Monday, July 04, 2022

End of the German Idyll

Germany looked normal over the weekend as a genial Chancellor Olaf Scholz welcomed the Group of Seven leaders and their guests to the luxurious Schloss Elmau in the Bavarian Alps. But those appearances are deceiving. Germany is facing its gravest challenges since the foundation of the Federal Republic following World War II.

This is very sudden. As recently as 2020, almost the entire world agreed with the smug German self-assessment that Germany had the world 's most successful economic model, was embarking on the most ambitious'and largely successful'climate initiative in the world, and had perfected a values-based foreign policy that ensured German security and international popularity at extremely low cost.

None of this was true. The German economic model was based on unrealistic assumptions about world politics and is unlikely to survive the current turmoil. German energy policy is a chaotic mess, a shining example to the rest of the world of what not to do. Germany 's reputation for a values-based foreign policy has been severely dented by Berlin 's waffling over aid to Ukraine. And German security experts are coming to terms with a deeply unwelcome truth: Confronted with an aggressive Russia, Germany, like Europe generally, is utterly reliant on the U.S. for its security. At a time when American foreign policy increasingly prioritizes Asia and isolationist sentiment among both Republicans and Democrats appears to be rising, if Donald Trump returns to the White House in 2025, German security will depend on his goodwill.

Mr. Scholz and his coalition government have responded to Vladimir Putin 's invasion of Russia with a series of, by German standards, revolutionary changes. Germany is beginning to rearm. It is, with some false starts, sending weapons to Ukraine. It has taken the first steps toward energy independence from Russia, even at the cost of its ambitious climate agenda. Coal plants will lumber back to life, new gas-processing plants will be built, and Germany is asking Europe to delay decarbonization mandates that no longer seem realistic.

But the real work remains to be done. Modern Germany was above all an economic project. The collapse of the Third Reich left Germany morally devastated, physically wrecked and economically bankrupt. From the moment of its foundation in 1949, the country 's central goal was economic growth. That growth could repair the destruction of the war, promote Germany 's peaceful integration into Western Europe, blunt the appeal of communism, and build a national identity independent of the malignant fantasies of the Hitler era and the bombast of Wilhelm II. The hard work of the German people, the pragmatic policies of the political class, the skills and determination of German management, and the favorable international climate resulting from the development of the American-led world order took Germany to economic heights.

In recent years, the German economic miracle depended on a combination of industrial prowess, cheap energy from Russia, and access to global markets, particularly in China. Today every one of those pillars is under threat. German mastery of automobile technology through a century of engineering is challenged by the shift to electric vehicles. The chemicals industry, in which German technology has led the world since the 19th century, is coming under environmental challenges as global competition intensifies.

Those challenges are exacerbated by the loss of cheap and secure Russian natural gas. Green energy, despite massive German investment, will be unable to supply German industry with reliable and cheap power for a long time. In the meantime, the alternatives to Russian pipeline gas are expensive and controversial. Nuclear power gives Greens the willies; coal is unbearable; liquefied natural gas requires long-term commitments and massive capital expenditures.

Beyond that, Germany 's economic relationship with China is changing for the worse. China was long the ideal customer for German products. Its newly affluent middle class fell in love with German luxury cars. Its rapidly growing manufacturing sector voraciously consumed German machine tools and other capital goods. But China 's growth is decelerating. Its maturing industrial economy seeks to compete with high-end German producers, often based on tools reverse-engineered from German imports.

Those in the Biden administration who dream that Germany will wholeheartedly join a new global American crusade for values should keep their enthusiasm in check. Mr. Scholz may agree in the abstract with President Biden about the importance of liberal values and the danger of climate change, but his calculations must reflect the economic facts of German life. This naturally leads to thoughts about how to patch things up with Russia and China.

Mr. Biden 's job is not to sing hymns about Western values with Mr. Scholz; it is to make Berlin understand that U.S. security guarantees come at a price. Given the realities of American politics, Germany cannot count on continued American support unless it does more to back the U.S. at a time of grave and growing danger world-wide.


Now The Wheels Won't Stay On: Electric Car Dangerously Fails, Results in Massive Recall

Toyota has recalled its newest electric vehicles because the wheels can literally fall off in what one commentator says is a symptom of what’s wrong with the electric vehicle market.

The company announced that 2,700 of its new electric bZ4X SUVs are a danger to their drivers, with only 260 to date having been delivered in the United States.

“After low-mileage use, all of the hub bolts on the wheel can loosen to the point where the wheel can detach from the vehicle,” Toyota said in a June 23 statement on its website.

“If a wheel detaches from the vehicle while driving, it could result in a loss of vehicle control, increasing the risk of a crash,” the company said.

“The cause of the issue and the driving patterns under which this issue could occur are still under investigation. No one should drive these vehicles until the remedy is performed,” Toyota said.

Owners of the vehicle, whose price starts at $43,215, might not be getting it back any time soon. “No remedy is available at this time,” Toyota said in its release.

“Until the remedy is available, any authorized Toyota dealer will pick up the vehicle and provide a loaner vehicle FREE OF CHARGE to the owner,” it said.

In a Wednesday column for Bloomberg, Anjani Trivedi, who covers industrial companies in Asia, wrote, “If that’s the level of quality and safety traditional auto giants are willing to commit to, then investors and regulators should increase their scrutiny.”

Trivedi noted that Subaru, which developed its Solterra electric vehicle jointly with Toyota, has also pulled that vehicle, which has not yet made it to the American market.

She said she expected that “as more are made, more problems are bound to crop up. In the past two years alone, there have been thousands of recalls, costing billions of dollars.”

Fires in electric vehicles have plagued Tesla and General Motors, which recalled all 142,000 of its electric Bolt vehicles because of that hazard.

Trivedi said EV buyers should be alarmed at what is taking place. “The issue is, these aren’t just any recalls: These are serious and, most worryingly, basic problems — an engine combusting, a tire rolling off. Manufacturers say they are remedying the issue, but then what?” she wrote.

“Even though there aren’t many of these vehicles being produced right now, and there have, so far, been limited injuries, the fact that these cars could actually be on the road — and trusted because they are made by a large, well-established company — should raise alarm,” Trivedi said.

The bZ4X debuted in Japan last month, according to CNBC.

Last December, the company’s president, Akio Toyoda, said Toyota planned “to roll out 30 BEV models by 2030.”

“Toyota has been under pressure to up its game in EVs, so will be very disappointed that a recall has been necessary on its first mass-market electric cars,” David Leggett, automotive editor at GlobalData, told CNBC.


Biden Apparently Thinks $5 Gas Isn't Painful Enough - His EPA Is Attacking America's Largest Oilfield

In case you were wondering whether the Biden administration could do anything more to cripple the U.S. fossil fuel industry, the answer is yes.

The Environmental Protection Agency is considering an “ozone violation designation” for portions of the Permian Basin, the largest oil field in the United States, according to Bloomberg News. The Permian Basin is located in West Texas and southeastern New Mexico.

In a letter to President Joe Biden on Monday, Texas Gov. Greg Abbott warned that this action “could lead to skyrocketing prices at the pump by reducing production, increase the cost of that production, or do both.”

The Permian Basin, he informed the president, accounts for 25 percent of our nation’s gas supply — 95 million gallons per day — and 40 percent of all oil produced domestically.

Abbott emphasized that this decision was entirely discretionary and that Biden had the power to stop it.

“If you do not, this action alone might serve as a catalyst for economic harm leading to an even deeper reliance on imported foreign energy and a faster economic decline into the pending recession by forcing even more pain for American consumers to pay at the pump,” the Republican governor wrote.

He concluded by saying, “Because time is of the essence in these EPA proceedings, I must hear back from you by July 29, 2022. If the EPA’s proposed redesignation is not suspended by that date, Texas will take the action needed to protect the production of oil — and the gasoline that comes from it.”

A fact sheet on this proposal prepared by the U.S. General Services Administration says: “In 2017, EPA designated certain counties in southeastern New Mexico and West Texas located in the area known as the Permian Basin attainment/unclassifiable for the 2015 ozone NAAQS.

“EPA is now considering a discretionary redesignation for (portions of) these counties in New Mexico and Texas for the 2015 ozone NAAQS under Clean Air Act section 107(d)(3) based on current monitoring data and other air quality factors. If the area is redesignated to nonattainment, the state(s) will be required to submit a State Implementation Plan to bring the area into attainment with the 2015 ozone NAAQS.”

This action was instigated by the conservation group WildEarth Guardians, according to Bloomberg. It said monitors had found that “average ground-level ozone levels” had exceeded “the 2015 standard of 70 parts per billion several years running.”

The group petitioned the EPA in March 2021 and later threatened legal action if nothing was done.

Jeremy Nichols, WildEarth’s climate and energy program director, told Bloomberg this designation “basically says you’ve got to clean up this mess or the consequences are going to get even more severe as far as restricting your ability to permit more pollution and more development.”

If parts of this region are found to be in violation of the ozone limits, state regulators would have three years to bring those areas back into compliance.

Bloomberg spoke to Todd Staples, president of the Texas Oil and Gas Association, about the effects an EPA attack on the Permian Basin might have on future energy development.

“Creating uncertainty on permitting and inserting unnecessary regulatory barriers will only negatively impact the production necessary to meet the needs of consumers,” he said.

Why would this administration even consider moving forward now with a plan that would further discourage oil companies from starting new projects? A rhetorical question.

At a time when some Americans are forced to choose between putting food on their table or filling their gas tank, this idea should have been dismissed out of hand.

While Biden claims to care about the rising cost of gas, his administration’s actions say otherwise.


Time’s up: The Australian Labor Party in Queensland can no longer have it both ways on coal

The Queensland Government is trapped between contempt for coalmining and the massive royalties it brings, writes Peter Gleeson.

One of the great ironies of the Queensland Labor Government is its disdain and contempt for the coal industry, the one fiscal sector that is propping up the Budget.

Because cabinet and caucus is dominated by the dopey Left faction, they are wedded to phasing out coalmining.

Unfortunately for Queensland, they haven’t quite worked out how they will fill the fiscal gap in unemployment and coal royalties, but hey, they’re not worried about the $100 billion debt, so who cares about jobs and revenue?

This financial year, coal royalties will account for about $8 billion, up $1.4 billion off the back of a new tax imposed by Treasurer Cameron Dick.

This is the same bloke who said 26 times before the last election there’d be no new taxes.

That’s a lot of hospitals and schools. The new coal royalties tax is the highest in the world, and it represents a danger to regional communities as coal companies cut their cloth.

It is also a risk to foreign investors, many of whom now see Queensland as a risky place to do business, as governments change the goalposts without warning.

Coal companies now pay 7 per cent of revenue for prices up to $100 per tonne and 15 per cent for prices above $150 per tonne.

Three new progressive royalty tiers will now come into effect on top of the existing royalty. The new tiers are 20 per cent for prices above $175 per tonne, 30 per cent for prices above $225 per tonne and 40 per cent for prices above $300 per tonne.

Coal companies argue that this large hike in royalties will negatively affect investment appetite for future mining projects in Queensland.

Executive chairman of the Bowen Coking Coal company, known as Ballymore Resources, Nick Jorss said: “We are extremely disappointed in the way this massive royalty hike has been implemented without any consultation upon an industry that already pays billions of dollars annually in taxes and royalties to fund schools, hospitals and services for all Queenslanders.

“Bowen is a local Queensland business built from scratch, not an international mining house.

“We are creating over 500 Central Queensland jobs as we open three metallurgical coal mines this year to supply the global steel industry.

“This proposed tax grab would permanently bake in Queensland as the regime with the highest royalties in the world, ostensibly to solve a near term Government funding issue.

“This raises substantial risks to further investment in Queensland mining and regional Queensland jobs.’’

This massive tax sting is par for the course for a Government addicted to royalties but keen to shut down the industry.

Let’s not forget the black-throated finch would have stopped the Adani coalmine in 2019 had Bill Shortenwon the federal election.

Now the State Government is using another weapon to derail a project that will create hundreds of jobs on the Darling Downs. It’s called silence.

Despite saying it will abide by the court process, there is little sign that the Government intends to approve the third stage of the New Acland mine.

Last week we saw the granting of the environmental approval for the third stage of the project, yet another court hurdle overcome.

Premier Annastacia Palaszczuk has always maintained that once the court and environmental regulations are satisfied the mine would proceed.

Ms Palaszczuk must now honour her word and grant the necessary ­approvals, including the mining lease and the associated water ­licence, so hundreds of workers who were stood down in December can get back to work.

They have simply run out of excuses. The jobs and livelihoods of hundreds of workers are at stake.

The mine’s closure six months ago due to the State Government’s years of inaction was a devastating blow for the workers, their families and the communities of the Darling Downs.

Ms Palaszczuk and he Mines Minister Scott Stewart have blamed their inaction on the court process. But the time is now up.




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