Unplug the Green Boondoggle
Many groups and countries are lining up for new handouts by Congress, now that it is functioning again with a new Speaker. Among those with their hats in their hands for billions of dollars is the green energy industry of windmills and battery-powered cars.
Fortunately, newly inducted House Speaker Mike Johnson (R-LA) is fully supported by conservative lawmakers in the House who want separate votes on spending-neutral bills. First out of the gate is a $14.3 billion aid package to Israel that is funded by repealing part of Biden’s $80 billion IRS expansion.
On Monday, Biden’s Treasury Department announced that it will borrow the most ever for a fourth quarter: $776 billion. The multi-billion-dollar cost of the Leftist green agenda is not something we can afford to ignore anymore.
Ask Ford Motor Company. Since last Thursday afternoon, Ford’s stock has fallen by 14% in three business days on news of its losing a more-than-expected $1.33 billion in its electric vehicle (EV) unit for the third quarter, which translates into an average loss of $36,000 on every EV it sold.
Once a preeminent American corporation, Ford’s value has fallen to only $38 billion in market capitalization, and it cannot survive annual losses of $5 billion on EVs. A sharp increase in costs for raw materials needed by the batteries in EVs has cast doubt on if and when electric cars would ever be profitable to sell, despite mandates by Biden and California Gov. Gavin Newsom.
As found by a new study released by the Texas Public Policy Foundation, “the average EV accrues $48,698 in subsidies and $4,569 in extra charging and electricity costs over a 10-year period, for a total cost of $53,267.” When converted into an equivalent subsidy per gallon of gasoline, it’s as though the government paid an extra $16.12 per gallon for a conventional internal combustion engine vehicle.
Hertz took a hit in its latest earnings report due to unexpected losses from operating the largest EV fleet in the rental car industry. Hertz announced a pause in its acquisition of more EVs.
Another green energy money pit is the wasteful spending on wind power, as illustrated by the often-idle giant wind turbines visible from many highways. Despite decades of effort and billions of dollars in spending, wind power is still unable to pay for itself.
Record cold temperatures across the United States this Halloween include October snow showers in eight midwestern states. The 20 and 30-degree drops in temperature being felt from Dallas to the East Coast require affordable energy or else there will be another jolt to inflation.
In August 2000, General Electric was the most valuable company in the world, having a market capitalization of $601 billion. Today, as it loses $1 billion annually on its offshore wind farms that blight the ocean view for many Americans, the value of the company founded by Thomas Edison has fallen by more than 80%, to just $116 billion.
Wind turbines fail to produce power when it’s needed most, such as on very hot or very cold days, and their maintenance expenses are exorbitant. The inconsistent supply of energy from wind turbines causes spikes that harm the energy grid.
Rising interest rates have laid bare the billions of dollars in operating losses generated by the noisy and ugly windmills. Since low-interest loans are no longer available, green energy companies will be forced to seek billions more in subsidies from the federal government to offset mounting losses.
As the funding of the federal government expires on November 17, the liberal wastefulness of green energy will be one of many senseless entitlements seeking new handouts in the next fiscal year. “Government is too invested to let these companies go bust, and taxpayers will be charged for the repair job,” the Wall Street Journal warned last weekend.
The real federal deficit has doubled from $1 trillion (not just billion) to $2 trillion in merely one year, while Biden demands another $100 billion to spend on no-win foreign wars. House Speaker Johnson wisely separates a vote on emergency aid to Israel from a vote on the much larger spending package demanded by Zelensky in Ukraine with the support of Sen. Mitch McConnell (R-KY) despite rising conservative opposition.
A financial collapse, typically unpredictable in its timing, becomes increasingly likely under the weight of this crushing debt. Ending subsidies for green energy and foreign wars is a great place to start to save our economy.
Due to inflation caused by the wasteful government spending, the interest costs alone on the mountain of debt run up by Biden will soon exceed our total spending on our national defense. With a new Speaker, conservatives in the House have a golden opportunity to realign our nation’s priorities.
https://townhall.com/columnists/johnandandyschlafly/2023/11/01/unplug-the-green-boondoggle-n2630624
**************************************************Witch Hunts and Climate
European witch hunts of the 15th to 17th centuries targeted witches that were thought to be responsible for epidemics and crop failures related to declining temperatures of the Little Ice Age.
A belief that evil humans were negatively affecting the climate and weather patterns was the “consensus” opinion of that time. How eerily similar is that notion to the current oft-repeated mantra that Man’s actions are controlling the climate and leading to catastrophic consequences?
The first extensive European witch hunts coincided with plunging temperatures as the continent transitioned away from the beneficial warmth of the Medieval Warm Period (850 to 1250 AD). Increasing cold that began in the 13th century ushered in nearly five centuries of advancing mountain glaciers and prolonged periods of rainy or cool weather. This time of naturally-driven climate change was accompanied by crop failure, hunger, rising prices, epidemics and mass depopulation.
Large systematic witch hunts began in the 1430s and were advanced later in the century by an Alsatian Dominican friar and papal Inquisitor named Heinrich Kramer. At Kramer’s urging, Pope Innocence VIII issued an encyclical enshrining the persecution and eradication of weather-changing witches through this papal edict. The worst of the Inquisition’s abuses and later systemic witch hunts were, in part, empowered by this decree.
This initial period of cooler temperatures and failing crops continued through the first couple of decades of the 16th century, when a slight warming was accompanied by improvements in harvests. Clearly, the pogrom against the weather-changing witches had been successful!
Unfortunately for the people of the Late Middle Ages, the forty years or so of slight warming gave ground to a more severe bout of cooling.
The summer of 1560 brought a return of coldness and wetness that led to severe decline in harvest, crop failure and increases in infant mortality and epidemics. Bear in mind that this was an agrarian subsistence culture, nearly totally dependent on the yearly harvest to survive. One bad harvest could be tolerated, but back-to-back failures would cause horrific consequences and, indeed, they did.
Of course, the people’s misfortunes were attributed to weather-changing witches who had triggered the death-dealing weather, most often in the form of cold, rain, frost and devastating hailstorms. Horrific atrocities were alleged of the witches, including Franconian witches who “confessed” to flying through the air to spread an ointment made of children’s fat in order to cause a killing frost.
Across the continent of Europe, from the 15th to the 17th centuries there were likely many tens of thousands of supposed witches burnt at the stake, many of these old women living without husbands on the margins of society.
The worst of the witch hunts occurred during the bitter cold from 1560 to about 1680. The frenzy of killing culminated in the killing of 63 witches in the German territory of Wiesensteig in the year 1563 alone. Across Europe, though, the numbers of witches continued to increase and peaked at more than 500 per year in the mid-1600s. Most were burned at the stake; others were hung.
The end of the witch hunts and killings tie closely to the beginning of our current warming trend at the close of the 17th century. That warming trend started more than 300 years ago and continues in fits and starts to this day.
https://myemail.constantcontact.com/Witch-Hunts-and-Climate.html
****************************************************California’s EV Conundrums
As California is attempting to lead the world toward no crude oil production, worldwide efforts to meet the supply chain demands of extracting 4 billion gallons of crude oil every day from this planet, there may be shortages and inflation in perpetuity to continue to make all the products of our materialistic society, being enjoyed by the current residents in the wealthier countries on this planet.
Meanwhile, the list of conundrums to California’s EV mandate is growing:
Lack of sufficient number of buyers, outside the elite profile of existing EV owners
The Governments’ lack of ethical, moral, and social responsibilities, by encouraging the social injustice of subsidies for well-off people who can afford EVs, continues exploiting the human rights of workers with yellow, brown, and black skin in the supply chain that are mining for exotic minerals and metals in poorer developing countries to support the green movement in wealthy countries.
Conditions have grown so dire for the supply chain of raw materials needed for EV batteries that Washington is cracking down on EV components that have links to Chinese Uyghur slave labor that are helping to build EV’s.
Due to EV battery fire potentials, questionable means of transporting EV’s from foreign manufacturers to the USA consumers.
Concerns about occasional electricity from wind and solar being able to charge EV batteries.
The limited life of the EV battery compared with conventional vehicles, the limitations of EVs during emergencies such as fires, floods, and power blackouts.
China restricting exports of graphite, a key mineral used for making EV batteries.
Auto makers will continue to face challenging supply chain issues to make all the parts and components of EV’s as the supply of oil derivatives manufactured from crude oil will be in shorter supply. The typical car today is made with about 260 pounds of plastics.
The crude oil industry’s time in California is limited, and the oil-refining industry is behaving as any industry would in comparable circumstances, by transitioning its operations away from gasoline to activities that will prove to be more profitable in the long run. And as crude oil supply falls further, much higher gasoline prices will become a way of life for Californians, as the conundrums associated with EV mandates may be growing.
Standard economic logic indicates that high California gas prices should encourage fuels supply to be shipped to California from other states. But this doesn’t happen because no other state formulates California’s unique gasoline blend.
In addition, the West Coast fuels market is isolated from other supply/demand centers as California is an energy island. The Sierra Mountains are a natural barrier that prevents the state from pipeline access to any of that excess oil. As such, the West Coast is susceptible to unexpected outages from West Coast refineries as it is unable to refill an unexpected loss in supply by quickly supplying additional products from outside of the region.
If gasoline is imported into California, which does occur when a California refinery goes offline for repair or maintenance, California typically imports gasoline via marine shipments, which usually take three to four weeks to deliver. To meet the demands of the fourth largest economy in the world imports of gasoline into California come from sources that include India, South Korea, the United Kingdom, Russia, and New Brunswick, Canada. This process is expensive and takes weeks for the fuel to arrive at California ports.
California’s regulatory and tax landscape has led to a steady drop in the number of California refineries. In the early 1980s, when California’s population was 24 million, there were 40 operating refineries in the state, which refined over 2.5 million barrels of crude oil per day. Forty years later, with a population of 39 million, the number of refineries dropped by 14, which refines less than 2 million barrels of crude oil per day currently. The reality is that gasoline and diesel supply is decreasing while demand is increasing, is fuel (no pun intended) for continuous price increases.
Refineries are also shutting down because California has imposed a new regulation that bans the sale of gas-powered cars and light trucks by 2035 and the State requires 35 percent of new car sales to be zero-emission vehicles by 2026. It makes no economic sense to invest in new capacity in a state that has de facto outlawed the industry’s existence in a few years.
In addition, refineries are also shutting down because there are incredibly lucrative state and federal tax incentives to produce biofuels, totaling a whopping $1 per gallon, and cease the manufacturing of gasoline and diesel. A Marathon refinery that had a crude oil refining capacity of 166,000 barrels per day is being retrofitted to produce biodiesel and is expected to be producing biofuel next year. Similarly, Global Clean Energy is converting a 66,000-barrel-per-day-capacity refinery in Bakersfield to biodiesel, and World Energy has invested $350 million to convert a 50,000-barrel-per-day-capacity refinery to biodiesel.
California regulators and legislators are getting what they want: less crude oil produced and consumed. And Californians, particularly low- and middle-income households, are paying a dear price for the preferences of those Tesla-driving legislators and regulators as fuel demand remains against a diminishing supply of gasoline and diesel.
You cannot build something from nothing. Thus, the California’s EV conundrums will most likely grow as everything that needs electricity, and every infrastructure, has parts and components that are made from oil derivatives manufactured from crude oil, from the light bulb to the iPhone, defibrillator, and all the parts of toilets, spacecraft, and EV’s.
https://www.cfact.org/2023/11/01/californias-ev-conundrums/
******************************************************Rare profit miss reveals Macquarie’s green energy indigestion
For years Macquarie was seemingly able to defy gravity, but it seems even the investment bank can’t outrun the bigger forces upending green energy markets.
Indeed, the first-half profit was down 39 per cent on the year to $1.4bn, hobbled by surging staff costs, softer revenue and writebacks. The profit collapse makes Macquarie more like a sleepy big four bank rather than a global cash machine commanding a sharp share premium.
One of Macquarie’s core businesses - the buying and selling big infrastructure and energy assets has ground to a halt, given the slowdown in dealmaking globally as markets globally hobbled by the prospect of higher for longer interest rates. The uncertainty on global outlook and higher financing costs has kept buyers away, leading to more assets sitting on the books than what it would normally want.
And green energy, an area where Wikramanayake has staked ground as an early mover by driving big bets on offshore windfarms and solar projects around the world, is delivering a new problem for the bank.
The economics of renewables is starting to become deeply challenged and this is having a dramatic impact on the value of projects springing up around the world.
As more renewables flood the grid it is becoming clear they produce much of their electricity, usually at a time when it is not needed. This is seeing the unit pricing for green electricity projects collapse, particularly in Europe, although the cost of building remains sky high.
Headwinds
In recent weeks oil major BP has written more than $US540m from two US offshore wind projects with inflation-linked construction costs soaring but offtake pricing collapsing. The cost of wholesale pricing on offer in the UK has come down 65 per cent in a short space of time, leaving few willing buyers to commit capital for new projects.
Macquarie has some $2.1bn of green energy investments underway with two-thirds of this at development stage which also means it is exposed to construction risk. Most of the funds are allocated to offshore wind and the rest is mixed between solar and small allocation to battery.
Wikramanayake acknowledges there is some concern about the direction of the green energy book given where unit pricing is going. She says Macquarie has taken a conservative view on projects and much of its offtake agreements underpinning projects were pitched pre-Covid when prices were higher.
Macquarie is confident about demand for its green energy and other infrastructure assets in the coming six months.
Macquarie is confident about demand for its green energy and other infrastructure assets in the coming six months.
Speaking to The Weekend Australian, Wikramanayake is still a believer in green energy with the longer term thematics stronger than ever. There’s still massive demand among governments and other operators to move out of carbon producing coal into green energy. The UK government wants 50 gigawatts by 2030 and have so far only hit less than half that. In the US, the Biden administration is targeting 30 gigawatts.
“This journey will not be a straight line like every other journey. But I think the important thing is a structural response needed, and the opportunity remains,” Wikramanayake says.
The recent shake-up in pricing has “given a bit of a wake-up call to people that are putting these off-take (agreements) in place that if they’re going to get the supply, they’re going to need to offer pricing that will attract private capital”.
She is more confident about demand for Macquarie’s green energy and other infrastructure assets in the coming six months, adding the bank is prepared to wait out the downturn.
“Plainly, we don’t want to sell these assets at less than their fair value. We don’t we don’t feel like we need to sell them if we feel like they’re good quality assets.”
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Jim Hansen and his twin
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