Seppuku
Back in the age of shoguns and samurai, there was a rather bloody way a noble warrior could restore honor for himself or for his family by committing a form of voluntary ritual suicide. What contemporary societies rarely grasp, is that the person in question had to die no matter what. He had to choose between falling into enemy hands (and being tortured — then executed resulting in the loss of his and his family’s honor), or performing this rather painful ritual by himself.
After several decades of magical thinking and self-delusion Europe has now found itself in the same situation. Leaders of this once prosperous peninsula of Eurasia have now decided to severe themselves from Russian fossil fuel supplies: starting with coal in August, then moving on to oil and gas. Lacking its own adequate supplies of energy carriers though this act will effectively self-terminate the EU economy — an act equivalent to a ritual suicide; a desperate attempt to restore the continent’s lost honor.
What the general public do not understand however, that there isn’t (and in fact there never was) a ‘choice’ for Europe in this matter. Once the continent has burned all its reserves of coal, oil and gas — contrary to modern beliefs in green wizardry — the only way left for it is a slow decline into poverty. The noble warrior has to embrace afterlife no matter what.
Fossil fuels worldwide would go away much sooner than people expect. In fact we are now past peak oil production since the end of 2018, and while COVID has caused a major slump, extraction has started to fall a year before the pandemic broke loose and failed to recover ever since. The economic dislocation caused by lockdowns have just exacerbated the underlying problem of depletion: the gradual decline in affordable fossil fuel production, replaced by uneconomic and ultimately just as hopelessly finite modes of getting oil and natural gas.
While it was easy to blame Russia for not providing enough gas to fill up European storage in the second half of 2021, not recognizing that it was due to increased domestic and Chinese demand in the face of limited supply is somewhat disturbing. Yes, Putin has weaponized gas supplies, but in an oh-so abundant world with unlimited options for substitution (as touted by economists) he couldn’t done that so. The world is in complete denial of the fact that the rising cost of energy carriers is not due to COVID or an otherwise cruel invasion and war, but due to the fossil fuel industry’s inability to keep up with demand growth and facing the very real prospect of decline.
On the other hand, ‘renewables’ are not a cure-all panacea. They can help in some cases, but certainly cannot provide all the services and raw materials provided by the use of coal, oil and gas. Long distance transport, mining, logging, food production, metallurgy, or even a stable electric grid continues to hinge upon the availability of cheap fossil fuels. And when both ends of the same continent, Eurasia, build ‘renewables’ at an unprecedented rate gas demand for load balancing soars. Grid operators are forced to fire up methane burning power plants to replace coal and nuclear, as well as to fill in the gaps in the evenings, on windless weeks, or on overcast short winter days — soaking up all LNG shipments from around the world and most of the pipeline gas supplied by Russia. Hence the price increase.
Meanwhile European natural gas production continues to fall due to a perfectly natural cause: physical depletion of once rich reserves in the North Sea. Not an ideal situation. Before you ask: Russia is not immune to this phenomenon either. They have passed their own peak oil production and had to resort to fracking to keep a semblance of stability — the same ‘miracle’ solution seen in the US. (So long as you define ‘miracle’ as an extraordinary expensive, water, sand and energy intensive method of drilling fast depleting wells at an ever increasing pace). Natural gas production, being intimately tied to oil extraction, faces the same fate all over the world, only with a few years of delay.
This is what economists of the better informed branch call: supply shock — a type of predicament immune to monetary wizardry, interest rate hikes and government spending. No nation on Earth can ‘un-burn’ its once rich reserves of fossil fuels — which now spend the best part of their days heating up the planet in the form of CO2 and methane. The damage has been done and the battle against depletion and climate change lost.
The rising cost of fossil fuel extraction, diminished discoveries of new reserves and volatile prices have deterred investment in the past decade globally (with the US shale patch and Canadian tar sands being probably the only exceptions). There is little or no spare supply capacity left: we have reached the end of growth. In prior oil shocks (also resulting in economic stagnation and rising prices, called stagflation) there were major untapped reserves under Saudi sand and at the shores of Alaska. Both of them are now well past their heydays with no replacement on the horizon.
We are entering uncharted territory here.
The inflation we see today is thus a sign of an economic reorganization on a truly gargantuan scale. The fact that a single inflation number of 5, 6, 7 or whatever % hides is that not all goods and services suffer the same fate. Food, metals (an indispensable ingredient to all ‘renewables’ and batteries), shipping and fuels lead the pack for the same reason: these are the most energy intensive parts of the economy. They are all using the same inputs: ever more unaffordable fossil fuels. This disproportionate rise in energy costs shifts customer spending from trips abroad and a new car every three years to heating and filling up the fridge.
While it might be true, that high prices invoke supply, replacing once cheap pipeline gas with LNG shipped across the ocean permanently locks in higher costs. More importantly however, against the backdrop of an already problematic global fossil fuel supply, this means actual physical shortages. Long lines at the gas station, then no gas at all — for months. Blackouts, as inherently intermittent ‘renewables’ predictably fail to deliver a stable service (lacking adequate load leveling from natural gas burning power stations). Loss of jobs all across the industry, starting with metallurgy, then car manufacturing. It doesn’t matter if the product is to be powered by batteries or fossil fuels: as both cheap energy (together with cheap metals) and potential buyers with enough money left to spend will dry up like summer rain on hot asphalt.
It is the relative affordability of energy that drives the economy. If the cost of fossil fuels (still providing 85% of our energy) goes up so disproportionally as it can be seen today, it has the potential to topple the entire system. The economy is not about money — contrary to the claims made by priests of the Sacred Order of Monetary Theorists. It is about cheap, affordable, readily expandable and widely usable energy — which much to the detriment to all life on this planet — still means fossil fuels.
The battle for the last remaining reserves of coal oil and gas on Earth for Europe has been lost. Now the only ‘choice’ it was left to make is to slowly wither on the vine, or die a quick — but certainly noble — death. The samurai from the western shores of Eurasia is on his knees, and he has seems to made up his mind.
Other nations are not much luckier either. Europe, despite the green rhetoric, will scrounge fossil fuels from all around the world in its last gasps for air — driving prices for much of the planet into wholly unaffordable ranges. Demand destruction can be expected to switch into overdrive finally putting an end to high prices, together with an old economic world order — and leaving one of its founding member lying dead.
Until next time,
B
This article uses ritual acts of suicide as a metaphor. If you have similar thoughts regarding your own life please seek professional help immediately. There is a raft of organizations ready to aid you worldwide.
