Guest blog by S. A. Shelley: September 2021 has been an interesting month as energy supply crunches of all forms appeared all over the world. China is suffering from rolling power outages that are affecting residents and industry and the authoritarian government there has ordered traders and industry to secure as many energy supplies as quickly as possible. In Europe prices for electrical power and natural gas are climbing to record highs and in the UK petrol stations are running out of petrol to sell to consumers. Pressure on energy prices is starting to manifest itself in the United States as well, with California already experiencing an increasing number of rolling brownouts, sorry "flex alerts".  Traders are starting to buy options on future contracts for oil at $200 / bbl. They are not far off, with natural gas prices in Europe in terms of energy equivalent at $140 / bbl (see note 1).

So, what's going on in the world?  Not enough government progs or bureaucrats, not enough Canadian bankers (shout out to the economists and analysts at BMO and Scotiabank) and not enough woke people read, let alone understand the OWOE blogs. Everything that has passed in September with respect to energy has been foretold in one of our blogs.

Let's consider Europe and in particular Germany and its natural gas crunch. For Europe, I think that the commentators at the Daily Beast summarized it well by acknowledging that Europe got itself into this position where almost the entire continent is reliant on Russia’s gas supply and then the commentators at DW realized that Europe is over a barrel with respect to gas supplies.  Contrast that realization with the best German response to the possibility that Russia could use gas as a weapon, a stern finger wagging and moralizing from former chancellor Angela Merkel. That admonishment by the brittle chancellor resulted in me smacking my forehead again.  Have classical learnings been forgotten by Europe’s politicians?  The dictum by Thucydides about 2500 years ago that the strong do as they will and the weak suffer what they must is, and always will be, relevant in politics, finance and energy: it is always pointless to negotiate from a position of weakness. 

What's worse is that the carbon pricing schemes in Europe, coupled with the power shortages are forcing a resurgence in coal fired power production (see Powergen International and  DW Academie). It gets worse. In Germany not one new wind turbine has been installed offshore in all of 2021 to date. It is as if Western European energy strategy has been derived from a Monty Python sketch. I will wager anyone that this year CO2 emissions in Germany will rise. So much for the vaunted Energiewende.

There are some bright spots in Europe. France for one, seems to be doing things right with respect to low carbon energy, by planning to accelerate the introduction of more nuclear power into its energy mix. Often overlooked, the Balkan states and Greece are starting to successfully supplant traditional carbon based energy with renewable and sustainable green energy. They have the advantage of small populations and without heavy industry do not need as much energy per capita as the northern European states.

But can the general European energy incompetence infection spread to America? It already has, and California is probably most afflicted by it. In an article by CNBC lamenting the imminent closing of the Diablo Canyon nuclear power plant, the reader should note that the Diablo Canyon plant provides about 9% of California’s electricity while coal still provides about 3% of California’s energy. Closing which kind of power plant will have the fastest positive impact to greenhouse gas levels while simultaneously maintaining the most power to California residents? The answer, for the government progs, bureaucrats and Canadian bankers, is of course close the coal plants before the nuclear ones. The irony again is that California this year has been rapidly adding gas powerplants to its energy mix.  Paraphrasing Greta Thunberg, "It’s all bunny blah, blah" (see note 2).

What of Canada?  By default, in spite of politically imposed constraints to its oil and gas industry, Canada should receive a bit of a revenue windfall because of global prices for those commodities. Furthermore, Canada's exports of coal, ostensibly coking coal, increased by about 21% in 2020 alone and will probably increase again this year bringing more revenue to government coffers. I remind the reader that North America's largest coal export terminal is in Vancouver, B.C. and that coal is by far the worst fuel source to burn (coking or thermal) in terms of greenhouse gas emissions. Yet while the woke mobs in B.C. fight against oil and gas pipelines, they are woefully blind to coal exports. Perhaps too many Renminbi are flowing through B.C. and Ottawa?

Something that could be bad for central Canada is if, somehow, Michigan finally manages to shut down Line 5, which Michigan is entirely within its legal right to do, and entirely with environmental imperative to do. I have written before that underwater pipelines are the worst kind of pipelines to have and the tragedy unfolding in California now, because of an underwater pipeline breach should remind people that Line 5 really needs to be shut down now: Not tomorrow, not next month, not after umpteen more court appeals, now.

Something that is bad for Canada in so many ways, especially energy transition is the current Federal Liberal government led by the weak, progressive, Justin Trudeau (see BBC News and CBC News and note 3).  Trudeau is progressive and Canadians are progressing into poverty. But I'll write more on that matter in a future blog (or in a declaration of Western Canadian independence).

So many wrong decisions are being made by the politicians, by the woke mob, that I am considering establishing another blog site and YouTube channel along the lines of "Our World of Stupid Energy Decisions". Green is better, but green overnight is impossible. The result of all this government and mob incompetence will be a catastrophic energy crunch that will set back the green movement for a long time. My other disclosure to readers is that I do not own any coastal property or property lower than 80m above sea level.

Vive l'Alberta Libre!

End Notes

1.  Full disclosure, this blogger has also bought options for high oil prices.
2. "Bunny blah, blah" T-shirts will be available for purchase in the OWOE online shop later this year, global supply chain willing.
3. Prime Minister Justin Trudeau, on the first, most solemn day of national reconciliation that he personally spearheaded to establish, took his family on a government jet across country to go surfing, and he initially lied about the trip.