Rising gas prices are just the start – OpEd – Eurasia Review


By Doug French*

As Americans cringe angrily as they fill up their gas tanks, the very first The United States Presidential Special Envoy for Climate said, “This year we need to deliver on those pledges and that means we need to decarbonize the electricity sector five times faster than we are doing now. We must deploy renewable energies five times faster than currently. We need to switch to electric vehicles about 20 times faster than we are now. And we need to move faster to a resilient Net Zero economy. »

If reality was out of his reach before, John Kerry surely lost touch when he married condiment colossus Heinz in 1995. He talks like he’s ordering lunch from his harassed house staff, ” Faster, Jeeves. Can’t you hurry up and decarbonize already? All of this service to the country has left Kerry clueless about physics, let alone economics.

“And to say that is to expose a fearful level of ignorance,” the green cartoon chicken known as Doomberg told Tony Greer on Real Vision: “In fact, what our politicians would think despite all the evidence before them, that somehow we can wave a magic wand and accelerate the adoption of electric vehicles by a factor of 20 when we don’t have enough lithium or nickel or cobalt to even support the current growth trajectory. It’s just crazy. Where will the diesel come from to extract all the cobalt, nickel and lithium we will need?”

Global oil and liquid fuel consumption will average around 100 million barrels per day this year, an increase of 2.2 million barrels per day from 2021. Yet Chevron CEO Mike Wirth, stresses: “there has not been a refinery built in this country since the 1970s.” More worryingly, he predicts: “Personally, I do not believe that there will be another new oil refinery in this country .

An increase in the price of a good should be a signal for entrepreneurs to produce more of that product. In a free market, that would be the case. But, as Mr. Wirth explains, “at all levels of the system, the policy of our government is to reduce demand, and so it is very difficult in a company where investments have a payment period of one year. decade or more”. “And the declared policy of the government for a long time has been to reduce the demand for [petroleum] some products.”

In his book omnipotent governmentLudwig von Mises explained: “The dangerous fact is that if the government is hindered in its efforts to make a commodity cheaper by intervention, it certainly has the power to make it more expensive.

So Joe Biden is talking about lowering prices at the pumps as gas prices hit new highs (and the summer driving season hasn’t arrived yet).

Doomberg puts a finer point on the lack of refineries: “The last major refinery to be built in the United States was in 1977. And by major, I mean over 100,000 barrels per day. There have been small ones, and specialized ones here and there. But overall, because of environmental pressure, the United States hasn’t built a new large-scale refinery in 40 years, 45 years, which is pretty incredible.

And that’s not the worst. “But also, what happened simultaneously was mostly on the east coast and the west coast, big surprise, a lot of refineries were shut down because of environmental pressure,” Doomberg said. With those shutdowns, the net effect was about 17.8 million barrels per day in the 1980s. And it’s 18 million barrels per day today. “When you look at the GDP growth that has exploded over this period, you can see where the constraints are,” Doomberg said.

According to Doomberg, “The world is running out of diesel. And if we run out of diesel, it’s really serious. The consequence of the destruction of demand will be a severe economic depression. »

As Mises pointed out, one government intervention inevitably leads to another, and Doomberg predicts that “the Biden administration [will] push for a ban on diesel exports, which will be much easier to sell politically. This will hurt refiners because international diesel prices are much higher for the 650,000 barrels they export per day.

The environmental mob, now armed with government power, may believe they are doing God’s work, but as Mises pointed out: “The effect of his interference is that people are prevented from using their knowledge and capacities, their work and their material means of production. how they would get the highest returns and meet their needs as much as possible. Such interference makes people poorer and less satisfied.

When you fill up, that’s how you feel, “poorer and less satisfied”.

*About the Author: Douglas French is President Emeritus of the Mises Institute, author of First speculative bubbles and money supply increasesand author of Walk Away: The Rise and Fall of the Ownership Myth. He obtained his master’s degree in economics at UNLV, studying with both Professor Murray Rothbard and Professor Hans-Hermann Hoppe.

Source: This article was published by the MISES Institute


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