Free Energy and Free the Economy

Even at 4 or 5 bucks a gallon, gasoline is still the cheapest, safest, most portable, and plentiful BTU “bang for the buck” energy source ever known to mankind.

Why is it that nothing seems to turn the key in our economic engine? This President and his band of merry economic advisors have been furiously manning the handle of the Keynesian pump, the same as “Zimbabwe” Ben Bernanke under Obama sloshed drums of ink into the Fed printing presses – and yet the economy is still wheezing like a ’73 Chrysler with a dying battery.

We have sold the future of our children to China for debt like a drunk sells his last drop of blood for just one more drink of Mad Dog 20/20. Congressional Democrats can’t be bothered to care about the economy because they think President Trump is Han Solo and they are the Imperial trash compactor (at least they go the trash part right).

Besides, there might be one person out there who still believes transgenderism is a fad. How can $6 a gallon gas be more important than that?

What’s wrong? Why is the economy not moving forward? Why are businesses shutting down for lack of workers when, in the words of President Cognitive Decline, we have the best economy in the world…the world…the world.

It is nothing new, I said this during the Obama administration - all of it can be explained in two words – energy policy.

Many would say that it is the lack thereof but that isn’t true. As with so many things this current administration does, an energy policy exists, it is just a policy of destruction of domestic energy sources.

That’s why Biden killed Keystone XL right off the bat.

The most significant hurdle our economy must overcome is the dual threat of high costs and the lack of fuel to feed growth. Rumors have it that diesel is in very short supply on the East Coast. The Wall Street Journal reports today about truckers striking in South Korea over low wages and high fuel costs.

Keynesians believe government involvement in the economy by “incentivizing” consumption via “stimulus” (government) spending is an appropriate way to initiate growth. Part of that is true, an increase in demand does spur consumption and generates economic growth but the caveat is that there must be a reason for the consumer to spend. The big fallacy in the Keynesian proposition is that not all spending is equal, especially if debt is involved. Government creating debt has an impact on the market for leverage by crowding private sector instruments out. If debt must be generated to spend and the net consumption is not greater than the cost of the debt, the net effect on the economy is at best zero and at worst negative…and the availability of leverage to finance growth disappears.

That is the reason sustained growth and recovery simply cannot be generated by short term bursts in government “incentivization” via public works projects that yield no economic impact (repaving roads is nice but it does not provide a benefit as long as the old road is adequate for purpose), cash for clunkers (replacing a serviceable asset with a new, more expensive one only serves to reduce static inventories and the destruction of usable assets drives supply down and prices up in the secondary markets) or direct payments/tax credits to citizens who are cautious or uncertain about the future (they use that to offset current expenses or save the money and reduce spending).

Then how do we increase demand and what has that to do with energy policy?

Energy is the key. Energy in its various forms – electricity, oil, natural gas, and coal – is at the root of every product, process and environment in the world. Things are made from it; it is required to fuel the processes used to create and it is required to make harsh or uncomfortable environments habitable or more comfortable for living beings. Take a basic item, food, as an example: production productivity relies on the fuel for mechanized equipment to cultivate, harvest and process, it requires the use of chemicals – seed coatings, fertilizers, herbicides and insecticides, processing and packaging requires energy to keep factories running, transport it to market and to make the sanitary packaging for mass distribution…it is clear that an increase or decrease in energy costs can have a significant impact on the cost of food.

Even at 4 or 5 bucks a gallon, gasoline is still the cheapest, safest, most portable, and plentiful BTU “bang for the buck” energy source ever known to mankind…and despite what the environmentalists claim, with modern engines, it is also 10 times cleaner and more efficient to use than just 20 years ago.

It is also the most important raw feed stock for the creation of fertilizer, chemicals, plastics and medicines. You can’t make fertilizer or milk jugs out of electricity.

Electricity is a product, not a resource.

The best way to generate sustained demand is to make a product less expensive without sacrificing quality or availability. This means that working on the price side of the equation, as Keynesian economics does, while ignoring the cost side will never produce a sustained recovery or period of growth. Lower costs mean people can afford to buy more at a given level of income and not only will they buy “more” in quantity, but they are also able to buy “more” in relation to the quality as well.

“Drill, baby, drill” is more than just a slogan – it is an economic necessity and an answer to a national security issue – but the entire process needs to be able to keep up. Extraction is just the first step, there is refining and transport (pipelines) to consider. Every link in the chain must do its job.

The most common comment that one hears when there is a push to open new resources is “it is not enough and besides, it will take 10 years to get into production”. The “not enough” argument is ridiculous because there are more and more petroleum reserves being documented with every passing week, the “10 year” statement is based on some truth – Biden has reverted to the Obama permitting process, stretching out approvals from weeks to months - but is any of this really a reason not to restart development?

No it isn’t.

Every day, week, month, or year delay is not a “knock for knock” delay because over time there are changes in regulatory and legislative constraints that get in the way. There is always a “new normal” – what was possible 10 years ago is either far more expensive today or has been made virtually impossible by a changing political climate.

While the Biden administration sits on its collective hands about energy security, abdicating its responsibility to America just as the Democratic controlled Congress did in the years since 2006, the world is not standing still – countries are cutting exports more and more to keep those resources inside their own borders.

I said it back in 2008 – free energy and free the economy. That is still true today. There is nothing that can impact the cost of things faster than cutting the cost of energy.