Thought of the Day - October 6 2021 - Lack of Energy?

No, I am not talking about the symptoms of COVID. I am talking about a growing supply chain issue. Remember toilet paper, remember masks, remember desks ( Thought of the Day - August 25 - COVID Shortages ), remember 2x4s, the F150 chip debacle, and most recently bacon? Child's play when compared to what could be coming.

Last year, we chuckled as people who had bought oil but could not take delivery, as they had no place to store it, instead of getting a refund had to pay an additional penalty ( Thought of the Day - April 22 - Gas Is Now Free ). Well, now the tables have turned. A barrel of oil, that for a while was free to any takers, is now back up to $80.

You see as COVID shutdown programs are being eased there is now a shortage of energy. In part, this is caused by supply chain problems. For example, when refineries cut back production, it takes a fair while to bring that capacity back online. The problem is not only a lack of energy it is that much of this energy is stranded. The lack of infrastructure development (pipelines, rail/road, tanker capacity, LNG facilities etc.) over the past years is partially to blame. Also, it is a vicious circle, when you have no fuel you also can't transport the stuff. Thus the lack of available energy is also adding to its own supply chain problem.

One of the main theatres, in which this is currently playing out, is Europe. You have probably seen headlines concerning people camping out at petrol stations in the UK to be first in line for the next tanker, and that Boris is considering mobilizing the army to drive said tankers. You might have heard that Putin has a big decision to make, to "give in" to additional natural gas demands from the EU or keep his people warm this winter.

China, whose industrial output is the envy of the COVID-world, has a severe shortage of coal and natural gas. Now we have largely put the US' Huawei extradition debacle behind us, China will buy all the coal and LNG we can provide; remember per-capita we are the largest coal producer in the world and too bad our LNG projects are not yet completed.

This summer the railway line down the road was expanded with a third track. Here is a recent pic I took. This extra capacity is already full, carrying: coal, petroleum products, and oh, all the other goods that also have supply chain issues.

Here in Canada, this energy shortage will be a mixed blessing. It will keep commodity energy prices high, helping our export revenues, but will hit our general population as yet another addition to our growing inflation tax.

But of course, who will really suffer? As usual, it will be the third world. Those without the means, the clout, or the forethought, to tackle this global issue head-on. They will feel the squeeze the most.

The challenge is that in this era of "popularist politics", Canada is not the only country with a lack of energy policy leadership. Many countries have cut back on traditional energy investment without a plan for replacement.

Guess what is the newest in-demand job across North America, two years running? A Wind Turbine Technician. Maybe, rather than just handing out 'Trudeau-Bucks', we should get people 'working on the railroad', or retraining for the energy sectors of the future - after all you can't spread COVID working at the top of a tower.

Cheers

Cliff