Great analysis. My one criticism is you are assuming people will be rational. Quite often they are not. If Venezuela were rational they wouldn’t be where they are. We could easily go down a similar path where the Climate-Only Cultists drive the bus off the cliff. Last century was riddled with mass delusions and tens of millions of deaths. I don’t see the Cultists compromising or being reasonable.
But, I’m not betting on it either, simply because my investing strategy for decades has been “If the world is going to end, then I’m going to end with it. At least I’ll have a few billion people as miserable as I am.”. 😊
Thanks ever so much. Personally, I tend to believe James Hansen et al on climate risks. But I also resent the obvious gaslighting on energy and critical minerals coming from activists, the IEA, and elsewhere.
I am pleased to see you now use the phrase “move to a healthier energy evolution” rather than referring to an “energy transition” since there is no known available energy source to transition to. I do have a further question: What if there is no “healthier” energy evolution? What if those calling for reduction in CO2 emissions based on the supposition that CO2 is bad for the environment as though it is a given that it is some form of pollution, what if they are wrong? Just suppose CO2 emissions - not particulates or other foreign matter, but CO2 itself; the gas plants breathe - are not bad at all - what then? What if it turns out that CO2 is actually good for the planet? It may be viewed as heresy, but has anyone asked that question and what it would imply? It doesn’t necessarily mean other forms of energy cannot be examined and pursued if they make sense for economic and other reasons, but it would meaningfully change the direction and priorities if it were no longer taken as a given that CO2 emissions were viewed as “pollutants” to be minimized at all costs.
Arjun, you've written before about how countries with domestic coal supplies will use that resource to ensure their energy security. In his substack note yesterday, David Hay was commenting that China's EV push together with usage of coal to power electrical generation is a way to reduce dependence on oil. I've heard others like Michael Kao make a similar point. Won't such energy security based strategies, particularly for large oil users like China and India, eventually impact the global demand for oil?
James, yes, for sure. The basic variables are GDP growth, efficiency gain, and substitution. The GDP component reflects a combination of populaiton and wealth gains. The wealth gain component boils down to how rich do the other 7 billion people become? and over what time frame relative to maturity in OECD.
Excellent point on African oil. It’s far easier to tell poor people what to do than to curb oil in your own country where consumption supports a high standard of living. It’s lazy. And not a little racist.
Todd, great to hear from you. I am a big fan of some of your recent posts/articles I have come across. The Euro/US mindset on how to address climate is just not something I can get on board with when it de facto means leaving 7 billion (+/-) people behind. No way that happens. And the 7 billion would benefit from and will need all new technologies that can scale at cost.
Yes, it’s funny with oil scenarios like the IEA’s. Climate activists accused the oil industry proponents of misusing the current policy scenarios to justify further development (so the IEA was told to get rid of it) and oil industry proponents accuse the climate folks of misusing the net zero scenarios to justify calling for no new development. I think they’re both right. Scenarios are not forecasts nor prescriptions. They’re a tool to help users organize and constrain (or expand) their thinking and planning. If you’re going to point to a current policy scenario one should highlight that policy can change. If you’re going to point to a net zero scenario one should highlight that you can’t take one aspect of it (no new FF development) and turn it into a policy prescription in isolation (ie. without the corresponding alternative energy investment and development).
100% Jason. It's why it was the weaponization of the IEA NZ0 that I find more problematic than the scenario itself...but I might opine it was willfully done in an effort to change the narrative. That can even "work" to a degree but requires a recognition that high and volatile oil prices will be an outcome...something that would be helpful to lessening oil demand...but politicians hate because citizens hate high and volatile prices...and rightly so as it is bad for economic growth.
Arjun,
Great analysis. My one criticism is you are assuming people will be rational. Quite often they are not. If Venezuela were rational they wouldn’t be where they are. We could easily go down a similar path where the Climate-Only Cultists drive the bus off the cliff. Last century was riddled with mass delusions and tens of millions of deaths. I don’t see the Cultists compromising or being reasonable.
But, I’m not betting on it either, simply because my investing strategy for decades has been “If the world is going to end, then I’m going to end with it. At least I’ll have a few billion people as miserable as I am.”. 😊
Thanks ever so much. Personally, I tend to believe James Hansen et al on climate risks. But I also resent the obvious gaslighting on energy and critical minerals coming from activists, the IEA, and elsewhere.
exactly!
Thanks for putting numbers to the situation in Africa vs the West. That was very helpful and mind blowing.
thank you Six Bravo!
I am pleased to see you now use the phrase “move to a healthier energy evolution” rather than referring to an “energy transition” since there is no known available energy source to transition to. I do have a further question: What if there is no “healthier” energy evolution? What if those calling for reduction in CO2 emissions based on the supposition that CO2 is bad for the environment as though it is a given that it is some form of pollution, what if they are wrong? Just suppose CO2 emissions - not particulates or other foreign matter, but CO2 itself; the gas plants breathe - are not bad at all - what then? What if it turns out that CO2 is actually good for the planet? It may be viewed as heresy, but has anyone asked that question and what it would imply? It doesn’t necessarily mean other forms of energy cannot be examined and pursued if they make sense for economic and other reasons, but it would meaningfully change the direction and priorities if it were no longer taken as a given that CO2 emissions were viewed as “pollutants” to be minimized at all costs.
Arjun, you've written before about how countries with domestic coal supplies will use that resource to ensure their energy security. In his substack note yesterday, David Hay was commenting that China's EV push together with usage of coal to power electrical generation is a way to reduce dependence on oil. I've heard others like Michael Kao make a similar point. Won't such energy security based strategies, particularly for large oil users like China and India, eventually impact the global demand for oil?
James, yes, for sure. The basic variables are GDP growth, efficiency gain, and substitution. The GDP component reflects a combination of populaiton and wealth gains. The wealth gain component boils down to how rich do the other 7 billion people become? and over what time frame relative to maturity in OECD.
Excellent
Excellent point on African oil. It’s far easier to tell poor people what to do than to curb oil in your own country where consumption supports a high standard of living. It’s lazy. And not a little racist.
Todd, great to hear from you. I am a big fan of some of your recent posts/articles I have come across. The Euro/US mindset on how to address climate is just not something I can get on board with when it de facto means leaving 7 billion (+/-) people behind. No way that happens. And the 7 billion would benefit from and will need all new technologies that can scale at cost.
https://open.substack.com/pub/toddmoss/p/we-cant-afford-for-everyone-to-live?r=402od&utm_medium=ios&utm_campaign=post
Yes, it’s funny with oil scenarios like the IEA’s. Climate activists accused the oil industry proponents of misusing the current policy scenarios to justify further development (so the IEA was told to get rid of it) and oil industry proponents accuse the climate folks of misusing the net zero scenarios to justify calling for no new development. I think they’re both right. Scenarios are not forecasts nor prescriptions. They’re a tool to help users organize and constrain (or expand) their thinking and planning. If you’re going to point to a current policy scenario one should highlight that policy can change. If you’re going to point to a net zero scenario one should highlight that you can’t take one aspect of it (no new FF development) and turn it into a policy prescription in isolation (ie. without the corresponding alternative energy investment and development).
100% Jason. It's why it was the weaponization of the IEA NZ0 that I find more problematic than the scenario itself...but I might opine it was willfully done in an effort to change the narrative. That can even "work" to a degree but requires a recognition that high and volatile oil prices will be an outcome...something that would be helpful to lessening oil demand...but politicians hate because citizens hate high and volatile prices...and rightly so as it is bad for economic growth.