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The fuel of the future

14 Dec 2022 | News Roundup

When the German chancellor came to Canada begging for liquid natural gas to alleviate its self-inflicted energy and geopolitical crisis he was told to go jump in the Rhine, then forced to tour a solar hydrogen plant in Justin Trudeau’s imagination. Now, the Vancouver Sun just noted, “Germany will be buying Qatari gas into the 2040s”. Whereupon Trudeau’s Natural Resources Minister Jonathan Wilkinson told the House of Commons Natural Resources Committee potential European customers “want to see the product in Europe within three years or they’re really not interested in part because they are aggressively moving towards hydrogen, which is something that Canada is very interested in supplying to Germany”. Right. They signed a deal with a grubby tyranny for decades’ worth of the stuff even though they have no interest in it after 2025, but what they really want is the unworkable hydrogen we don’t even have.

That Germany is scrounging down behind the couch for hydrocarbons might look like realism of a fitful sort. As is Britain opening its first coal mine in 30 years while pretending it’s to smelt steel and will be “net zero in its operations”. Though even there we’d say what, you’re not doing solar steel to go with our solar hydrogen? And the Guardian was predictably, but in this case plausibly, unpersuaded by either claim.

The fact that in the middle of it all the EU has decided not to pay a premium for Russian oil, repealing the law of supply and demand, fails to impress as energy realism. According to NBC “The price cap, which was led by the Group of Seven wealthy democracies and still needs their approval, aims to prevent a sudden loss of Russian oil to the world that could lead to a new surge in energy prices and further fuel inflation.” And if you can make any sense of that assertion you failed economics.

Just like California governor Gavin Newsom whose latest inspiration is to cap oil refinery profits to hold down prices. That scarcity rather than greed drives up prices is, apparently, beyond his comprehension. Instead, in rhetoric that would have shamed Lincoln (and we don’t mean it in a good way) he said:

“For me this is about never seeing those spikes again. You guys are all being screwed and taken advantage of.”

He by contrast will just shut off the power and make you drive an EV you can’t afford if only you could charge it. Which might call into question his grasp on reality. But it’s not some special lack of ability he brings to the situation.

On the other side of the world, in New South Wales, Australia, we read that “Federal government has pushed NSW to impose $125 coal price cap”. And why would they do such a thing?

Well, obviously, an energy shortage has led to a scramble to burn coal for power. And so:

“The Australian first revealed yesterday that the initial advice to NSW and Queensland governments was that they would have to cap coal prices at between $125 and $160 a tonne – around half current levels – to have any meaningful flow on impact for energy bills.”

Again, energy is expensive because governments made it that way by making it scarce. And while high prices, and profits, lead to investment, an increase in production and falling prices, the almost universal plan is to hide the scarcity by depressing prices so that the shortage persists. Oh, and make sure the system is dependent on the stuff that doesn’t work not the stuff that does, as “Coal spurned: renewables to ‘keep lights on’”.

The idea is that the voters will have cheap energy. In reality what they’ll have is cheap lack of energy, which is not the same.

P.S. Another possibility is to raise the price, lower it then raise it again while keeping it low. As in “Negotiations are still ongoing over the possibility compensation to be paid by the commonwealth to the states for lost royalties and possible compensation payments to coal producers.” Wouldn’t it be simpler to get out of the way and let the marketplace pick winners?

5 comments on “The fuel of the future”

  1. So what are governments going to do when they lose revenue from oil and gas taxes and royalties? No one seems to want to go down that rabbit hole. But governments are drunk on their own spending. Where will they tax next?

  2. When producing "green" Hydrogen through hydrolysis, it takes 49.7 KWH to produce one Kg of Hydrogen which contains 33.6 KWH of useable energy. The "difficulties" in storage and transport are on top of this grand delusion. These facts and the examples above seem to confirm that green theocracy and the politics of crises trumps numeracy.

  3. When electricity margins were tight during the summer heat wave, Californians were told to charge their EVs during the night. I looked at California’s nighttime energy generation mix and estimate that about 2/3 was from fossil fuel.

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