Image attributed to Miguel Gonzalez of Hernan Cortes scuttling his fleet off the Veracruz coast. On display at the Naval History Museum in Mexico City

Biden’s Plan that will Drive Energy Prices Sky-High

On new year’s eve 2019, at a town hall meeting in Peterborough, New Hampshire then-candidate Joe Biden fielded a question on the subject of climate change. His response got little if any media attention. But it revealed a plan that would both put our country on a path of economic insecurity and lead to substantially higher energy prices for years to come.

During his rambling response he said…

The third thing we have to do is set down guide rails now. So between the years 2021 and 2030, it is irreversible, the path we have set ourselves on

He was talking about putting the country on an irreversible path toward a renewable energy future. No Plan B, just in case the inevitable unintended consequence rear its ugly head.

So like the Spanish Conquistador Hernán Cortéz who ordered his men to “burn their ships,” as they prepared to invade the Aztecs, Biden is going “all in” on forcing the adoption of renewable energy. 

Here’s why it’s such a bad idea…

Green Energy Really Isn’t Ready for Prime Time

How do I know?

The Biden administration pretty much admits it. An article published on April 5 in the Wall Street Journal laid it out:

Biden administration officials are seeking ways to boost oil imports from Canada, people familiar with the situation say, but with one big caveat—they don’t want to resurrect the Keystone XL pipeline that President Biden effectively killed on his first day in office.

The article shines a light on two facts. First, that fossil fuels are still absolutely necessary in the world today. And second, that Biden is completely committed to eliminating them.

The president is “pipeline-averse” because pipelines are long-term infrastructure that serve on-going business concerns. By rejecting pipelines, he’s basically telling the oil industry, “OK we still need oil — for the moment. But just remember, your days are numbered once we get this green thing up and running.”

In truth, he isn’t really even concerned with higher gas prices…

Their thinking is if gas prices fly high enough, it will accelerate the adoption of electric vehicles and other renewables that much more quickly. The White House said as much: 

…implementing Mr. Biden’s plans to promote use of electric vehicles would save Americans more than $900 a year in gasoline costs, and that his plans to use clean energy to power utilities would tack on an additional $500 a year in savings to consumers and “create millions of good-paying union jobs.”

So why not just press the green issue? Simple…

Green Ain’t Free (It’s Not Even Cheap)

The current bout of inflation is impacting everything across the globe — and that includes the metals and other raw materials that are required to produce renewable energy equipment like solar panels and windmills. For instance:

  • Copper prices are up over 130% since March 2020…
  • European steel prices soared 51% in just three weeks since Russia invaded Ukraine…
  • And Polysilicon, the raw material used in the production of photovoltaic solar cells, is up over 400% since August 2020…

Francis Yared, an energy analyst at Detuschebank, has written that an overt push for renewable energy will create “a negative supply shock that internalizes the climate cost of the production of goods and services. This negative supply shock will be inflationary until technological progress absorbs these costs. That could take years.”

It’s a lose-lose proposition.

President Biden, with his burn the ships attitude will happily let gas prices soar (as long as he can lay blame somewhere else) to make owning a internal combustion car as painful and expensive as possible 

That means higher gas prices forever. 

While an abrupt shift to green energy will ultimately extend the negative supply shock (basically what we’ve been going through post-lockdown) and keep driving prices higher for years to come. 

It would be a simple solution to let the market evolve as it will.

But forcing economic change, as always, forces capital where it doesn’t want to go. And that creates price dislocations that impact us all. 

So food and energy are the two markets facing screaming inflation for the foreseeable future. There’s one more market facing a negative supply shock that could have just as big an impact on everything…

Make the trend your friend,

Bob Byrne
Editor, Streetlight Daily