Far From Grüven - Doomberg
Countries that bungle their energy policies can’t have nice things. Among the luxuries that eventually slip out of reach are abundance, good-paying jobs, and an effective military. That leaders in the West fail to understand this—even in the face of a steady parade of evidence that points plainly to the axiomatic nature of the statement—is one of the great mysteries of our time. Energy need not be produced domestically, but unless it can be accessed cheaply and reliably from somewhere, the fate of that economy is sealed and no amount of politicking or bureaucratic reshuffling can overcome that fact.
Part of the blame for the confusion can be apportioned to a modern economic theory that fails to differentiate energy and other critical commodities in its appraisal of gross domestic product (GDP). As our friend Luke Gromen put it in his weekly Tree Rings newsletter last Friday, “ Commodity and weapons production GDP is not the same as GDP created by flipping houses back and forth to each other at ever higher prices and writing financial derivatives to bet on those housing prices.”
Consider China, a country with little in the way of oil or natural gas but an abundance of domestic coal. As described in our August Doom Zoom presentation to Pro Tier members, Year of the Dragon: China Through the Lens of Energy, the country’s leaders have played their energy cards to perfection. In addition to pursuing an all-of-the-above strategy that includes a massive buildout of hydroelectric dams, nuclear power plants, refineries, and natural gas pipelines that connect to its neighbors, China has been happy to nod along with the West’s rejection of coal while gorging on the stuff itself. If you ever wondered how China came to make almost everything you buy, here’s your answer:
