The Year That Wasn't

Hushed stories, sealed lips and outright lies of omission

Bill Bonner, reckoning today from Poitou, France...

This week, we’ve been looking backwards at the Year That Wasn’t.

That is, we’ve been raising questions the media declined to ask. And looking at the stories the press failed to cover.  

You already know the questions:

Can the Fed really escape from its inflationary policies of ultra-low interest rates and ‘printing press’ money? Can it really follow through on a tightening cycle next year?

Will more lockdowns and more vaccines (it’s your ‘patriotic duty’ to get vaccinated, says Joe Biden) really do more good than harm? Yesterday, John Bell, a professor of medicine at the University of Oxford told the BBC:

“The incidence of severe disease and death from this disease [Covid] has basically not changed since we all got vaccinated….” 

Can the US really shut off half its fossil fuel use by 2030? Experts say it’s impossible. Politicians say they’re going to do it anyway. What might go wrong?

That was the question on the table at yesterday’s Zoom call for subscribers. It’s a question the mainstream media should have asked the 38,000 delegates to the US COP26 Climate Change Conference.  

In today’s world… after two decades of weaning people away from fossil fuels… approximately 500 million of the earth’s population may be said to live on ‘green’ energy. Even that is a gross exaggeration, since you can’t have ‘green’ energy without ‘dirty’ energy. You can’t make the steel for windmills… or the glass and silicon for solar panels… without intense heat. And with few exceptions, there’s nowhere to get such heat without fossil fuels.

But grosso-modo, about 5% to 10% of the world’s power now comes from 

‘renewables.’ That leaves more than 7 billion people who rely on fossil fuels – for their food, their shelter, their clothing, their transportation, their heat, their jobs, their incomes, etc.

Practically all commodities move by ship, truck, or freight train. And practically all ships, trucks and freight trains are powered by diesel fuel. Turn off the tap… and the world stops.  

Within 48 hours, the supermarket shelves would be barren. Within 48 days, desperate people would be freezing, rioting, and starving. Within 48 months, modern civilization would dead… along with billions of people.

The Coming Winter Nightmare

So, yesterday, we put the question to two old friends, each of whom knows far more about the energy industry than we do – Rick Rule and Byron King: What kind of problems are we likely to run into on the road to the Great Energy Transition?

Rick was surprisingly cheerful. The energy glass may be more than half empty, he pointed out, but what is left is a delight for investors. The more the government discourages production, the more precious oil, gas, coal, and nuclear power become.   

Just because the feds don’t like it, in other words, doesn’t mean it isn’t popular.  And when people turn the switch, they want the lights to go on.  

In today’s world, power is not a ‘want;’ it’s a need. And the less of it that is available to consumers and industry, the more they are going to have to pay for it.  

In other words, the Winter Nightmare – when the power runs out – may be a hellish ordeal for most people, but not necessarily investors. (We remind investors: our Trade of the Decade is ‘short the US dollar; long energy, in the form of oil and gas producers and explorers.)  

Especially appealing is uranium, says Rick. If governments want to reduce carbon emissions and still provide abundant electricity, he believes, they’re going to have to build nuclear power plants. But it takes 10 years to build a nuclear plant; there are bound to be some ‘supply chain interruptions’ in the meantime.

Energy Stalingrad

Next up, Byron King recalled how governments occasionally do extraordinarily stupid things. In WWII, for example, the German army blundered into a shocking defeat at Stalingrad that turned the course of the war. 

The campaign began under the clear skies and warm temperatures of summer, 1942. Approximately 800,000 German, Italian and Romanian troops set out to take Stalingrad on the Volga river. It seemed like a cakewalk, at first. But then came the clouds… the cold… and the full weight of the Soviet Army.  

Surrounded and cut off from supplies, the Germans and their allies were doomed.  Between Soviet firepower, freezing temperatures, starvation and disease, very few of them survived. And now, Byron believes Germany has set itself up for a Stalingrad-like disaster in the energy sector.  

Germany has a modern economy, heavily dependent on power for its many leading chemical and metallurgical industries. But in the wake of the Fukushima nuclear disaster, Germany’s elite decided to decommission 26 of its nuclear power plants.  

In their place, it built windmills all over the place. And put solar panels on roofs.  But now it is so short of power that it has to put old coal-fired generators back in service, burning lignite, one of the dirtiest of all ‘dirty’ fossil fuels.

If the weather turns bad, as it did in the winter of ’42-’43, says Byron, Germany could have its own “Nightmare Winter” as early as this year. And meanwhile, America, whose elites are determined to follow in Germany’s goosesteps, trudges mulishly to a Stalingrad of its own.

A reminder that paid subscribers can view a recording of our Zoom meeting, as well as enjoying access to audio recordings and a comprehensive transcript of the event, to be mailed next week. If you’d like to be on that list... and invited to future events like this with our most trusted analysts, feel free to sign up here...

Best wishes for 2022 to all Dear Readers.

We’ll be back on Monday to look at the year ahead.

Regards,

Bill Bonner