Thursday 10, March 2022

Energy nonsense

Biden, his advisors, Kamala, the Twitter amanuensis, whoever it is that writes Biden’s tweets is clueless about energy. He uses the usual argument that it’s cheaper to use renewable energy, and so not using oil will save us money and benefit us in other ways. But this simply isn’t true. The market has a fabulous track record in delivering the goods in the cheapest possible way, and for the moment fossil fuels is that way. We cannot wish away that fact.

Loosening environmental regulations won’t lower prices.

But transforming our economy to run on electric vehicles, powered by clean energy, will mean that no one will have to worry about gas prices.

It will mean tyrants like Putin won’t be able to use fossil fuels as a weapon.

— President Biden (@POTUS) March 9, 2022

The world divides into Fotherington-Tomases and Nigels. The former treat climate change as a quasi-religious matter, the latter as a scientific one. Because religion is a much better rallying cry for politicians than science, the political class is in the Fotherington-Tomas camp. It is very unclear how this will play out, but my guess is that it will not pan out well.

The Doomberg Proposal for US Energy seems an excellent one, but betrays the author’s status as a scientist with a poor grasp of politics.

Wrap

Oil continued to sink, stocks too, which is a reversal. Commodities were very mixed, with food up along with precious metals, but energy down, apart from NG. The dollar is up again, following 10Y yields, which again are in touching distance of 2%.

Putin seems to have said that he’ll continue supplying oil (why wouldn’t he??), the UAE is still trying to talk up OPEC output, and US initial jobless claims were a bit above expectation (227K vs 217K). Maybe it was this that pushed stocks back down vs yesterday.

My guess is that something has to give. Russia’s interest rates are now 20%. Shorting the RUB with a carry like that must be suicidal. Not advice.