The Carbon Bubble is Bursting

I admit it. I felt sorry for those poor, duped oil, gas and coal company investors back during the early part of 2015. Many of these guys, fed a constant stream of bad information from the financial news sources, at the time were still enraptured by the notion that fossil fuel stocks were then cheap and that the situation was nothing more than some kind of golden buying opportunity.

Now, six months later, 41 US oil and gas companies have gone bankrupt, powerful major oil companies like Exxon and BP are in the range of 20-40 percent losses in stock price year-on-year, most gas companies have seen even more severe losses, and most coal companies have been reduced to junk stock status (see Arch Coal declares bankruptcy). TransCanada, the parent company of the canceled Keystone XL Pipeline, is challenging United States sovereignty with its 15 billion dollar lawsuit. But it’s questionable if the company will even exist long enough to see the results of its NAFTA-based legal challenge.

Arch Coal stock price

(Arch Coal, one of the largest coal companies in the US, filed for bankruptcy today. The company’s stock price has plunged from 300 dollars per share in 2011 to 58 cents per share today. A total loss to investors of 99.88 percent. The dirtiest burning fossil fuel — coal energy faces headwinds from increasing competition by renewable energy, stronger national policies aimed at reducing carbon emissions, as well as a strong push for fossil fuel divestment by environmentalists and those who have increasing concerns about the impact of human-forced climate change. Image source: CNN Money.)

It’s as if All of Fossil Fuels Were Solyndra

It’s like the curse of Solyndra has been revisited on the entire fossil fuel industry. But while the renewable energy industry is undergoing its biggest boom ever, the fossil fuel industry’s own bad investments, bad performance, bad decisions, and overall bad impacts on pretty much everything from the increasingly wrecked global climate, to the Deepwater Horizon blowout, to Oklahoma fracking earthquakes, to the debacle that is the Porter Ranch gas leak, are sinking it even faster than its carbon emissions are melting the Arctic sea ice.

Back during 2013 and 2014 we warned that continued investment in oil, gas and coal companies was a really bad idea — one that probably represented the worst malinvestment in the history of finance. A carbon bubble that was worse even than the bad real estate investments that led up to the financial collapse of 2008. Trillions-upon-trillions of dollars encouraged by more than 500 billion dollars worth of subsidy support globally from the world’s governments each year. And to what end? Producing fuels which, contrary to wind and solar, increase in price the more you use them even as they wreck the very natural wealth that is the basis for healthy economic systems the world over.

And now the markets are being driven to the brink by just such a terrible malinvestment. Now major fossil fuel supporters are crying crocodile tears to their friends in Congress — asking them to shore up these big, polluting, malinvesting fossil fuel special interests. In other other words — the fossil fuel industry has now gone panhandling to the US government for a bailout after a risky and speculative oil and gas production binge. The fruits of drill-baby-drill thinking resulting in both economic and environmental collapse.

The Cheap Energy Age and Saudi Arabia’s Use of the Cheap Oil Lever

How did this all happen? Well, much talk-talk has appropriately centered around the topic of Saudia Arabia. But, as with many issues covered in the news today, the current conversation over Saudi’s move to turn on the oil taps lacks the full and appropriate context. It’s probably true that Saudi Arabia opened up the spigots in an effort to tamp down competition from US fracking interests and from other high-price but high volume competitors overseas. An issue that short-sighted conservatives and Wall Street vs Main-Street blow-hards like Trump have used to drum up much misplaced rage.

BLOG-Trump-Probably-Hates-This-News-About-Wind-Energy-0722-2015

(Fossil fuel cheerleaders like Donald Trump seem both outraged and perplexed by the fall in fossil fuel fortunes even as wind, solar and electric vehicles make new gains. Image source: Donald Trump Probably Hates This Wind Energy News.)

But the story often not told is the one where wind energy, solar energy, and efficiencies have now become an increasingly competitive player in the energy sector. If one considers jobs growth alone, a single US renewable energy sector — solar — added 35,000 jobs during 2015 growing to more than 208,000. By comparison, the entire US oil and gas extraction industry composed just 199,000 jobs at the start of 2015 and by its end had contracted by 14,000 to 185,000. This point is worth reconsidering for a few moments — just one renewable energy industry now supports more US jobs than the entirety of all the oil and gas extraction interests combined.

What’s going on in the US is part of a growing global trend. In many regions now, wind and solar are competitive with natural gas and coal as well as with diesel electric generation. In total, more than 106 gigawatts of new renewable energy capacity from wind and solar alone was likely installed globally over the course of 2015 (see wind capacity forecast here and solar capacity forecast here). Since over 3 million barrels of oil go to diesel electricity generation around the world, this new generation directly competes with that source. In addition, natural gas, which is fungible with oil in many markets, is also being increasingly crowded out by cheap renewables. With coal also under price pressure, the world was flooded with a glut — not only of oil, but of cheap energy sources of all kinds.

Perhaps even more of a threat to the fossil fuel industry was a growing shift within the auto industry toward renewable and high fuel efficiency vehicles. This shift was driven in large part by major countries and influential regions like the US, EU, and China providing ever-higher fuel efficiency standards for their vehicle fleets. The tip of the spear to this effort, of course, is in the growing expansion of electrical vehicle access. And despite ever-lower oil prices around the world, electric vehicle sales continue along at a rather substantial rate of growth — jumping from 320,000 total global EV sales during 2014 to 447,000 total EV sales during 2015. Marking the first time a major oil glut has not dramatically reduced the rate of electric vehicle sales growth.

In this global context of both fossil fuel glut and ramping renewable energy adoption, it was impossible for Saudi Arabia to defend the price of oil without losing much of its market share. And with so many new energy systems coming to the fore, it was all-too-likely that the kingdom would eventually see that market share whittled away entirely. Saudi’s only recourse to defend its markets was to open the pumps and flood the world with cheap crude. But as it did, the move shifted the burden of fossil fuel market erosion back to the highest price, and often dirtiest, producers. In other words — fracking, tar sands and the various marginal mines and fields around the world.

Deepwater Horizon

(Major disasters like the Deepwater Horizon oil spill and the Porter Ranch gas leak have aided in the fall of fossil fuel industry fortunes. But the pervasive and growing concern over human-forced climate change is likely to have an even broader impact. Image source: NOAA.)

So who’s really to blame? In all honesty, those currently seeking the bailout by Congress deserve at least as much of it as the Saudis. They were the ones who over-invested in oil, gas and coal and who failed to see a world in which even heavily subsidized fossil fuels couldn’t compete on the margins with emerging renewable energy and efficiencies. And they were the same fools who also denied climate change. A generation-spanning crisis that is now about to make the 2015 blow to the fossil fuel industry look like the proverbial tempest in a tea-pot.

COP 21’s Ongoing Influence

To this point, we should also be very clear that human-forced climate change is starting to have a serious impact on global policy-making. The storms, floods, droughts, sea level rise, glacial decline, ocean health decline, and mass displacements of human beings and wildlife related to climate change just keep getting worse and worse. So pressure on policy-makers from all corners for comprehensive actions to reduce the harm caused by human forced climate change is growing quite intense.

It is due to this increasingly urgent call to action that the recent stated COP 21 goals were the strongest yet coming from any climate conference. And though they are not yet enough to provide much hope for avoiding a very dangerous and deadly 2 C warming this Century, the goals, if applied, do shift the world solidly away from the ridiculously catastrophic business as usual fossil fuel burning path.

In total, the conference committed to a 40 percent reduction in global greenhouse gas emissions from 1990 levels by 2030. Further emissions reductions commitments continue on through 2050 at 75 percent. The conference also aimed to increase the renewable energy share of the global energy market to 32 percent by 2030 even as it aimed to reduce total energy consumption by 50 percent by 2050. Adding in even a mild carbon pricing or carbon tax regime and what this means is that the fossil fuel industry is looking at decades of recession and retraction. And since most scientists are now saying that COP21 isn’t enough, that more stringent policy measures will be needed to rapidly reduce carbon emissions, it appears that the harmful practice of burning fossil fuels is being set on a path toward ending this Century.

So once again, as we warned before — the carbon bubble is bursting. The end of the age of fossil fuels is at hand. Fossil fuel investor — beware.

Links:

Arch Coal Declares Bankruptcy

TransCanada Sues US For 15 Billion Dollars

Go Fossil Fuel Free

41 US Oil and Gas Companies Have Gone Bankrupt

CNN Money

The Oklahoma Fracking Earthquakes

The Porter Ranch Gas Leak

Bankrupt Fossil Fuel Industry Seeks Bailout From Congress

59 Gigawatts of New Wind Energy Capacity for 2015

57 Gigawatts of New Solar Energy Capacity for 2015

Electric Vehicles See Major Sales Growth Through 2015

NOAA

COP 21 Success or Failure?

National Solar Jobs Census

Bureau of Labor Statistics — Oil and Gas Extraction Jobs

Hat tip to Greg

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7.8% Unemployment and Falling: So Why are Republicans Selling Another Economic Decline?

Confidence. It’s a funny game, isn’t it? And the most prominent con-game going on right now is this endless selling of economic decline.

‘The economy is bad,’ we hear. ‘The recovery wasn’t fast enough,’ they say. ‘Obama failed’ — and that’s the real message they want you to believe. They want you to believe that you’re miserable, things are terrible, and that the person to blame is Obama. They want you to believe that things are as bad as … well… as bad as four years ago.

Perhaps the clearest illustration of this illusory sales pitch was when its very premise was threatened by a drop to 7.8 percent unemployment, putting a cherry on top of the strongest sustained jobs growth since 1984.

These rosey facts led GOP magnates like Rick Satelli and Jack Welch to assert there was a ‘government conspiracy’ to fudge the numbers. And since employment figures are as closely guarded as US nuclear weapons codes, these assertions were quickly proven to be what they were: preposterous.

It’s a chancy game, this selling of recession. Because the sales pitch itself creates a certain amount of damage. If people believe it, it suppresses economic confidence. It prevents people from buying. It may prevent some from seeking a job they would otherwise qualify for. It creates a kind of sense of malaise so poisonous to a post-recession expansion.

Yet this selling of recession hasn’t only been verbal. It has been legislative. Every bill that would have actually resulted in jobs creation has been blocked by republicans in Congress for the past two years.

Benjamin Feinblum summed up how these blockages keep happening in his recent report after the Republicans blocked a jobs bill aimed at helping veterans coming home from war find work:

The method Republicans have used to block all jobs legislation in the past two years is the same. A jobs bill comes up, it is filled with positive things for the economy, Republicans filibuster debate, this shields them from having to make floor speeches on why they don’t want tax breaks for small businesses… etc.

Why? Well, if the economy recovers too strongly before an election, Republicans will lose power.

Futhermore, republicans have engaged in a direct assault on America’s best hope for a new growth industry — alternative energy. At every turn we hear attacks on solar, wind, renewables and, most of all on the Chevy Volt. This has even caused some defections in the ranks of republicans. For example, Bob Lutz has been deriding republican-led attacks on the Volt ever since the vehicle launched in December of 2010:

Yesterday Forbes published an op-ed piece from GM’s former CEO, Bob Lutz defending the Chevy Volt and calling on certain right wing media outlets to focus on telling the truth, rather than concocting lies. One wonders after reading his piece whether the Republican Party believes in that Communist strategy that the ends justify the means? — Torque News

We know republicans would have preferred to let GM go bankrupt, as Romney once advised. Now they attack an American innovation marvel. One that is leading an electric vehicle charge that could break the back of fossil fuel dependence and spur the American economy to new growth all in one go. Just last month, nearly 6000 electric vehicles sold in the US. Given these numbers, it appears that EVs are taking off even faster than their predecessor, the hybrid. Meanwhile, US alternative energy production has doubled since Obama took office.

Sadly, the sales pitch of ‘recession’ continues. In just this past week’s debate Mitt Romney chided Obama for investing 90 Billion in green energy. That 90 billion included the stunning success the Volt is now becoming, in spite of a right-wing media assault. That 90 billion included a doubling of US renewable energy production. That 90 billion helped to support hundreds of thousands of jobs in places like Ohio, Wisconsin, Michigan, Florida, Texas and New Jersey. That 90 billion helped to indirectly support 8.5 million jobs that result from alternative energy — a number three times higher than that supported by fossil fuels for each dollar spent (Business Week).

Yet all Romney could say for this emerging American revolution? Solyndra. The cherry picking of one failed company in a wave of overall success. I suppose Romney could have thought of better use for that 90 Billion? Funneling it into a 5 trillion dollar tax cut for the rich, perhaps? Or, maybe investing it in ‘nation building’ overseas, as he mentioned recently in a foreign policy speech at VMI. But, under Obama, that money, instead has been invested in nation building at home.

7.8 percent unemployment and falling… Stock market doubles. It looks like a little nation building is making things better. Far better than when Bush left office at 7.8 percent unemployment and rising at the rate of 750,000 jobs lost each and every month.

So what’s Romney’s big beef with building up America for once? Why keep bashing her?

I don’t know if republicans, overall, are good or bad people. I suspect that they are good, just misled by misinformation and succumbing to that all-too-human failure of believing that the ends justify the means. But, just like Mitt Romney, they seem to be decent folk employed in the bad work of short-selling America. And it is this bad work that is so very unhelpful and destructive. The defending of tax cuts that aid in the shipping of jobs overseas. The defending of the dominance of the oil, gas and coal industry, which staunches future energy development, jobs growth, and prevents the tackling of the farmland-destroying menace that is climate change.

What this reveals is that republicans have taken the cynical approach of hurting America in the hopes that it will aid them in the regaining of power. This ‘conquer America’ strategy through a systematic damage to America’s prospects would be something expected from a foreign power seeking to undermine America’s status for the advancement of its own. But it is a terrible betrayal for such a policy to be leveled against America by one of its own political parties. One that prides itself on its patriotism.

For republicans, it is best to learn that, sometimes, it is better to lose for the right reasons than to win for the wrong ones. For winning the wrong way often results in a short term gain at the expense of a later consignment to the dust-bin of history — not to mention the terrible damage that occurs along the way.

Message to Romney and republicans: stop doing bad work. Stop selling America short. Stop selling recession in the midst of recovery. Stop assaulting the new industries that will create the new jobs. Stop attacking American innovations like the Volt. Stop holding back legislation that helps people find work and helps build jobs. Stop making it harder on farmers and the people who tend to the engines of democracy — the hard-working people of America. Stop hurting us. Stop hurting America.

And to Americans tired of this endless selling of recession, the sandbagging of US jobs progress, the destruction of emerging US industries, and the failed policies that caused our terrible recession in the first place: you have both the ability and the opportunity to remove these republicans in Congress and to prevent them from holding the White House again this November. Who knows, perhaps the time is right for a voter revolution against a harmful party, that acts so much like a foreign power, occupying our golden shores.

Links:

http://www.torquenews.com/1075/bob-lutz-defends-volt-calls-republicans-be-truthful

http://www.theatlanticwire.com/business/2012/10/unemployment-plummets-78/57640/

http://www.policymic.com/articles/11510/senate-republicans-block-another-jobs-bill-face-backlash-from-american-public

Mitt Romney’s Enormous Lie On Green Energy Reveals Assault On Key US Industry

(Imagine Mitt Romney holding a match under this image)

It’s really no news that republicans hate US alternative energy. Across the country over the past few years they’ve done everything a political party can do to fight renewables. They’ve blocked legislation, they’ve waged verbal and political campaigns against the new technologies, and they’ve jiggered laws and legislation in an attempt to dissuade people from adopting alternative energy sources at every turn. The Volt, as just one example, has turned into a political whipping boy of the right blamed and smeared with each new success. Solyndra, in another example, is a strawman that has ridden shotgun with Mitt Romney all over the campaign trail.

Republicans, clearly divested of their fake jobs interest, have targeted an industry that directly supports hundreds of thousands of American jobs, 3 times the average number of jobs per dollar spent when compared to fossil fuels, and indirectly supports over 8.5 million jobs. But, it’s pretty clear, given republicans’ actual policies, removed from rhetoric, that they don’t care one whit about these jobs or any other so long as they’ve got a political axe to grind.

Enter yesterday’s presidential debates when Mitt Romney, telling a lie a minute, suddenly opened all guns on alternative energy in this off-color and patently false statement:

“And these [clean energy] businesses, many of them have gone out of business, I think about half of them, of the ones have been invested in, have gone out of business.”

This statement couldn’t be further from the truth. Not only has renewable energy production doubled since Obama began his term in 2009, of the 34 alternative energy companies having received government loans through the stimulus program, only 3 are now in bankruptcy. Nine percent does not make half. But since when did arithmetic ever bother Mitt once he’d gotten onto the whopper roll?

Romney’s false claim goes further than even its blatant and gross exaggeration would indicate. It creates an impression that alternative energy in the US is an abject failure. An implication which couldn’t be further from the truth. And with new US wind installations outpacing every other form of new energy except the, soon to go bust, natural gas, Romney has decided to level a vicious political assault against a sector that is critical to current US energy security as well as economic growth.

We all know that republicans like Romney believe that more drilling can power the entire US and achieve energy independence all in one go. It can’t. The costs for the new fuels are too high, the rate of consumption is too great, and the rate of overall depletion is too high. The republican push for reliance on these depleting fuels would only set the US for another bubble and bust. Even now, many natural gas companies are financially struggling due to the climbing costs of fractured shale production. On the side of oil, fracked extraction of that resource requires prices higher than $90 per barrel to remain profitable. A high price Romney smugly blames on Obama even though it is a simple reality of the market force of depletion acting on the fossil energy sources Romney wants us to be reliant on.

Yet these internal dynamics don’t even take into account the dramatic and growing impact of fossil fuel emissions on climate change. Nor do they consider that the cost of renewable energy, year over year, just keeps going down.

Just this year, another 20% of sea ice was lost in the Arctic. At the current rate of decline, ice-free summers will be seen in the Arctic within this decade. The impacts of this event are twofold — ever more extreme and prolonged extreme weather conditions in the northern hemisphere and enhanced melt in Greenland as it loses its insulating barrier of sea ice. But Mitt Romney doesn’t believe in climate change, remember?

Also this year, solar energy prices fell by over 65%. Now that’s change we can believe in. And as Mitt so snippetly noted, oil prices are high on average overall. Yet Mitt wants to bet the farm and the country, for that matter, on an increasingly expensive and difficult to extract resource.

Romney’s assault on the legitimacy of renewable energy is not only an assault on increasingly less expensive energy and on dealing responsibly with climate change, it is an assault on the American dream. Imagine if Romney’s false vision of half US alternative energy industries going bankrupt came true. Imagine all the lost jobs and livelihoods. Imagine all the failed innovations. Imagine how far back both the US and the world will be pushed if that dark vision becomes reality.

Perhaps Mitt Romney wasn’t lying entirely when he made this statement after all. Perhaps he was instead telegraphing his own plan to drive half of US alternative energy industries into bankruptcy even as he pushes for greater dependence on the dirty dangerous and depleting oil, gas, and coal. It’s really funny how neurotic people with bad intentions tend to project in this way. So we have to wonder, was Mitt foreshadowing the result of a Romney presidency?

Perhaps Mitt Romney’s wish for alternatives is as it was with GM:

“Let them go bankrupt.”

Considering Mitt profited so much from American bankruptcies over the course of his career, I suppose he’d like that. Who knows, maybe his equity firms could still get a part of that action. US middle class alternative energy jobs going to China for more Romney bucks, anyone?

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