Exhibit One, April 2018: Prime Minister Jacinda Ardern has banned future offshore oil and gas exploration in New Zealand. “We’re protecting industry and protecting future generations from climate change,” said Ardern. “This is a responsible step, which provides certainty for businesses and communities that rely on fossil fuels.”
Exhibit Two, May 2020: The Government will borrow an extra $50 billion in the June 2021 fiscal year.
You may well wonder what the connection is between these two that prompted this article? It is this statement, I read recently, which makes one pause and think.
All debt is borrowed against future supplies of affordable hydrocarbons (oil, coal and natural gas).
Charles Smith
Really? Yes, really!
How does one repay debt? With future income.
What produces future income? Economic activity.
What allows economic activity? Affordable energy supply.
So all future income is simply a claim on future energy.
Which energy source gives the best bang-for-buck? Hydrocarbons.
But aren’t we transitioning to cheap green renewable energy sources? The ideologues would assure us we are, but the reality is that “renewable” solar and wind are anything but cheap or free. The panels and turbines have a relatively short life of 15-25 years and then need to be replaced.
And, as we know, these energy sources are also intermittent. “No problem,” we are told, “buy batteries.” But batteries have a finite life as well, so more replacement.
Where do we source the raw materials for batteries, solar panels and wind turbines? From mines; and the large mining machines required to mine the required minerals are powered by hydrocarbons.
One cannot make solar panels without a large amount of coal.
With reduced supplies of hydrocarbons, energy prices will inevitably rise. Will your income rise at the same rate once Ardern, Shaw, Carr et al turn off the oil and gas taps?
Let’s pop over to Utopia for a short visit. All oil and gas is gone. What was the cumulative cost to society of replacing all the internal combustion vehicles with electric or hydrogen vehicles?
What is the true environmental cost of the replacement battery supply for all these vehicles?
How are they making all the plastic components for these new vehicles, since plastic is a by-product of the hydrocarbon refining process? The articles describing creating plastic from electricity are hard to find on the web, so the fact that New Zealand has plenty of hydro-power and growing supplies of geothermally generated electricity is not much help.
Likewise it is hard to create jet fuel from electricity, but since we are already hearing the cry of “Stay home to save the planet”, there may be no need for jet fuel. (Yeah/Nah.)
So back in the real world, while Robertson and his mates at the Reserve Bank can print money any time they like, they cannot print energy nor make it more affordable.
Food, water and other life essentials require energy for creation, collection and distribution and if that energy gets more expensive as supply constraints kick in, then it will not really matter how many zeros are added to the money.
Until now, this game has been played with little harm; energy was cheap and plentiful so money could be printed (borrowed as a claim on the future) without too many ill effects. But never before have we seen the staggering rate of expansion of the money supply at a time when the supplies of cheap abundant energy are being threatened by the Left loon lobby.
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