A weekly newsletter cannot, of course, be on top of breaking news, especially if it concerns something like the latest claim from Donald Trump about his world-historic accomplishments in the Strait of Hormuz or some such. So we don’t know if we should inform you that world leaders are dismayed that the Iran war is back on and oil prices are soaring, or that world leaders are dismayed that the conflict is over, the oil is flowing and carbon emissions are soaring. It’s not good when a satirical outfit does better reporting than the supposedly serious press as, for instance, with the Babylon Bee headline “VICTORY: Trump Secures Reopening Of Strait That Was Open Before War”. (Following up their caustically on-nose “Oh No! Trump Negotiates Deal With England And Now They Have The Colonies Back”.) With the preliminary text available it seems that everyone hates it across the spectrum and it may have collapsed by the time you get this newsletter. But if as it semi-seemed at time of writing the tankers are moving it may temporarily ease constraints on global oil supplies. Temporarily being the key term. So the only sane policy for governments, including the Canadian, is to stop ignoring the vulnerabilities this conflict made impossible to ignore, not to go back to sleep on the whole question of energy security. We must produce more, more realistically.
They are liable to go back to sleep instead for a lot of reasons, one being a chronic tendency to send words to do the work of deeds. Another being a tendency to think regimes hostile to the West are just kidding. And yet another, related, being vanity. They have committed to the notion that thanks to their brilliant compassion the world is undergoing a “green energy transition” and doesn’t need that silly old oil any more. And, more generally, to the notion that because they are in charge everything must be great, from the economy to the resilience of supply chains. But none of these things is wise, and we need wisdom here not flash and self-esteem.
Whatever comes of the Memorandum of Understanding, and we’re developing a tendency to get hives when we encounter that slippery phrase instead of, say, “Agreement”, the larger lesson surely is that most countries are very dependent on energy that is not safe.
Very dependent because it is simply not true that oil and gas are dwindling away to a greasy memory, as even Heatmap seems to get in this context. And not safe because far too few countries, even an “energy superpower” like Canada, have a properly functioning industry free of excessive regulation, taxation and intent to exterminate at the earliest convenient opportunity.
The problem here isn’t just that under even a best-case scenario it will take a while for the world oil trade to get back to where it was in January. It’s that where it was in January was anything but a best-case scenario and those are rare.
As we have catalogued, a remarkable number of important things were being shipped through the Strait of Hormuz including minerals crucial to this supposed transition. And they were being shipped under the noses of the mad mullahs of Teheran, whom nobody should have supposed were reliable, responsible, well-disposed guardians of anything whatsoever.
The usual suspects, of course, think that all is well because the war has driven a massive rush toward the alternative energy they already claimed the world was engaged in though it wasn’t. For instance:
“There’s peace, of a sort and dearly bought, in Iran, but don’t expect a return to the status quo, the [New York Times] analysis by Patricia Cohen says. ‘The war has set in motion changes that will be hard to reverse.’ ‘The profound vulnerability of countries throughout Asia, Europe and elsewhere that depend on imported energy is supercharging the hunt for alternatives. In some places, like South Korea and Japan, that has led to an increased use of dirtier fuels like coal. But over the longer term, this energy shock — the second in just four years — is likely to accelerate a transition to renewables like solar and wind as well as nuclear power.’ Wind and solar generated more energy worldwide than gas in April for the first time, according to UK energy think tank Ember.”
Though to be fair in writing these words Canadian pundit Paul Wells also said:
“that doesn’t mean fossil fuels are off the table. The Hormuz bottleneck, which will probably continue even in ‘peace’ and could return any time, means there’s also a scramble to find new suppliers. ‘Brazil, Venezuela, Colombia, Argentina and Guyana are building their oil production capacity as the world looks for alternative suppliers,’ the Times says. There’s a country missing from that list, at least potentially.”
And it’s Canada, with its sclerotically self-satisfied government given to grandiose pronouncements that Wells called “the very definition of ‘easier said than done’”, and to minimal accomplishments.
Even David Gelles of the New York Times “Climate Forward”, while warning of lasting disruptions, noticed that:
“the effective shut-off of roughly 15 percent of the world’s oil and gas has disrupted business, agriculture and daily life around the globe and pushed some countries to ration energy. Even if the hundreds of tankers stuck in the Persian Gulf start moving soon, it will take weeks or months for them to reach their destinations. And it will be much longer than that before Gulf nations can fully restore production, after months of fighting left critical infrastructure damaged and supply chains in tatters. So energy prices are likely to remain high for the foreseeable future.”
But he does not comment on what, then, the effective shut-off of roughly 100 percent of the world’s oil and gas, aka Net Zero, would have done. It’s kind of important to the story.
Or not, since he continues blithely:
“Outside of the Middle East, disruptions from the war are pushing some countries to look beyond oil and gas. As we reported this year, spiking energy prices are prompting many developing nations to seek out more renewable power, notably solar. (Many of them are also burning more coal.) As one analyst told my colleague Chico Harlan, ‘the long-run signal is pretty clear: Do everything you can to reduce your dependence on imported petroleum.’”
Now the last bit is fair enough, since one way to reduce your dependence on imported petroleum, we note, is to increase the availability of the domestic stuff. (Or at the very least build pipelines that bypass Hormuz.) But then it’s back to the future with Gelles:
“What that means in practice: The world will get its power wherever it can these days, whether that’s oil and gas from the Middle East or solar panels from China.”
China? Why from China? If they’re so great, why not make them yourself, especially since last time we looked there wasn’t just a long sea route from China to wherever you live unless it’s southeast Asia, Russia or central Asia, there’s also this government in China that’s militant about using trade for geopolitical leverage not mutual enrichment. And trading Teheran for Beijing doesn’t sound that great to us.
