Worldwide Energy Crisis

[Humphrey Bogart]

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www.ft.com

I'm surprised this hasn't been talked about on this site yet.

1. Gas shortage in the UK
2. Chinese Power Blackouts and Manufacturing Decline
3. Supply Chain Issues

I have been playing a contrarian game since COVID began and have said all along that lockdowns and ignoring the economic aspects of the pandemic would worse damage to us long term than the virus.

People told me I was crazy when I said Oil would reach $100.00 a barrel again within a year or two last year.

I'm doubling down on that bet and having seen the state of the global shipping industry first hand, I think we are in for a very hard winter.

 

[Colin Parkinson]

There is huge amounts of energy reserves scattered around the world, it's just accessing them or willing to use them.

 

[Humphrey Bogart]

There is huge amounts of energy reserves scattered around the world, it's just accessing them or willing to use them.

This is the kicker. Europe's problem is entirely their own making. They embarked on ambitious Green Energy projects that were driven by 'optimistic' projections of how much energy they would produce, while also disbanding Nuclear and Legacy Coal capacity.

Sound familiar? (Cough Ontario Cough). Russia, their major gas supplier, who has been punished by them incessantly now has them by the neck and can set gas supply to whatever they think they wish.

Likewise, COVID travel restrictions have hurt the global shipping industry immensely. When I was overseas, I had heard stories from Pilots who told me there were merchant crews who hadn't left their ships in over a year. Most of the global shipping industry is crewed by Philippinos and Indians who work on a contractual basis. My understanding is a large number have chosen not to renew contracts as the harsh conditions and chaotic travel restrictions have made the job unbearable.

Shipping workers warn of 'global transport systems collapse'

In an open letter on Wednesday, the workers groups warned that fragmented and inconsistent pandemic restrictions around the world have thrown global shipping into chaos.

www.dailymail.co.uk

 

[Colin Parkinson]

My friend who runs the launches to the ships in Vancouver harbour posted this picture of a "meal". One ship they budgeted $7.63 per day per man for food.

 

[Humphrey Bogart]

My friend who runs the launches to the ships in Vancouver harbour posted this picture of a "meal". One ship they budgeted $7.63 per day per man for food.

The Navy Budgets just over $12.00 a day for food. The food got very bad when I was in the Middle East and Asia. I would honestly rather eat an MRE.

 

[SeaKingTacco]

Subscribe to read

www.ft.com

I'm surprised this hasn't been talked about on this site yet.

1. Gas shortage in the UK
2. Chinese Power Blackouts and Manufacturing Decline
3. Supply Chain Issues

I have been playing a contrarian game since COVID began and have said all along that lockdowns and ignoring the economic aspects of the pandemic would worse damage to us long term than the virus.

People told me I was crazy when I said Oil would reach $100.00 a barrel again within a year or two last year.

I'm doubling down on that bet and having seen the state of the global shipping industry first hand, I think we are in for a very hard winter.

Wait until the Trudeau Liberals ban the oil sands.

Large numbers of Canadians will either starve or freeze to death. Good times.

 

[Navy_Pete]

To be fair, the UK's entire supply chain is in trouble because of a lack of drivers, and a lot of that is a combination of COVID and Brexit. They broke away from the single market, didn't do anything to make sure customs ran smoothly, and got surprised when most of their drivers from EU countries went back home and refuse to do hauls there, and then there aren't enough drivers left.

They had drivers sitting around for a few weeks in the UK side trapped on the highway on the way to the ports because they couldn't clear customs to leave, with zero actual infrastructure (parking lots, bathrooms etc). People were bringing them food and whatnot because they were quite literally stuck on the side of the highway.

 

[Kirkhill]

It ain't just the UK looking for drivers neither.

A Trucking Crisis Has the U.S. Looking for More Drivers Abroad

A shortage of truckers across the U.S. has become so severe that companies are trying to bring in drivers from abroad like seemingly never before.

www.bloomberg.com

The trucking problem has two main origins -

1 old geezers retiring and youngsters not filling in
2 Covid disrupted supply and distribution

And the energy ain't just a UK thing, as Humphrey rightly points out.

Its one thing to promote alternatives and efficiency. I heartily approve.
Its another thing to promote a panic and have people abandon viable options before the alternates are mature.

Coal and Gas can keep us going for quite a while longer - and they can be made cleaner. In the meantime we can be assured of maintaining life's necessities. Like fizzy Cokes and light beers.

 

[Brad Sallows]

Its one thing to promote alternatives and efficiency.

Sure, but the set of proponents and the set of people most adversely affected don't overlap much.

 

[Navy_Pete]

I think the thing people are realizing with COVID is that the 'just in time' supply chain concept is effective when it works, but is extremely fragile. Having it global, and not having any kind of stockpiles for a buffer means that you are extremely sensitive to any disruption, and something 100 steps down the line will ripple all the way through.

People have been talking about getting a hold of their supply chains for years, but the BS with 'maximizing shareholder equities' became a race to the bottom, and a lot of deregulation on things like wages to truckers (making new people not want to come in), consolidation of the rail lines into monopolies (that then cut the workforce to increase profit). International shipping can be pretty brutal on the crews at the best of times, suspect a lot of people will jump out of there as they have been stuck on their ships for most of the pandemic, and there have been more than a few crews stuck in port somewhere not being paid.

The entire stockmarket concept is about infinite growth, which isn't sustainable, and a lot of these booming profits in the 80s/90s made these large companies that make stuff really vulnerable to supply chain shocks by building them into a house of cards. Unless companies valuation starts to include things like resilience and flexibility will just continue, and get much worse as climate change makes parts of the planet unliveable.

 

[Kirkhill]

I think the thing people are realizing with COVID is that the 'just in time' supply chain concept is effective when it works, but is extremely fragile. Having it global, and not having any kind of stockpiles for a buffer means that you are extremely sensitive to any disruption, and something 100 steps down the line will ripple all the way through.

People have been talking about getting a hold of their supply chains for years, but the BS with 'maximizing shareholder equities' became a race to the bottom, and a lot of deregulation on things like wages to truckers (making new people not want to come in), consolidation of the rail lines into monopolies (that then cut the workforce to increase profit). International shipping can be pretty brutal on the crews at the best of times, suspect a lot of people will jump out of there as they have been stuck on their ships for most of the pandemic, and there have been more than a few crews stuck in port somewhere not being paid.

The entire stockmarket concept is about infinite growth, which isn't sustainable, and a lot of these booming profits in the 80s/90s made these large companies that make stuff really vulnerable to supply chain shocks by building them into a house of cards. Unless companies valuation starts to include things like resilience and flexibility will just continue, and get much worse as climate change makes parts of the planet unliveable.

I agreed with you right up until the very last assertion.

Yes. Parts of the planet are becoming unliveable. Again.

But. Other parts are becoming liveable. Again.

1.7 to 2 million years since we came to grips with fire and made it work for us. About the same time we figured out how to sharpen a stone (probably making a spark in the process).

In that time the ice has advanced and retreated at least a dozen times and every 23,000 years or so the Sahara has shifted from grass and lakes to desert while the Amazon has shifted in counter-cycle from dry grass land to rain forest.

And we're still here. And with little historical evidence of central planners and bureaucrats.

 

[NavyShooter]

Interesting....

Some data points I've seen on an anecdotal basis:

-there are hundreds of locomotives parked in the southern US getting only basic maintenance done to maintain them as functional. They are not moving materiel.
-there are line-ups of container ships at shipping piers around the world, mostly US ports though - as they wait days and weeks to offload. This has impacted machine tool delivery in the US, and consumer commodities.
-internal production within China has been disrupted by some of their internal lockdowns - I just cancelled an order for an item that, a year ago, was regularly stocked - it was first delayed by two weeks, then another 12 days just to get to warehouse, and so I cancelled the order and got refunded my money (waiting for that process to finalize, but it seems to be happening.)

Anecdotal evidence is just that...tales and lies and stories....usually stuff you used to hear around the table at the mess. The problem is, there's youtube video of the trains, and you can check out the line-ups in anchorages on marinetraffic dot com.

Yes, the world will continue to turn, the sun will rise and set, and there's considerable basis of evidence that this will continue...for a very long time.

However.

There is also evidence of supply chain disruption, and one of the rumbles that concerned me most is that there are tales of problems with the US Mail. When the mail stops being sacrosanct and becomes unreliable...we are headed for bad times.

 

[Humphrey Bogart]

I think the thing people are realizing with COVID is that the 'just in time' supply chain concept is effective when it works, but is extremely fragile. Having it global, and not having any kind of stockpiles for a buffer means that you are extremely sensitive to any disruption, and something 100 steps down the line will ripple all the way through.

People have been talking about getting a hold of their supply chains for years, but the BS with 'maximizing shareholder equities' became a race to the bottom, and a lot of deregulation on things like wages to truckers (making new people not want to come in), consolidation of the rail lines into monopolies (that then cut the workforce to increase profit). International shipping can be pretty brutal on the crews at the best of times, suspect a lot of people will jump out of there as they have been stuck on their ships for most of the pandemic, and there have been more than a few crews stuck in port somewhere not being paid.

The entire stockmarket concept is about infinite growth, which isn't sustainable, and a lot of these booming profits in the 80s/90s made these large companies that make stuff really vulnerable to supply chain shocks by building them into a house of cards. Unless companies valuation starts to include things like resilience and flexibility will just continue, and get much worse as climate change makes parts of the planet unliveable.

This is 100% the result of low interest rates and cheap money. We've been in the longest Bull market in recorded history as a result of fiscal policies that came about after the Great Recession.

Due to this access to cheap money, investing has really tilted towards growth as opposed to value. Many companies have seen the success of FAAMG and have tried to replicate that by marketing themselves as having endless growth potential.

Uber, Nikola, Evergrande, etc.

Uber is one of the least successful large companies on the planet and has lost bucketloads of money along the way in a fiercely competitive industry. Uber has lost more than $27 BILLION over the last 4 years alone. Believers in infinite growth will tell you it's all part of the plan towards global domination. More pragmatic people will tell you that eventually you gotta start showing us the money and your ability to make it as opposed to spend it.

David Olive: What is wrong with Uber? Everything

The ride sharing delivery service has too much competition and cannot make a profit. It helped create and legitimize the gig-economy underclass and accounts for a significant increase in vehicles on the road, writes David Olive

www.thestar.com

People have been ignoring actual market fundamentals like P/E and P/B for years, along with profit. I do believe it's going to change though and very quickly.

You are correct that we are seeing just how vulnerable the global supply chain is.

Another issue is Government policy. Government's have been gifting money in the form of tax credits and subsidies to certain industries while punishing others for ideological reasons.

The energy crunch in Europe is a direct consequence of Government intervention in the market. Ontario's rising hydro rates were a direct result of Government intervention in the market. The lack of competitiveness of Canadian Oil & Gas is a direct result of Government intervention in the market.

 

[Kirkhill]

US Energy shortage. And two years ago they were flooding the world with fracced products.

Consumers facing high energy costs as winter quickly approaches - Washington Examiner

Homeowners in the United States might be in for a costly winter. Oil and natural gas prices continue to climb higher as supply struggles to keep up with demand, which will only increase as the temperatures begin to drop across the country and heaters begin to be switched on in houses. The price...

www.washingtonexaminer.com

US Supply Chain problems. - Port backlogs in NY and LA.

Why Thanksgiving and Christmas will be MORE expensive this year

Video shot by DailyMail.com shows the scale of the problem with the country's supply chains, as double the average number of ships are awaiting unloading in New York harbor.

www.dailymail.co.uk

 

[Brad Sallows]

Many aspects of how we live are fragile. We improve our lives by making something more efficient so we can redirect resources to something new. But efficient things are less tolerant of destabilizing influences, so by nature more fragile. A city is remarkably fragile, but we haven't recently tried turning off the power and water and food deliveries for a couple of weeks to see what happens.

Stock markets are not "about infinite growth", they're about investment of capital in shares of profitable (or potentially profitable) enterprises. A profitable enterprise doesn't have to grow. Regardless, while infinite growth is obviously physically impossible given the limitations of our reach, productivity (and thus profitability) increases - even small ones - are, for practical purposes, not limited yet.

Deregulation, destabilization, disruption, etc of whatever is established are motivators for increasing efficiency (productivity), and thus improving our circumstances. They are not entirely malign. We are where we are because our predecessors worked through creative destruction.

The assumption that investors don't price in things like resilience and flexibility is invalid. People who put their capital at risk should be expected to do more thinking, and a better job of it, than any number of people in government, think tanks, or university faculty clubs.

 

[daftandbarmy]

My friend who runs the launches to the ships in Vancouver harbour posted this picture of a "meal". One ship they budgeted $7.63 per day per man for food.

 

[Kirkhill]

On the subject of energy - apparently Britain is building wind farms faster then the grid can handle them. Red tape is being blamed but I think it is equally as likely that the grid can't handle the variable supply from the farms.

Inside Sunak’s plan to free Britain’s electricity grid from a tangle of red tape

Many renewable energy projects vital for net zero are held up by bureaucracy and delays

www.telegraph.co.uk

That article led with this picture.




Something about the colouring got me to thinking about this picture.



How do you convert the top picture into the bottom picture?
Cut the lines connecting the turbines to the grid.
Every time the wind blows you will start poaching lobsters.

The electricity generated will turn the wind turbines into immersion heaters and the water will turn into a heat sink. The heat can then be handled like any other mass of potential energy. It can be drawn on as geothermal energy on demand or as a hydro-electric cascade. The energy supply is stable and constant. The generators can be turned on, on demand.

And if you want to go one step further....



Turn these into heat sinks and steam accumulators. Stick the wind powered immersion heaters down the wells. Abandoned wells filled with sea water can be pressurised by heat and turned into accumulators that can be used to power steam turbines on demand. A more expensive solution would be to heat active oil wells. The heating would increase the rate of extraction but the well would be turned into a geothermal heat sink with the oil as the transmission fluid. The heat in the oil could be recovered at the surface in a geothermal plant of the type used in Reykjavik's Blue Lagoon.

This is fun....

 

[SeaKingTacco]

Go do the math on the energy required to bring 1 litre of water to a boil from 15C.

Now, multiply that by several trillion….

 

[KevinB]

Go do the math on the energy required to bring 1 litre of water to a boil from 15C.

Now, multiply that by several trillion….

Nuclear power laughs at your puny requirements.

 

[Good2Golf]

Nuclear power laughs at your puny requirements.

Да! In Canada, CANDU does you!