Videos Of The Week
Another Appearance From Tom Luongo & A Breakdown On Energy With Simon Michaux
I have been trying to catch up this week on videos on a couple of different topics. As always, I have been focused on energy, commodities, and current events. I try to be a dispassionate observer of what is going on in the world, and I try to remove my emotions to form opinions objectively instead of subjectively. Today’s first video cover geopolitics and the global chessboard, and the second one is a deep dive on energy where expert Simon Michaux breaks down the future he sees for energy, society, and everything else.
Wall Street For Main Street w/ Tom Luongo
You guys might be getting tired of Tom Luongo if you are watching all of these videos, but he has been an invaluable resource for my understanding of geopolitics, the different power centers of the financial system, and central bank policy. I’m a satisfied subscriber of his Gold, Goats n’ Guns newsletter, and I would encourage readers that are interested in these topics to subscribe to his service. Since this was his first time on Wall Street for Main Street, he lays out his thesis from start to finish on central bank policy, the geopolitical links that he sees, and some of the conflict going on behind the scenes.
Wall Street For Main Street w/ Tom Luongo
Finding Value Finance w/ Simon Michaux
If you want a deep dive on some of the history of energy and what is going on today, this video is right up your alley. While some people have been calling for peak oil for a long time, I don’t think that’s the right way to think about. I do think that we have hit peak cheap oil. That’s why I think the oil price, while volatile, is heading higher over the long-term. Instead of rambling on too much describing the video, I included a quote below that stuck out to me when I was watching it.
120 years ago, when they first discovered oil, you dug a relatively small hole in the ground and it would spurt up into the air under pressure and you would catch it in a bucket, and it was such high quality that you could almost put it straight in your car, or on your salad and eat it. It was very, very high quality and there was a lot of it. So, for the last century, we have chewed through all those really high grade deposits. Now, we’ve got the very, very poor quality deposits left. Think of like tar sands in Canada. Or you have to go to deepwater, 3 or 4 kilometers deep, and then you have to drill into the crust, really deep, many kilometers. And then you have to get it up, and once you get the oil up, there is more processing steps because it’s full of sulphur and sodium.
So more effort has to go into get the oil, and get products to the market, and we’ve used technology to actually increase economies of scale against that sliding scale of quality. Around 2005, we had a peak in conventionally produced oil. What saved the day was an innovation in horizontal drilling, which allowed the fracking industry to be viable. Precision horizontal drilling with fracking became the new source of oil, and from about 2008 onwards, that became the new expansion. Most expansion of oil has actually happened in the tight oil sector…. Since 2011, all new oil expansion has come from tight oil, which is by definition very poor quality…. So we are forcing an inefficiency into the oil market that didn’t exist before. What I’m saying there is we have got an enormous amount of oil. Lots and lots of oil is still left. We’re not running out of oil. What we have run out of is cheap oil.
- Simon Michaux
I've heard that $5 trillion argument before and it's like the guys that accuse big pharma of being able to make each tablet for 20 cents. They're ignoring the R&D costs. We'll the German government subsidies of the last few decades led to both innovation and economies of scale. Renewables are now 1/4 the cost of nuclear per unit to the grid. That doesn't include firming - but as I E shown from the Australian industrial group that doesn't matter. They Overbuild. So remember it's not just renewables replacing fossil fuels one to one, it's also electrification of everything HALVING the total energy they must replace! Get your superannuation out of fossil fuels ASAP as they're going to be left with a bunch of stranded assets
Peak oil is pretty obvious - but the head of the IEA actually says we'll hit peak DEMAND before we hit the peak of geological supply issues. Also, avoid Simon Michaux. He's a bit of a slippery fellow with data. He argues against renewable energy for the alt-right. Hits people new to alternative energy with such an avalanche of misinformation that they cannot see the forest for the trees.
EG: Simon Michaux’s whole argument rests on a straw-man - that renewables need a month of storage by the *fanciest* batteries to get through winter. This multiplies the minerals factors of hundreds to thousands. But “winter” is not the blind-spot Michaux pretends it is. Engineers have a plan.
OVERBUILD RENEWABLES TO REDUCE STORAGE! Renewables are now 1/4 the cost of nuclear – so we can Overbuild them. Build enough to sail through winter with each city having 2 days storage, and then you have excess “Super-Power” to do other work the rest of the year. I list a number of experts.
https://eclipsenow.wordpress.com/overbuild/
They say Australia can probably get away with a 200% renewable grid - that’s just for our electricity needs. For industrial transport, heating, mining, smelting and refining I reference an Australian industrial think-tank worth a THIRD of our Stock Market! They plan to Overbuild 2020’s electricity grid by 5 TIMES to produce all the products they want to sell and export.
Also, some energy experts don't even call it Overbuild - they just model how much will do the job and talk about extra powerlines. As this energy expert writes:
"Next Michaux overstates the requirement for batteries by at least an order of magnitude by ignoring a few things. First, he ignores the massive HVDC interconnects being built around the world that deflate grid storage requirements. HVDC is the new pipeline (and LNG tanker and oil tanker) after all."
https://cleantechnica.com/2023/07/04/how-many-things-must-one-analyst-get-wrong-in-order-to-proclaim-a-convenient-decarbonization-minerals-shortage/
USE PLAINER MATERIALS: all sectors of the energy transition are pivoting away from fancy rare earths and scarcer metals. Why? It’s the cost! Consider the plainer options. Solar is silicon (27% of the earth’s crust!) and aluminium (8%). Wind is aluminium and iron ore (5%) and fibreglass (glass fibres and recyclable plastic polymers.) Aluminium can replace copper in almost all copper's roles - yes even in EV's and it's 8%! 1200 TIMES more abundant than copper. It recycles well. We will never run out. https://www.shapesbyhydro.com/en/material-properties/how-we-can-substitute-aluminium-for-copper-in-the-green-transition/ Also, all the copper ever mined is still on earth (apart from a few satellites.) We can recycle and reprioritise that.
GRID BATTERIES can be made from sodium (sea salt) which is safer and 30% cheaper than lithium. Even if we DID need a month of storage (we don’t!) - Sodium could supply it a million times over.
This saves all our lithium for EV’s. They’re going LFP - Lithium Iron Phosphate. The USGS says there is 89 MILLION tons of lithium. At 6 kg per EV that’s 14 BILLION cars - we only 1.4 billion. Also - we keep finding lithium faster than we’re mining it. In Sept 2023 America just discovered the worlds’ single largest lithium reserves.
USE PHES! Pumped-Hydro Electricity Storage hardly uses any metal for the enormous energy stored. The best PHES sites are 400 to 800 metres. Michaux’s 1000 page “Report” said sites are too limited! But it had no source! Here it is. https://youtu.be/LBw2OVWdWIQ?t=1342 Are you ready? He tells us the WORLD doesn’t have enough pumped hydro sites because of a viability study about PHES in SINGAPORE! Pancake flat Singapore - their highest hill is only 15 metres? Gee - I wonder why THEY had trouble finding enough sites!? (Facepalm!) This is an example of how far outside his comfort zone he is working. When this was pointed out to him he replied that the amount of water that was required was an extra 50% of the annual fresh water we use. But it’s a once-off fill - and we’ll be doing it over 25 years. So even if the quantity is true it’s only an extra 2% per year over that period. THEN the top-up rate due to evaporation is only 10% of the water we CURRENTLY throw at cooling thermal stations like coal. We’ll end up saving water! https://theconversation.com/batteries-get-hyped-but-pumped-hydro-provides-the-vast-majority-of-long-term-energy-storage-essential-for-renewable-power-heres-how-it-works-174446
Instead watch Australia’s Professor Andrew Blakers who won the Queen Elizabeth Prize for Engineering (the Nobel prize for engineers). Here’s his global tour of pumped-hydro storage. http://youtu.be/_Lk3elu3zf4?t=986 The world has 100 TIMES the pumped hydro we need! https://re100.eng.anu.edu.au/global/
Michaux’s OWN PAPER shows we have MORE than enough minerals if we just subtract his ridiculous “Fancy batteries that ate the world”. Check “Michaux Sans Batteries”. https://eclipsenow.wordpress.com/michaux
Michaux is just a former peak oil doomer trying to justify his doomer manifesto. Avoid him.