We live in a time lacking in clarity. I meet so many incredibly intelligent and well-spoken people with whom I discuss the world of finance and oil – and then am absolutely gob-smacked by the downright feckless imbeciles who equally clog up the internet and television with their inarticulate and downright stupid opinions. Truth and integrity have never been more in question, and even after the last five years, I’m still astonished by them.
Folks, I’ll get to the energy insight in a moment – but give me a minute here.
I am watching –with tremendous surprise – the incredible resistance that the Ukrainian people are putting up against Putin’s aggression. In the events that have unfolded over the last two weeks, I was convinced that US intelligence was right and Putin was sure to invade, but I was incredibly wrong in both the resistance he has faced in Ukraine and the solidarity and strength the Europeans and the rest of the world has handed Russia, even in the face of critical Russian natural gas supplies.
I had expected, as certainly Putin did, that Ukraine would fall with relative ease as the Crimea had, and Europe, reliant on Russian gas, would make token cries opposing it. Instead, the ex-comedian Zelinskiy, who resisted Trump’s political bullying to find dirt on his political rival, has even more heroically donned a flak jacket and walked around a bombed-out Kyiv daring the Russian tyrant to come and kill him – and inspiring the world with his bravery.
The clowns have become leaders, and our leaders have become clowns.
You could not find a more clear fault line of democracy versus tyranny, of bravery versus cowardice, of good versus evil.
This one is easy – or it should be. Even Putin’s nuclear saber-rattling shouldn’t deter us from the fortitude to stand with Ukraine – and even more, stand with what it stands FOR. It is scary when a tyrant has erred in his calculations, realizes it, and begins to show signs of desperation. This is where Putin is and fuels his desire to turn the Ukraine mistake into a wider macho showdown with the US. Biden won’t fall for it. He’s already put himself in the background, allowing the Europeans (particularly Germany) to take all the credit for sanctions – although he was clearly the director of this consolidated effort.
I am convinced that Biden will go down in history as the most underrated President of all time. He removed us from a 20-year useless war, airlifting 160,000 in the process, vaccinated 170 million Americans, got the first major infrastructure bill passed since Eisenhower, and put NATO back together in time to face this major European challenge.
Oh, and GDP growth is near 6% and the unemployment rate is the lowest it’s been in 30 years. That was in his first year. But I digress.
The photo on top of this newsletter is Berlin – here is a quick video of what was happening this weekend in Prague.
In this country, in contrast, there are powerful folks admiring the ‘genius’ of the murderer, talking of his ‘wonderful’ Ukraine plan, extolling his ‘savvy’ and statesmanship. Others on TV wonder aloud why we shouldn’t all be rooting for the butcher as he walks through Ukraine. This morning, I got a newsletter with the opinion that harsh sanctions would have horrific long-term consequences for Europe and the US, the 2-minute pundit believes that the litmus test for access to the international finance community now will hinge upon having good relations with the US and that the Dollar as a global benchmark is therefore at risk.
What is the matter with these folks? What has happened to them? There should be no equivocating here, no rationalizations, no excuses. There are no “downsides” worthy of examining when halting the actions of a megalomaniac- there should only be solidarity. That is the America I know, the one that stood up to Hitler. Europe has this right, and they have more – much more – to lose.
It should be easy here. Have we lost so much clarity here in the United States that it truly isn’t? This one, if any single example existed, should be so easy to get right.
Ok – back to Energy.
Besides the political and security issues surrounding the Ukraine crisis, Europe now faces an Energy tipping point as well. Their leadership recognizes, correctly, that their reliance upon Russian fossil fuels has directly financed Putin’s aggression in Belarus, Chechniya, the Crimean peninsula, and now – closer to home – Ukraine. Their energy conversations will now center upon how best to take that leverage away from Russia in the future.
There are two obvious choices to be made here – two ways that Europe can decide to go:
They can double down on the development of renewable and nuclear alternatives for Russian oil and natural gas, or they can begin looking for an alternative – Western-held – sources of fossil fuels.
I choose to be an optimist here. Perhaps inside of this crisis in Europe is a fantastic energy opportunity to be had. I have spoken for years – written a book even – on the need for a new US view on energy and the pathway to advocate for a transition that continues to support US jobs and US fossil fuel producers. What seems clear at this moment is that Europe cannot immediately ‘switch on’ renewable supplies to supplant Russian oil and gas – they worked on this for two decades and this was the unfortunate result – a growing economy even more reliant on Russian supplies. They will need the US to support them in this transition effort – both with policy and with fossil fuels, particularly natural gas in the form of LNG, which we still have in abundance.
As with so much, including the resistance against Putin, the United States must play a major role and show the way.
This country needs an energy policy that – first and foremost – stabilizes global oil prices and therefore stabilizes global oil and gas supplies. This is the key to avoiding the sinusoidal waves of gluts and shortages that result in crises like we have seen in Europe this year, as well as the roller coaster expansion and collapse of oil and gas reserves over the last nearly two decades.
We will need the support of the major oil and gas companies to craft this policy, we will need greater controls over our capital markets to ensure its integrity, and we will need a reliable global carbon market to help finance it.
Big asks? You bet. But you couldn’t have a bigger or more important problem to solve here. And in my 35-years of watching energy markets, this is the only way I think it has any possibility of long-term success.
It will require sacrifice, make no mistake – particularly of consumers. Gas prices will need to be higher and stay there. But think of this as our contribution in the war against a tyrant, and a defense of our environment and planet to boot – and maybe $5 a gallon gas isn’t too much to ask with all that on the table. It shouldn’t be, not when you view and cry from the scenes we’re seeing this week in Ukraine.
