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Jeremy Warner’s Road To Damascus

January 9, 2022
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By Paul Homewood

 

 

Only a few years ago, Jeremy Warner was writing:

“As a commodity product, oil has to date been quite unusual in that it accommodates both low and high-cost producers. This is largely because supply is deliberately constrained by OPEC and others with an interest in eking out the resource’s income stream for as long as possible. A barrel of oil, it has long been thought, is worth more left in the ground than extracted.

The now exponential growth of renewables threatens to challenge this established orthodoxy. Indeed, BP admits in its analysis that quite a bit of today’s known reserves will end up never extracted – music to the ears of the green lobby. The implications are clear: oil producers should make hay while they still can, even at the cost of a resulting glut that depresses prices. In any case, there may be little point in developing new sources of supply, particularly at high cost.

Rather, oil companies should be slashing their investment to virtually zero and handing the cash back to shareholders – either that or using their superior credit ratings to invest in renewables.”

Now he has seen the light!

 

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For lessons on how to make a bad situation even worse, ask Ed Davey, leader of the Liberal Democrats. He’s just proposed a £5bn “Robin Hood” windfall profits tax on the “robber barons” of the oil and gas industry so as to help pay for fuel bill rebates and ease Britain’s cost of living squeeze.

The trigger for his proposal seems to have been the boss of BP, Bernard Looney. Announcing bumper third-quarter profits a little while back, he rather ill advisedly said his company had become a “cash machine” as a result of soaring oil and gas prices. Sir Ed has quickly given notice of a big withdrawal.

But hold on a moment. Is this the same Ed Davey who as energy secretary from 2012-15 under David Cameron’s coalition government helped lay the ground for the disaster zone, with its myriad market and regulatory failures, that UK energy policy has become? Why yes it is. Politicians seemingly find it easy to forget their past.

I don’t wish to dwell unduly on the Lib Dem leader’s special contribution to today’s shambolic state of affairs; suffice it to say that loading the cost of the Government’s green agenda on to fuel bills, rather than having the guts to do it progressively and upfront through the tax system – which would have been the more logical and equitable approach to incentivising the desired energy transition – is a large part of the mess we are in.

Still, we are where we are, and not content with his part in getting us there, Sir Ed now seems determined to foul things up even more….

If further taxing the North Sea is likely to prove counterproductive, that effectively leaves only UK domiciled oil and gas companies there for the fleecing. Just two of them – BP and Shell – are big enough to make a significant difference. Perhaps Sir Ed hadn’t noticed, but far from being the bad boys of the sector, both of them have got with the programme by leaning over backwards to join the green energy transition stampede. The business case for this transformation is that green energy will take a long time to deliver meaningful returns, if indeed it ever does, but that it can be funded in the meantime from the abundant returns of hydrocarbon runoff.

Whether these strategies make sense from a shareholder value perspective looks rather more questionable. One of those who has come to the view that it does not is Lord Browne of Madingley, BP’s former boss. In an article for Time magazine, he’s joined the growing throng of activist investors calling for a breakup. Browne always was more of a deal maker than an oil man, and having built BP via mergers and acquisitions into the giant it is today, he now presumably hopes to capitalise on the potentially rich pickings of tearing it apart.

Any such take down will be excellent news for private equiteers and other vulture capitalists on the lookout for oil industry roadkill, but it is very unlikely to further the cause of the energy transition so beloved of the likes of Sir Ed. For it is not just prospects for a carbon free future that squeezing BP and Shell dry would harm.

The fact is that for now the world is still overwhelmingly dependent on hydrocarbons for its energy needs. We are going to need the gas and oil these companies produce for a long time to come. Drive the industry offshore if you must, but by reducing Britain to an investment desert, it only makes us even more dependent on outside forces that care little or nothing about the demands of climate change.

https://www.telegraph.co.uk/business/2022/01/08/hammering-big-oil-will-do-nothing-help-fuel-poverty-climate/

22 Comments leave one →
  1. Martin Brumby permalink
    January 9, 2022 6:12 pm

    Paul
    I’m surprised you let Potato Ed Davey off so lightly.

    Please don’t forget that it was this twerp who chose Hinkley Point as the least likely to be successful, the most expensive and (drum roll) the scheme controlled by France & The Chinese Communist Party.
    I have little doubt that the South Korean proposal, if chosen, would now be generating electricity.

    He is also the Secretary of State that imposed ground vibration levels on Fracking so low as to be impossible to meet. As low as naturally occurs, very regularly, and far lower than accepted vibrations from quarrying. He even boasted of having done this whilst working in Ruinable Energy.

    Possibly even more idiotic than Miliband.

    • mikewaite permalink
      January 9, 2022 10:22 pm

      Or possibly very clever, devilishly clever.

  2. Broadlands permalink
    January 9, 2022 6:15 pm

    It is remarkably ironic that those who urge us to move quickly toward renewables fail to grasp that the only truly renewable is ethanol-based biofuels that are 90% fossil fuel. The rest are replaceables after they are broken, leaking and worn out. What this means is that none of them can be manufactured, delivered and put in place (or replaced) without vehicles that use those biofuels for transportation.

    So, yes “the world is still overwhelmingly dependent on hydrocarbons for its energy needs.”

  3. Nicholas Lewis permalink
    January 9, 2022 7:12 pm

    No mainstream media outlet is telling the truth that going green, irrespective of the merits, can’t happen overnight and cutting off fossil fuel exploration and development prematurely is going to cause a resource crunch and drive up the price of fossil fuels. Thus the cost and more importantly the availability of the necessary raw energy to manufacture windmills and solar panels will be insufficient so we end up in the worst of both worlds.

    • Phoenix44 permalink
      January 9, 2022 10:34 pm

      This is a crucial point. Most/all previous technological revolutions have been discrete – you didn’t need the previous technology to make the new one. But these Green “technologies” are largely dependent on fossil fuels and pretty much always will be, not just for energy but for plastics, transport etc. This seems to have passed Carney and the like by. If fossil fuels become scare and expensive, the Green tech won’t happen. So we will have neither the old tech nor the new tech.

      • jimlemaistre permalink
        January 9, 2022 10:56 pm

        Well said . . . I would like to add this . . .

        Wind turbines are the ultimate in embedded costs and environmental destruction. Each weighs 1,688 tons (the equivalent of 23 houses) and contains 1,300 tons of concrete, 295 tons of steel (14.5 % Global CO2 is from concrete and steel), 48 tons of iron, 24 tons of fiberglass, and the hard to extract rare earths neodymium- Boron, praseodymium, and dysprosium. Each blade weighs 81,000 pounds and will last 15 to 20 years, at which time it must be replaced. We cannot recycle used blades. Plus power lines, transmission towers and the 15% lost in transmission . . . OHM’S LAW . . .

  4. mjr permalink
    January 9, 2022 7:13 pm

    Paul – just in case it was missed .. Countryfile tonight – BBC1 – included an “investigation into the cost of renewable energy to our rural homes” . Included interview with some person from the CCC who was spouting off about how heat pumps are 3-4 times more efficient than gas etc etc. Sounded very dodgy to me and needs fact checking as it stank.

    https://www.bbc.co.uk/iplayer/episode/m0013cl3/countryfile-the-cairngorms

    • January 9, 2022 7:28 pm

      Bob Ward, renewables lobby attack dog, was on LBC earlier today (Sun 9/Jan) claiming that wind & solar were getting cheaper. So still lying through his teeth.

      • Tinny permalink
        January 9, 2022 8:48 pm

        He had a letter in today’s Telegraph saying that the answer is more renewables.

      • January 9, 2022 9:24 pm

        I wonder how he sleeps at night.

      • Vernon E permalink
        January 10, 2022 11:05 am

        He’s the guy I posted about last week for his awful interview with Farrage on GB News. He is obviously a leading voice and fanatic in Net Zero politics and he is a Professor in education!! He needs to be stopped.

    • Duker permalink
      January 9, 2022 9:27 pm

      They are very efficient , I have 2 , but dont use them for radiators, as heating the air directly is a quicker room heatup.
      But Im very careful about the temperature I set, only on the very coldest nights going above 20C or 21 which is achieved very quickly ( they arent used when we are out or gone to bed)

  5. jimlemaistre permalink
    January 9, 2022 7:24 pm

    Paul, as always you rattle the cages from which our so called ‘leaders’ spout their policies and expect us all to pay and pay. Every policy initiative in the last 30 years to clean up the environment has had ZERO effect on ‘Global’ pollution. Yes . . . in our own back yards things ‘appear’ to have improved . . . but all we have done is move the problem somewhere else, mostly South East Asia. 25 cities today in China produce 50% of global CO2. 30 years ago China’s global contribution was less than 10%.

    Every environmental policy initiated locally by western governments has failed Globally.

    In our societies environmentalism has been a reign of terror on Unions and good paying jobs. The only production jobs left in the west come from assembling the ‘finished’ goods whose components have all been produced more cheaply and with all the inherent pollution left abroad. Inflation has remained low but our productivity, real productivity that western countries were founded upon are gone thanks to environmental policies at home. Global pollution remains the same, now abroad.

    Bill gates was being interviewed recently and he mentioned Cows and their methane production from their excrement’s. Today in North America there are 70 million cows . . . that is a lot. but pound for pound that is less than the 60 million Buffalos that once roamed the Parries producing methane. OH, and where pray tell would we grow the wheat for pasta or bread if they still roamed from the Yukon to Florida ? Common sense and logic always seem to be absent from ‘The Big Green Propaganda Machine’.

    Furthermore, EVERY discussion about Electricity as a replacement for Fossil Fuels fails the test of Ohm’s Law. Resistance = line loss as HEAT. At least 28% of the energy produced is lost to resistance to charge an Electric Car. So when we calculate demand based on consumption . . . that number is 28% below what must be produced. Electric car manufacturers tell you what is drawn from the battery . . . NOT . . . how much electricity was produced to charge that battery !

    https://www.academia.edu/62574334/Tesla_Versus_Toyota_Camry

    Worst of all, however Paul, is the truth that is missing from the ‘Green Agenda’ on the CO2 input costs that are never discussed for Wind Turbines, Solar Panels or Hydro Dams and the energy required to build towers for transmission lines or the environmental damage Globally from extracting and producing the rare earth’s that go into these ‘Green Machines’. We can not brush these facts under the rug like somehow they will magically go away ! All energy production poisons Planet Earth ! Electricity has ALWAYS been an extremely inefficient form of energy . . . Again OHM’s Law. The ‘Clean Energy’ narrative is so filled with false assumptions it would be laughable if not for its wide spread acceptance in society at large. The following is an explanation of where the narrative has missed the mark.

    https://www.academia.edu/52039545/All_Electricity_Poisons_Planet_Earth

  6. Phoenix44 permalink
    January 9, 2022 10:27 pm

    Not sure where Warner got that nonsense about low and high cost producers. One of my first jobs back in the 1980s was working with the cost curves of commodity producers. The price was set by the cost of the last bit of production required to meet demand. The curves were often very steep.

  7. dennisambler permalink
    January 9, 2022 11:01 pm

    https://www.gov.uk/government/news/lord-deben-appointed-chair-of-committee-on-climate-change
    12 September 2012 The Rt Hon Lord Deben PC has been confirmed as Chair of the Committee on Climate Change (CCC), as approved by Energy Secretary Ed Davey.

    This follows a successful pre-appointment hearing on Tuesday 4 September, in which the Energy and Climate Change Committee (ECCC) recommended that he was suitable for the role.
    DECC Secretary of State, Edward Davey, said:
    “Lord Deben brings with him a huge amount of knowledge of working with businesses in the environment sector and of working with Government during his time as a Government Minister and an MP.

    Lord Deben has a major contribution to make to the climate change agenda, and I look forward to working with him as we move into critical period on climate change issues both at home and abroad.”

  8. T Walker permalink
    January 10, 2022 12:42 am

    The only question to ask about potato ED is are there 1 or 2 “t”s in cretin.

  9. dfhunter permalink
    January 10, 2022 12:49 am

    dennis – thanks for the reminder how Ed Davies helped get us into our current mess & still wants our votes for his madness.

  10. Adam Gallon permalink
    January 10, 2022 6:50 am

    The windfall tax, should be on the holders of ROCs.

    • Phoenix44 permalink
      January 10, 2022 9:14 am

      It’s quite amusing that all those investors who disinvested from fossil fuel companies are now missing out super-profits!

  11. watersider permalink
    January 10, 2022 5:21 pm

    But possibly not as (deliberately) stupid as the current boss of my erstwhile employers BP, Mr. Looney states (ok folks, it is a fairly common name in County Kerry where this clown comes from with no derogatory connotations – well maybe McGilliguddy Reeks near Killarney but that’s another story). He says BP will no longer be an oil and gas company, he determines it will be a windmill company. How stupid is that?

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