- 12 June 2020
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All that has happened, is Russia has shown the EU, who's your daddyI'll avoid politics and simply say that from a purely technical perspective, any energy source can work reliably if it's designed and built to do so and likewise they all fail if under built relative to demand.
People often take the issue far too "religiously" - they all work if done well and they all fail if done poorly.
Yes, the smartest money has known this for a very long time.WPL up 25 % in a month. I'll keep holding though. The US S&P Energy 500 index is up 45 %, while our index is up by just just 11 %.
Could be a fair while before gas ( and oil for that matter) goes the way of the dodo.
Energy transitions by their very nature take a very long time.Yes, the smartest money has known this for a very long time.
There's a fantastic documentary called "pump" that you can find here:Energy transitions by their very nature take a very long time.
It's one of the few industries where you can today discuss 2030 and politely correct anyone who suggests that's "long term". To someone investing their money in shares it might be fairly considered a long term but to anyone looking at the physical side 9 years is nothing when you're dealing with assets that have a lifecycle measured in decades or even centuries.
Coal, oil and gas aren't going away tomorrow.
As for nuclear that depends on governments.....
So it seems that clock's time expired yesterday:https://www.bloomberg.com/news/arti...reak-not-slowing-down-despite-6-week-lockdown
"Sydney cases not slowing despite 6 week lockdown"
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As I said before, this genie isn't going to be put back in the bottle. I suspect the new clock on this is going to be how long before they just give up like the U.K did?
Adding to that, the time varies considerably.The ONLY solution is a supply increase which is not a simple/easy/quick thing to do at the moment.
People will have to get used to higher food prices, the boss of Kraft Heinz has told the BBC.
And in many cases, restarting a well, a stopped mine now flooded, an oil rig now static is not always possible quickly especially as we are in a supply crisis with chips in shortage which could prevent buying just one critical elementAdding to that, the time varies considerably.
Bringing an existing drilled but uncompleted oil or gas well into production where supporting infrastructure (pipelines etc) already exists is pretty quick.
Putting a coal mine that's been on care and maintenance back into production or recommissioning a power station that's been sitting idle can be done in a few months normally or somewhat faster if there's a real panic to get it going.
But at the other extreme, well to go and discover a new oil field and bring it into any serious level of production or to build a major nuclear power station from scratch, well depending on location that can easily end up taking more than a decade.
With that in mind I note two things:
First is the rig count in the US which is back up to 532 from the latest data I can find online. That's about half the level of 2018 but more than double the low point in 2020. So it's heading in the right direction but still a long way short of running flat out.
Second is that the number of drilled uncompleted (DUC) wells is coming down quite sharply. So in short, the low hanging fruit is being picked to get production happening quickly but ultimately that's unsustainable, you can't keep completing more than you're drilling forever. See here: https://www.eia.gov/todayinenergy/detail.php?id=49456
Same could be said for most places. There's some movement, some things are happening, but it's fairly modest and there's no stampede thus far.
A lot will also depend on who owns it.And in many cases, restarting a well, a stopped mine now flooded, an oil rig now static is not always possible quickly especially as we are in a supply crisis with chips in shortage which could prevent buying just one critical element
Yeah there was a great peter schiff interview with precisely this. He basically said that he didn't see used cars dropping in price because new cards are now going to be so much more expensive. If used is a percentage of new and new is higher, there's your inflation even in the used market.More inflation coming through, this time food:
Note that it says "will have to get used to it" which implies it's not "transitory".
I expect most other inflation will likewise not be transitory. Once the prices are up, they won't go back down no matter what the central banks tell us.