Bad medicine for gas prices

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DAILY ENERGY NEWS | 05/19/2022

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The Biden administration's answer to high gasoline prices is to buy an EV...

CNBC (5/18/22) reports: "The cost to produce electric vehicles is primed to surge over the next four years, according to a new report, the result of scarcity in key raw materials needed to make EV battery cells. 'The tsunami of demand is coming,' said Sam Jaffe, vice president of battery solutions at E Source, a research firm in Boulder, Colorado. 'I don’t think the battery industry is ready for it.' The price of EV battery cells has declined in recent years as production rose around the world. Battery cells currently cost $128 per kilowatt-hour on average, and by next year could cost around $110 per kilowatt-hour, E Source estimates. But the declines won’t last much beyond that: E Source estimates battery cell prices will surge 22% from 2023 through 2026, peaking at $138 per kilowatt-hour, before they resume a steady decline through 2031— possibly to as low as $90 per kilowatt-hour. The projected spike is the result of growing demand for key raw materials, like lithium, needed to make tens of millions of battery cells, Jaffe said."

"Investors untroubled by green ideology are beginning to give energy a second look in recent months, which is encouraging. But there’s no way to make up for all the investment that didn’t take place over the past few years. We need more refining capacity now, which means we needed more refinery investment five to ten years ago."

– Dominic Pino, National Review

People are sobering up, and It's not lookin' pretty.

Mining.com (5/17/22) reports: "While the movement to an electrified future is already picking up pace, it will be much slower than some of the optimistic projections in the market today, CPM Group founder and MD Jeffrey Christian told an industry audience at the Vancouver resource Investment Conference on May 17. He took silver as a prime example, pointing out that hundreds of millions more silver ounces would need to be produced to keep up with the projected linear magnitude of the industry’s growth. He took silver as a prime example, pointing out that hundreds of millions more silver ounces would need to be produced to keep up with the projected linear magnitude of the industry’s growth. The impact of solar power growth on silver because of the green revolution is meaningful. 'Solar power has gone from virtually no silver use 25 years ago to about 120 million oz. a year now, and that’s going to continue to grow,' he said. He said he has seen many 'overly optimistic expectations of how fast the green revolution can come...'The IEA and everybody else who’s sober knows that those governments have not lived up to their Paris Accord commitments, and really have no ability to live up to those. It’s an idealistic scenario. It’s just not there now,' he said."

It now pays to haul coal to Newcastle. (except that takes diesel, and it's through the roof!)

The solution to a great many of the world's problems is for the government to simply get out of the way of problem solvers.

Discourse Magazine (5/19/22) op-ed: "Images of Russia’s war on Ukraine and of Olaf Scholz’s grimacing visage have heightened popular attention to energy security. Germany, whose chancellorship Scholz attained in December, finds itself wedged firmly betwixt rock and hard place, with Russian fuels representing the former and energy poverty the latter. Though Scholz himself is not to blame, Germany’s body politic certainly bears culpability, having opted for an ill-conceived Energiewende ('energy transition') that has forsworn low-emissions nuclear energy and reliable domestic coal and yielded dangerous dependence on Russian imports. Americans view with trepidation Germany’s self-inflicted woes, worrying that our own choices could beget similar results...The best route to securing abundant energy isn’t by blocking exports or legislating that we 'Buy American.' It is to expand the scope of economic freedom so that palatable domestic options are available to the firms and households that are wary of geopolitical risk and related ethical quandaries. Enormous potential for new domestic energy production goes unrealized due to stifling public policies. Along with erecting barriers to fossil fuel shipments, energy restrictionists have stymied the developments needed to spur industrial-scale alternative energy solutions. "

Energy Markets

WTI Crude Oil: ↑ $110.15
Natural Gas: ↑ $8.44
Gasoline: ↑ $4.58

Diesel: ↑ $5.57
Heating Oil: ↑ $372.62
Brent Crude Oil: ↑ $110.32
US Rig Count: ↑ 789

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