In Brief: Hot air and false optimism
3 weeks ago In Brief 1,799 Views
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Windfall hot air
Even now, the political class is treating rising energy prices as temporary – just like they thought inflation was temporary this time last year. They would like you to believe that Russia – which has continued to supply oil and gas (which were expressly excluded from sanctions) to Europe to this day – is responsible for rising prices which began long before the invasion of Ukraine. The reality though, is that increasing energy prices are structural and there is no relief in sight.
Peak oil – the point when industrial civilisation was extracting more oil from the ground than it had ever done before… and would ever do again, occurred in November 2018. The slow decline in output through 2019 was already causing an economic slowdown even before governments around the world over-reacted to the Covid. The over-reaction though, rapidly accelerated the process of decline, causing production to be lost as wells were shut down – some of them permanently – when economic activity crashed during the first round of lockdowns. And when the economy finally reopened, the sudden and massive increase in demand could not be matched by supply, and prices shot up into the stratosphere. The same went for gas, whose use in balancing modern electricity grids and as a feedstock for fertiliser, has left us looking desperately short of both food and power.
In 2022, the world is having to get by on four million barrels of oil a day less than we were consuming prior to the pandemic:
https://consciousnessofsheep.co.uk/2022/05/25/in-brief-hot-air-and-false-optimism/
