating The Transition.” The piece has a date of November 2022, but is linked at RealClearEnergy today.

Lynch’s piece is somewhat long (14 pages), and filled with decades’-old super-confident predictions of our energy future, all of which failed. I’ll give you just a sample:

Rawleigh Warner, CEO of Mobil, 1977: “The oil business has come to maturity, and with this maturity comes a new set of challenges...oil companies have no other choice. They must diversify or go the way of the buggy-whip makers.”

Standard & Poors, 1980: “Diversification [by oil majors] into alternative energy fields should offer promising new opportunities for increasing profitability.”

Standard & Poors, 1984: “Diversification out of the oil business has been disastrous for most of the majors....”

Ford Chairman William Clay Ford, Jr., 2000: “I believe fuel cells will finally end the 100-year reign of the internal combustion engine . . . Fuel cells could be the predominant automotive power source in 25 years.”

Jurgen Schrempp, Chairman of the Board of Management of Daimler-Chrysler said the company would be a market leader and later predicted sales of 100,000 hydrogen fuel cell vehicles in 2005.

Lynch on hydrogen fuel cell vehicles: “[T]oday, a quarter century later, sales are in the four figures.”

Senator Richard Lugar and R. James Woolsey, 1999: “Cellulosic ethanol is a first-class transportation fuel, able to power the cars of today as well as tomorrow, use the vast infrastructure already built for gasoline, and enter quickly and easily into the transportation system.”

Lynch on cellulosic ethanol: “[C]urrent production of cellulosic ethanol is so low data is not reported by the government.”

It goes on and on from there. There’s one very safe bet on the energy future, and that is that the utopian dreams of would-be central planners will fail. The $300-400 billion of subsidies said to be in the “Inflation Reduction Act” for “renewable” energies is not nearly enough to enable those things to prevail over fossil fuels in the market for energy. The energy supply will inexorably move to whatever best supplies consumer needs at the lowest cost.

[MtnClimber]

2050, MtnClimber: "The internal combustion engine is here to stay"

[silent majority rising]

I became a Petroleum Geologist in the mid-seventies because the ‘panic’ then was that we would run out of oil by the mid-eighties, global cooling would cause a new ice age, and half the planet would starve to death. I wanted to do ‘my part’ to stop the ice age and keep people from starving. The experts were wrong. Production is twice as much now as then, and reserves are quadrupled. The same media propagandists turned their stories on a dime to dance to the tune of the Globalists. So called “Journalists” like a good dystopian story to tell because it makes them feel important, and many are probably bribed to do so. So the lesson is NEVER BELIEVE A MEDIA STORY! The first question to ask is “why are they writing this story, and why now?” Once you use that filter, you might be able to deduce 20% of the truth.

[Sequoyah101]

None of this stuff survives without federal mandates or supports. Just in my short life there has been coal bed methane, deep and unconventional gas, ethanol and now the whole green zero thing. Good technology and business has customer pull to make it happen. It does not usually need to be supported.

Reagan and others have said, “If you want more of a thing, subsidize it. If you want less, tax it.” The objective of either option does not need to make any sense to gooberment. Nothing but whim, fancy, emotions, votes and bribes count.

So long ago now I almost forget the details there was a guy managing the local Farmer’s Coop who decided to float a scheme to produce ethanol. The tax incentives were many and it was all the rage. Interest rates were high and the bonds they sold to finance the venture were just too good to be true and that was a fact. The money was spent to no good end, everybody and is dog was getting into methanol. The scheme went bankrupt sending the Coop into tailspins. We all lost all but all of our money as back of the line creditors. Jack was tried and convicted for fraud as I recall. Don’t know what happened to him.

Also knew another guy who piled onto the ethanol gambit with all of his considerable money. When Trump pulled the plug on supports he went down. Don’t know if he survived or not.