The economy has tanked.
We are all in our homes, scared out of our minds.
But there are blessings amid the ruins.
The air is cleaner. The water is cleaner. It is quieter. Animals have come out of hiding around the world. People have re-learned the value of family. Science matters again. Community matters again.
There were pictures posted, early in April, of Venice with water you could see through, of LA without smog. Those were retouched. Things aren’t that good.
Still, they’re immeasurably better than they were.
The climate crisis doesn’t have to destroy that progress. Unless we have a death wish.
Here’s the problem. Many people do have a death wish. Many people don’t care if everyone dies, so long as they’re among the last survivors.
Donald Trump feels that way. Many of his “mullah” supporters feel that way, hoping the rapture sends everyone else to hell. So, too, with many of his “moolah” supporters, who think their money will protect them from the revolution.
Oil states were built on this nonsense, and their lives are now on the line. They’re making unprecedented deals to cut production in the short run in hopes of obtaining a price that will let them come back in the long run.
The question of “who’s winning” the oil war dominates the oil patch. Is it Russia, with its low “lifting” costs and willingness to let its people starve? Could it be Saudi Arabia, with an absolutist ruler jailing every rival in sight? Is it Texas, which can go bankrupt, then get new capital when profits become possible? Star Wars began with a trade dispute, too.
In truth they’re all losing. The most valuable commodity in the oil patch these days is an empty storage tank. The industry could run out of storage by June unless there are even-deeper cuts than now contemplated. We just paid $1.19/gallon for gas here in Atlanta. No one makes money at that price.
As I wrote last year, this is just the first step:
The fall of oil will be as sudden, as catastrophic, indeed as violent as its rise has been. Autocrats don’t take threats to power lying down. Revolutions are messy, and the winners usually find themselves surrounded by rubble. Imagine a Muslim World that can’t rely on fossil fuels to keep its people quiet. Imagine a Russia that can’t feed its army. If you want to see the future, look at Venezuela. That’s what it looks like.
Right now, there are great efforts being made, led by the White House, to prevent this. It may be the most popular policy Trump has left. And here’s the thing. The policy must fail, just as the President must fail. Oil prices will collapse, production will be shut in, and then prices will skyrocket.
This is the opportunity renewable energy has been waiting for. There are whole new generations of gear ready for production. There are wind turbines that can be deployed on floating platforms. There are solar cells that can be made with new materials. There are storage technologies that only need capital to be deployed. Wind power and solar power, even with storage, now cost less to create than oil or natural gas.
This is where capital needs to go. We can’t bail out the oil patch. We must not, if your kids are to have air to breathe and water to drink.
Some of this is already priced into the market. Lots of people are complaining about the market rising even while the economic damage spreads. But it’s not all stupid. Tesla is now worth more than GM, Ford, and Chrysler combined. That’s because it dominates in battery technology and has proven it can scale electric car production. Anyone who wants to compete tomorrow must follow its lead. The CAFÉ standards Trump vetoed recently are meaningless. Electric cars are simpler to design and easier to build.
There is a political dimension here. Voters in the oil patch will be madder than Kentucky coal miners when they learn their way of life is over. They will fight this with everything they have. The economic dislocation resulting from the Fall of Oil will be severe, thanks mainly to Trump. As with so many other things, we were headed away from this disaster in 2016. Now we’re going into it with full steam, flags flying.
Before you even think of giving an inch to these people, I want you to go outside. At least open a window. Inhale. That’s what you’re risking if we can’t take this opportunity to win the War Against Oil once and for all.
