RE: Energy Crisis11 May 2022 11:24
Goehring & Rozencwajg
Opening paragraphs from the Q4 2021 Market Commentary.
‘The Distortions of Cheap Energy’
‘We are making one of the largest mal-investments ever—possibly only rivaled by the one made by banks in mortgage-backed securities 15 years ago that ultimately produced the 2008 global banking crisis and financial panic.
Over the last decade billions of dollars have been diverted from traditional energy invest ment to so-called “transition technologies,” notably wind, solar, and lithium-ion- powered electric vehicles. These technologies represent the worst of all possible worlds: not only do they generate inferior economic returns, but they are unable to address our carbon reduction needs.
Over the last decade billions of dollars have been diverted from traditional energy invest- ment to so-called “transition technologies,” notably wind, solar, and lithium-ion- powered electric vehicles. These technologies represent the worst of all possible worlds: not only do they generate inferior economic returns, but they are unable to address our carbon reduction needs.
The analysis here is some of the most important work we have done in our 30-plus years of energy investing. It builds on several previous letters in which we discussed the energy efficiency of various renewable technologies and how those renewables unfavorably compare to hydrocarbon-produced energy. Please consider what we are about to discuss with an open mind; our conclusions are original, contrarian, and extremely important. as they are likely to result in massive unintended consequences, some of which have already emerged and are painfully obvious. For example, we believe the huge investments made in renewables over the last decade are responsible for the energy crisis that is gripping Europe today. Only a month ago natural gas prices in Europe hit $50 /mmbtu—or $300 per barrels in oil terms.’
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