Grant Williams (00:10):
Before we get going, here’s the bit where I remind you that nothing we discuss should be considered as investment advice. This conversation is for informational and hopefully entertainment purposes only. So, while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets. Now, on with the show.
Welcome, everybody, to another edition of This Week In Doom. It’s been way more than a week since we’ve brought the doom and I’m delighted to have the chance to catch up with everybody’s favorite green chicken, Doomberg. Doomberg, my friend, how are you and how is life in the coop?
Grant Williams, great to see that you’re in fact back in the Caymans. This is a rarity. I should say for everybody listening in between recordings, they say that you should never meet your heroes, but we were blessed with an appearance from none other than yourself at the chicken coop. So, you’ll have to tell us what did you think of the chicken coop? It was certainly great to host you, and I will say that old adage is false. It was wonderful to meet you. You were a true gentleman. For those who’ve never met Grant in real life, I must say even nicer in person than he sounds on these wonderful podcasts.
Grant Williams (01:33):
Well, that wouldn’t be difficult. Let’s face it. I had a terrific time. The chicken coop is amazing. It’s such a great little spot you’ve got there and the way you guys have done it all out, I was very jealous, I have to say. I’m sitting here in my little semi-loft in the Cayman Islands, very jealous of Team Doomberg’s workspace, which is really quite something, I have to say. Have the renovation started?
Oh, we are knee-deep. There is not a room in the house that doesn’t have a piece of sandpaper on the floor somewhere, but I am looking out the window of the chicken coop as we record this and I see snow. So, nothing in life is without trade-offs. I must say you were a very loud whiner about the weather. I mean, let’s be honest. It was pretty chilly.
Grant Williams (02:14):
I decamped from you, went south where it got warmer again, and then I went to Sweden. Man, there is a reason why so many shows about miserable serial killers are set in Sweden in the winter, because man, it is bleak. Let me tell you. I’m sure the summer is absolutely delightful, but oh boy.
I believe the word you used to describe the weather as you called me on your way up here was grim. So, I guess…
Grant Williams (02:38):
Grim. Bleak is one degree worse than grim.
Apparently, on the Grant Williams afraid of cold scale.
Grant Williams (02:45):
Yeah, there you go. There you go. Well, my friend, it’s been such a long time since we’ve managed to catch up properly and you have been quite prolific in that time. There’s an awful lot of stuff that you’ve written. I keep getting these emails come through and reading them, I go, “Oh man, we have to talk about this.” So I’m going to try and engage you in meaningful conversation about a couple of them. I want to start, if you’d be so permissive, to let me kick off with the Whack-a-Mole piece, which I thought was absolutely superb. So, let’s talk about that, lay out the premise, and then I want to dig into it, because I thought it was a really, really interesting piece as they usually are.
Well, from the beginning, a small minority of analysts, content creators, I would count yourself and Luke Roman and the Doomberg team into this category. We were puzzled by the West’s strategy vis-a-vis Russia sanctions, the seizing of the reserves, and what that would mean long-term for the dollar. We wrote very early on a piece called Crazy Pills, where we pointed out weeks after the sanctions were imposed that the crazy strategy behind the Western implementation of sanctions, especially as it pertained to Russian energy.
Anybody who has spent more than five minutes in the commodity sector, which must exclude all of the decision makers of every Western government, knows that you really can’t hurt the revenue of a major player in the energy sector by sanctioning their volume, because they will more than make it up in price. This is commodities 101, when you are dealing with deeply inelastic materials like oil and natural gas. If you try to stunt the volume of a major player, let’s be clear, Russia is among the leaders in the export market for these materials, which of course sets the price, the market clearing price for everybody.
If we were to be successful in say, cutting half of Russia’s exports from getting to the market, the price of those commodities would more than double and Putin would more than make it up on price. Yet we’ve learned nothing about this and we continue to basically play into Vladimir Putin’s hands. Now, look, we are very clear in all of these pieces. If your narrow objective is to minimize Putin’s revenue so that he can no longer afford to wage war at the level that he might want to, then there’s one and only one way to go about doing that, which is to flood the world with commodities.
I was just a guest at the Grizzle Research Conference and actually made the point, which sounds provocative when you first hear it, but makes perfect sense when you think about it for a bit, which is that the US Navy should be escorting Russian oil tankers to make sure that every molecule of fossil fuels that Russia produces finds its way to the market. If we were to do that, we would substantially reduce the price, which would then necessarily reduce Putin’s revenue. Oil famously traded for -$37 a barrel during COVID. It traded for $135 a barrel at the peak of the Ukraine-Russia crisis. That shows you the inelasticity of these materials. If we flooded the world with supply, we would crush the price and we would therefore actually impact Putin’s revenue.
Of course, what we’ve seen since then is the failures of these sanctions has become readily apparent. This crazy price cap we couldn’t believe when we first heard was actually serious policy has failed, and yet we haven’t learned a thing. It’s really amazing. It’s two years on now. Putin’s revenue has continued unabated, and then frankly, the war in Ukraine is starting to look pretty grim. Not quite bleak yet, but grim for the NATO team and for the Ukrainians.
Grant Williams (06:14):
The thing that dawned on me as I read it and I remember thinking this at the time when you wrote the Crazy Pills piece before it was proven was just how obvious it was. It doesn’t take a genius to look at this, just look at the incentives in the week that we’ve lost poor Charlie Munger, God rest him. The quote about show me the incentives and I’ll show you the outcome is such a fabulous piece of advice. So, what is it you think that allows people who operate in markets, either as a hobby or as a living, to understand this stuff so simply and for politicians who… Look, they’re not idiots, right?
I mean, we all have our issues with them. They must know. They must understand the actions of what they’re doing. How do we end up like this? How do we end up where they make these pronouncements, they do things for show, knowing full well what the ultimate outcome’s going to be, but they press on anyway? I just don’t get it.
We wrote a follow-up piece to Crazy Pills called The Peter Principle where we profiled the 60 minutes segment shortly after the sanctions were imposed. It’s not just the White House. The media, 60 Minutes of course has a research budget far larger than Doomberg’s, I can assure you. Yet it has to be incompetence because you couldn’t make it up with malice. Here’s the thing, it just feels like it should be right. If we stop Russian oil from flowing, surely, that will stop the Russian war machine, but you can’t. It’s like trying to stop gold from flowing around the world.
I mean, all you’re going to do is increase the friction costs of transacting in the space. So, when we say the US Navy should be escorting Russian oil tankers to make sure every drop of Russian production finds its way to the market as flawlessly and friction-free as possible, that is actually the counterintuitive way to reduce Putin’s revenue.
Grant Williams (08:01):
But it isn’t. This is my whole problem. Look, these people have access to all kinds of consultants. One presumes that the consultants they get to advise them have a working understanding because this isn’t oil specific. This is any commodity. The same supply-demand dynamics will impact just about every single commodity in the same way that you described. So, I’m at loss to understanding how this idea that we need to be seen to be doing something trumps any common sense. It feels like at the end, they’re just ready to say, “We’ll explain it later. We’ll be able to explain this away.”
I think they’ve been fooled because it works on small producers. So, if you’re a negligible producer in the commodity sector, of course, if you could stop your oil or natural gas from getting to the market and it doesn’t have a material impact on global prices, well, then that’s a strategy that might work, but you’re talking about basically the largest exporter of fossil fuels in the world. We saw how plus or minus one million barrels a day can radically swing the price of oil. So, I do think that perhaps they had fooled themselves with previous adventures in their attempts to say sanction Iran when they decided to tackle the Russian bear in this case.
Grant Williams (09:14):
The other part of this whole fiasco was the EU mandated price cap. You talked beautifully about that too. Let’s pick that apart as well because it’s just compound madness at this point. The things that they’re saying to appear tough, the things that they’re saying to look like they’re taking steps are just ludicrous. So, walk me through the EU mandated price gap, more importantly, the utterly predictable ways in which that’s turned out as well.
Well, as we said at the piece, I mean when we first read about this idea, it sounded so crazy to us that it read as satire. Basically, we have decided that we, the west, not just the EU, I might add, I think this was birthed in the White House as well, we just can declare that Russian oil shall not trade hands for prices above $60 a barrel. The means by which we were meant to enforce this arbitrary price cap just on Russian crude was by denying shippers of these oils, Western Insurance as though the insurance were more valuable than the cargo being transported. It’s really amazing to think that our geopolitical moat is our willingness to underwrite insurance.
So, of course, this didn’t work in any way, shape or form, and we were treated with an amazing headline as we called it, The Least Surprising Headline of the Year. Almost no Russian oil is sold below $60 price cap said Western officials. But the craziest part is the proposed remediation of this utter failure is now the plan, at least as described in the Financial Times, is that Denmark will be given the task of essentially imposing a blockade on Russian ships into and out of the Baltic Sea, because the insurance that those ships have is insufficient to cover the potential environmental disaster that might befall Denmark if these old and dirty ships were to run a ground or to capsize.
So, as we said, pardon our naivete, but do the people of Denmark support going to war with Russia? Because a naval blockade on Russia in the Baltic Sea would seem to us to be crossing the reddest of the red lines. One wonders whether the people of Denmark have voted for such a proposition. Are we prepared for direct kinetic conflict between a NATO member and Russia? Because we’d better be if this is our plan. It is all so crazy when you think about it. I don’t know who comes up with these things. Janet Yellen may have been the chair of the Federal Reserve and may currently be the head of the US Treasury, but apparently, she doesn’t know very much about commodities.
Grant Williams (11:41):
Okay, so let’s look forwards. Because as you’ve laid it out there, it’s so ludicrous open and this latest twist pulling Denmark into this is just beyond of me. Every time I think these clowns have run out of ways to baffle me with their ineptitude, they come up with something like this. But let’s look forward. As you look at this situation, you look at the war grinding on, you look at the weariness of the American public, the British public, the public of the EU sending more and more tens, if not hundreds of billions, of dollars of aid to the Ukraine, particularly now that the Hamas-Israel conflict is also demanding contributions from the West. How do you see this thing playing out from here, Doomy?
Because it seems to me, and at the risk of being labeled an apologist, as you have been in the past by certain quarters, it seems to me that no matter what the media tells us, if you just look at the playing field here and you look at the situation of both sides, it feels to me like this is Russia’s war to lose now rather than Ukraine’s war to win. What do you think?
Well, I would begin my answer by saying I’m not a geopolitical expert or a military expert, but our read of the situation, we follow the news flow like anybody else given our interest in energy, is that Russia has a long history of winning wars of attrition and grinding down their opponents. Peter Zeihan would say that both Russia and now especially Ukraine are on the cusp of significant demographic crises. But last I checked, there’s way more people the fighting age in Russia than there are in Ukraine. If you don’t read The Economist to get all of your news and you go perhaps one step closer to the original source materials, you can see pretty clear that the much vaunted Ukrainian counteroffensive of 2023 has failed. I think the Ukrainians were on record admitting as much last week.
The West unbelievably so considering how much money we spend on the military industrial complex seems to be short on bombs and weapons and shells. I think we have vastly underestimated Putin’s seriousness in this matter and his popularity domestically and Russia’s economic robustness and its ability to not only survive these sanctions, but as we quoted in the piece, that their economy is booming and that it’s booming because the sanctions have failed. Our attempt at sanctioning Russian energy only cause global energy prices to be higher than they would be. So, here we are. As we close the piece, you could call us whatever names you want to call us.
The only thing worse than failure is a predictable one and our refusal to learn from such setbacks is frankly flabbergasting. But raising your hand early and pointing out that this isn’t going to work and in fact will have the counter effect, it will blow up in your face. At the time, we were deemed Putin puppets by certain people on Twitter, some of whom we even used to respect. Yet here we are two years later and we won’t be waiting for any apologies. This is how it goes if you have any presence on the internet and it’s just par for the course. But the last sentence of the piece is as follows, the way to win an energy war is to produce more of it and everything else is just happy talk from no nothings.
Grant Williams (14:52):
Well, yeah, it really is frustrating, and as you point out, the Russian economy is actually doing really well. Obviously, the better the economy does, the stronger the pro-Putin support is in Russia, which again just reinforces the whole situation. So, I just don’t see anything other than a grinding Russian victory unless that outcome is so absolutely unconscionable to the West, which I fear it is, that they escalate their involvement and we end up with a much more problematic degree of involvement from NATO forces on the battlefield, which I think feels to me like that’s the way we’re heading now. That genuinely concerns me.
Grant Williams (15:34):
I didn’t think we’d have to be worried about that. But the longer this goes on and the more the ridiculous policies are proven to not work, the more desperate I think politicians are going to get because you cannot have a defeat as a Western politician. You cannot admit defeat and back down. It’s just not the way the game works these days. I’m really concerned, Doomy, about the steps they’ll take to “ensure” a victory.
Well, there’s only one real big loser in all of this, and that of course is Europe. If you took a step back, who are the big winners? The US is a big winner, even if it may be partners with a side that looks likely to perhaps if not lose a war, secure peace in suboptimal terms, let’s put it that way. China’s a big winner. They have a new energy partner and Russia’s a big winner. The only big loser, huge loser in this is Europe proper, beginning with Germany. But continuing across the continent, I think this is going to be a severe generational blow to the European Union Project and we’ll see what happens. It’s pretty crazy when you think about it. At the same time that we’re trying to sanction Putin’s energy, the US is producing an enormous amount of energy and Europe is overpaying for it.
That’s the net result is Europe is now securing most of their energy from the US. They’re securing actually still a fair bit from Russia, including more than a plurality of their LNG exports if you can believe it. But the US is now once again producing oil at a record rate that we have just recently eclipsed the pre-COVID highs. We are the world’s largest producer of natural gas by a wide margin, and much of that export capacity is being directed towards Europe. So, Putin wins, the US wins, China wins, and Europe is the big loser. I don’t know how you could see it any other way.
Grant Williams (17:09):
Yeah, I can’t unfortunately, which doesn’t fill me with any joy whatsoever, but that’s just the way it is. Well, listen, another piece that you wrote, which I want to talk about, again, I don’t know where you find these stories, but this one was a real head scratcher for me and that is Carol Miller, Congresswoman Carol Miller of… Remind me where she’s from.
She’s from the great state of West Virginia, the great state of West Virginia.
Grant Williams (17:29):
West Virginia. So, let’s switch topics from Vladimir Putin to Carol Miller and try and draw a line and differentiate the two because the policies of the West against Russian energy is ludicrous. Ms. Miller, some of the ideas that she’s been spouting are perhaps even more ludicrous. So, why don’t you run us through what she’s been up to?
Well, we should give some background on poor Congresswoman Carol Miller. So, as we said in the piece, she has a quintessential American political biography. She owns a bison farm in Huntington, West Virginia and got active in local politics as one does and was first elected to what’s known as the West Virginia House of Delegates in 2006. She rose to the position of Majority Whip. I believe she was the first female to serve in that capacity in the House of Delegates. Then she ran for Congress. Being a bison farmer, she had a catchy campaign phrase that she had pledged to cut the bull in Washington, which is great. Now she sits on the powerful Ways and Means Committee.
For those listening who aren’t based in the US or don’t follow American politics, that’s basically the most powerful committee in Congress because it controls the purse strings. Then The Hill, of course, is this pretty apolitical, well thought of politics magazine, this news magazine in the US, The Hill. She took to the pages of The Hill to write an amazing op-ed. When it was sent to us, because when such things get published now with as many subscribers as we have, we receive it several dozen times via email. She wrote this amazing word salad in The Hill about hydrogen. So, hydrogen, now, just so everybody listening is aware, hydrogen is the new source of grift in Western governments. Scores of billions of dollars will be wasted chasing the hydrogen dream.
Ms. Miller was very upset about some new rules that are about to drop from the US Department of Treasury that will ultimately adjudicate who gets to pilfer the US Treasury and at what level. It’s very difficult to explain for those not in the energy space just how nonsensical her op-ed was, but it was very clear that Ms. Miller, it’s been a long time since she’s taken a chemistry class. Let’s just put it that way.
Grant Williams (19:41):
Well, look, nobody explains these complex energy issues better than you, because I think until you understand the reality, the full impact of the lunacy isn’t quite there. So, give it a stab if you can and try and explain the reality and then let’s get into what she said.
All right. So, hydrogen is an interesting molecule. Hydrogen, of course, is in water, but water is basically burned hydrogen. That’s the way you need to think about water. It is the lowest energy state that you’ll find hydrogen. It has been fully combusted H2O. That O means the hydrogen has been burned. If you just have the hydrogen molecule, H2, and then you burn it with air, you release an enormous amount of energy. So, when you burn hydrogen, you don’t have carbon dioxide. So, hydrogen in theory is a pretty reasonable energy carrier. So, if you start with water and you put a lot of energy into water, you could split that water into hydrogen and oxygen and then move the hydrogen around as a fuel just like we do today with gasoline and then recombine it with oxygen under controlled circumstances to release the heat.
Now, there’s one small problem with this is that you have to put twice as much energy into the splitting than you could ever get out on the backend, because thermodynamics is such that there’s no such thing as a perpetual motion machine. So, hydrogen as a reasonable energy carrier only makes sense if you really, really care about carbon emissions, because you’re basically taking twice as much energy to produce the amount of embodied energy that you could eventually extract for useful work out of the hydrogen.
Now, if you have a landscape filled with wind turbines and a desert filled with solar arrays and there were periods of time where you’re producing way more electricity than you could ever hope to use, one of the things you could do with that excess electricity is spin an electrolyzer and split water and store the hydrogen and then use the hydrogen later if you so choose to make electricity again. But of course this is very inefficient, much less efficient than say a battery or pumping water, using gravity storage with large volumes of water and so on. But if energy is free, hydrogen is a reasonably useful fuel that we could make with free energy.
You literally cannot create a carbon-free economy unless you capture all of the carbon dioxide you create when you combust fossil fuels. Hydrogen is a fuel that at least in theory enables a utopian vision of a world in which we have ample energy and no carbon emissions. So, that’s why every environmentalist around the world is pursuing all manner of technology developments in and around the hydrogen space. Can we split the water more efficiently? Can we store the hydrogen at higher pressures so that we can have a longer range in a hydrogen combustion vehicle? Pick your favorite technological development to make hydrogen possible.
Now, with hydrogen, the way it’s made today, and I should say hydrogen is a globally traded commodity on a very large scale, predominantly because it finds very wide use in ironically the refining of oil. So, hydrogen today is made on demand by what’s known as methane steam reforming where you take natural gas, and through a complicated set of chemistries, you make hydrogen and ultimately CO2. So, that’s how you make hydrogen today, it’s handled in large quantities. We have hydrogen pipelines. There’s dozens and dozens, I think 48 world scale hydrogen production plants along the Gulf Coast alone with a thousand miles of hydrogen pipelines.
So, the big grift that’s happening here is the fossil fuel industry is going to get their hands on as much of this hydrogen money as possible. Then when the wind and solar panels don’t appear, they’ll have all this free capital given to them by the government and they’ll just turn around and use that for more efficient refining of fossil fuels. However, to circle all the way back to Ms. Miller, well, she wrote something that is just incomprehensible and it stuns me that somebody at this level… Again, we talked earlier about “How could it be that the sanctions policies are so crazy?” Well, when you read stuff like this, this is how. She says in this piece that the most effective way to “create” hydrogen is through a process called carbon capture utilization and storage.
Of course, carbon capture utilization and storage has nothing to do with hydrogen. It’s literally taking CO2 out of the air and shoving it under ground. Then she goes on to say, “The process takes coal and natural gas emissions and converts them into hydrogen.” Now, I don’t know what this even means. In my mind, natural gas and coal emissions is universally meant to mean carbon dioxide and there’s no hydrogen in carbon dioxide. I don’t know how you take carbon dioxide and make hydrogen out of it. Later on she says, she closes this paragraph with using natural gas and coal emissions to create hydrogen energy. Create hydrogen energy, by the way, is the perfect example of a comprehensive energy solution.
We have this famous meme of this comedian with the big hair looking quite confused under this quote. I do think, like we talked earlier, we have a competency crisis amongst the political class. By the way, she has a staff, the Hill has editors. How does this happen? As we said in the piece, we’re not sure which version of ChatGPT was used to create this gibberish, but the language model needs a new training set. I mean, what are we talking about? There’s so much wrong with what she wrote.
It’s difficult to know where to begin, but this is just the opening story to the great pilfering that is about to incur of the public treasury in the US. But we thought it was a fun one to introduce the concept of hydrogen, how it’s actually made and why it is that we’re about to waste scores of billions basically lining the pockets ironically of the fossil fuel industry in the name of this green energy utopia.
Grant Williams (24:56):
Well, look, as I said, no one explains these things better than you. That was a beautiful explanation and you and I spoke about this when you published the piece. It’s extraordinary to me that this goes unchallenged today. I think it speaks to a broader problem, which is the media, which is this inability or unwillingness to do the real work, to do what used to be called journalism and fact check everything and ask tough questions and push back and do all the things that you’re supposed to do. Instead, can we get a celebrity, i.e. someone that has some profile to write a piece in our publication? Because if we do get someone who has a name, someone who has a profile, it’s bound to bring eyeballs and the whole thing.
It’s just ridiculous now, because the last thing that anybody really cares about is the integrity of the work. It’s all about the numbers, it’s all about the eyeballs, it’s all about influence, and it’s nothing to do with integrity of the journalism. That is a massive problem, Doomy, because it’s not just the energy space that we’re seeing this in. It’s everywhere and everything. There is so much misinformation out there now that it’s impossible for people to really understand what’s going on in the energy space given that it is the focal point of so much time and energy. We are being pointed towards that by every single person standing behind a lector in the world today, it seems.
The fact that you’re sending people down this rabbit hole and providing them with complete gibberish information explains a lot of the ridiculous protests we get in the streets of people that have no idea what they’re protesting and what it’s all about, but they throw themselves behind a cause which they’ve been told is virtuous and this is the way to get a better world for us and our children. Look, well-meaning idiots to a man, well-meaning for sure, but how do we solve this? How do we somehow swing the pendulum back in the direction of information and knowledge rather than just fluff and soundbites and hooks that will resonate with people and get them to take a side?
Well, I should say it is a tragedy at the macro level, but it is the market inefficiency that we at Doomberg are so happily occupying today. I mean, this is mana from heaven or us, because there’s no shortage of things to write about. But all kidding aside, I do believe that Doomberg would not be a thing if journalism had not been destroyed by the likes of Facebook and Google. Let’s be fair to the reporters and the journalistic industry, the drive to clickbait has destroyed a semblance of reward for doing proper investigative reporting. I do believe this is where Substack is differentiating itself across all dimensions. We’ve gotten to know the leadership of Substack quite well, given our prominence on the platform and we’re investors in Substack. Full disclosure, we contributed heavily in the author-led round.
I think it’s always important to lay bare your potential financial conflicts when you’re discussing something like this. But the objective of Substack is to change the way people read on the internet. I go to Substack every day now and I subscribe to all manner of Substack. I think the last time I checked that was up to over 65 that I subscribed to. Left, right, from environmentalist to climate change is a hoax and everything in between, there is a market for community-driven content where you earn your credibility. Look, barely any of our subscribers know who we are in real life. We win their credibility with every piece. Look, we’ve made mistakes and we’ve gotten big calls wrong.
We’re the first to admit when we do, but nobody is doing outside of Substack, I would argue very few publications are doing deep dives. Now, I would say one of the few remaining periodicals that does a pretty good job of framing these issues relatively well is the Financial Times. I think the Financial Times is still an old school, well-researched. Rarely do I read something in the Financial Times where I think, “Oh, that’s just gibberish.” But the Financial Times, it’s a pretty small list, shrinking list. Now in Substack, you can find deep experts writing on such topics and across all dimensions. I do think whether it’s the Twitter files or Seymour Hersh going to Substack or you could go find Doomberg, it’s a great place. The nice thing about Substack is that it is not driven by advertising.
So, you don’t have this point source of veto on your editorial content. Look, all of our subscribers are precious, but none of them are particularly integral to the financial success or failure of Doomberg. If one subscriber gets annoyed with what we write and they unsubscribe, we’ll happily give them a refund and move on. If you’re running an advertising business as the new owner of Twitter is finding out, you have to be mindful of what you say or not. Probably better to not go down that rabbit hole, but that’s been quite the spec to watch. As an outsider who left to Twitter several months ago, that decision seems to be ripening well.
Nonetheless, I do think the one thing that I think gives me hope about this situation is a prolonged absence of legitimate real in-depth reporting has given birth to Substack. The market is hungry for it, people will pay for it, and inefficiencies in the market will be filled. We are very thankful that Carol Miller exists, because it just makes our work fun and it’s a great way for us at least to intellectually deal with just how pathetic the knowledge has become. Look, there’s some really great people in Washington, D.C.
I think the US Department of Energy is filled with a lot of really patriotic, pragmatic, smart scientists who know what the right answer is and just have to put up with these politicians and understand that we’re only two years away from the next election and so on. But this one was a particularly clumsy handling of an affair, especially when you consider just how much money is being thrown at this. If we were to quantify it, it would shock people.
Grant Williams (30:38):
Well, I hate to break it to you, my fine feathered friend, but we are one year away from the next election. Unfortunately, that doesn’t sound right.
You’re never more than two years away from the-
Grant Williams (30:45):
I’m sorry, I thought you said… Okay, right.
No, no. I corrected myself.
Grant Williams (30:49):
I didn’t want to ruin your day. We’re just about to go into the full depths of the madness now, I suspect, as we turn a new page in the new year. It’s a great point of Substack and it is a fantastic platform. Like you, I don’t have as many subscriptions as you, but I have a whole bunch of them from Substack and every single one of them is valuable to me. So, I think it’s proven its worth, and you are the feathered embodiment of that. But the problem seems to be that it’s still very much a minority venue in terms of people wanting to seek out information. Most people still get their information from the same massively broad church of mainstream media.
At a time when people need access to the best information they can possibly get, they are continuing to seek it out from places where the quality of that information is deteriorating almost by the day. It really, really worries me with this election coming up, because this is going to be a very keenly fought, very important election, potentially with a third candidate who might actually matter for the first time since probably Ross Perot. It terrifies me, frankly, that the minority of people getting their information from Substack are well-served and the vast majority of people who are going to go into a booth and make a mark on a piece of paper are being served the fatuous nonsense that we’ve been talking about.
Well, then there’s the TikTok issue, which we can get into as well, but I will say I’m hopeful. I’ll give you a small example. I would say that between Substack and Twitter, there have been a small army of very vocal pre-nuclear energy proponents. I believe that that effort, which we’ve played a minor role in, has yielded tangible results. I read ahead of COP28 that Biden is looking to secure a commitment from up to a dozen or more countries to radically increase nuclear deployment between now and 2050. Canada, Justin Trudeau did a 180 on nuclear. Outside of Germany, I think we’re seeing a global nuclear energy renaissance.
I think that the small army of technology experts and influencers on Twitter, on Substack, on their own blogs, on podcasts, have actually shaped opinion. I refuse to live in a world where no politician is doing the public’s good and all politicians are only lining their pockets. I do believe, and this sometimes annoys our subscribers, that many of the decisions that Joe Biden has made on energy are relatively prudent given his political reality of being flanked on as far left by environmental extremists. Joe Biden was the senator from Delaware. The biggest corporation in Delaware is DuPont. We used to joke that Senator Biden, DuPont. He wasn’t from Delaware, he was from DuPont. He knows the commodity industry reasonably well.
The US is, despite all of Biden’s playing footsie with the environmental left, the largest oil producer in the world, the largest natural gas producer in the world. We’re a very prominent producer of nuclear power. We have a lot of things going for us. We’re toying around with doing an end-of-year piece about all that’s working well and wonderful in America and the assets that the country has when it comes out of the Fourth Turning, as your friend Neil Howe how describes. The rebirth, boy, is going to be special. I want to go along the US rebirth post-Fourth Turning. It’s not all doom and gloom, the name of our periodical notwithstanding. So, we’re generally hopeful. None of these things aren’t fixable.
As much as we see society ripping itself apart, it was the same way in the ‘60s and ‘70s. It was forever thus, and it will forever be. But I do think by and large, most politicians, even Ms. Miller for example, if I could have gotten hold of her staff before she wrote that piece, I could have corrected it. I think I know what she was trying to say. We do have, actually I checked before we started recording. We have 183 .gov email addresses in our subscriber dataset. So, that gives me some hope as well.
Grant Williams (34:33):
Well, if you do write that positive end-of-year piece, you are going to have to write it under a nom de plume, right? You’re going to have to be Bloomberg or something, because it just won’t feel right coming from you. Listen, we’ve still got time hopefully to sneak in one more piece, and that’s the piece that you’ve put out this morning, which, and this is a subject very close to my heart because you were talking about how they’re coming for meat. Once they come for meat, I’ve got a problem with that, Doomy. So, I hadn’t heard of Clim-Eat and this guy Dhanush Dinesh. Is it Dhanush Dinesh?
Sounds right, sounds right.
Grant Williams (35:04):
Something Like that. So, walk us through this story as well, because again, it’s not just a story because we’ve heard this story before, this push to marginalize meat and push people down the plant-based road. I totally get that. A lot of people have been down that road in the last few years. Many of them have turned around and gone on a bus going back in the other direction pretty quick as the stock price of Beyond Meat bears testament to, but it’s still a thing. The spin you put in this and the direction you took in terms of, again, this idea that’s constant in your work about how you’re asking people to vote for a much worse standard of living in the present to potentially ameliorate issues sometimes far in the future, this was another great example of that. So, walk us through this piece, which I think… Was it Meat in the Middle, I think you called it?
Yeah, Meat in the Middle, but M-E-A-T. Yeah. So, as you mentioned, we coined the phrase the big lie. The big lie sold by climate alarmist is that we can radically reduce our use of fossil fuels without meaningfully impacting our lifestyles. We can radically reduce our use of fossil fuels, but it comes at a significant price and nobody wants to talk about those trade-offs, because they are politically unpalatable to the point of politically unsustainable. No politician, absent complete authoritarian control, can radically reduce their nation’s consumption of fossil fuels without killing a lot of people. It’s not like this is unprecedented. Chairman Mao, right?
So the big lie is that all we need to do is proliferate the “cheapest sources of energy”, wind and solar, and install a few batteries, and we could end fossil fuel use now and everything will be great. Of course, that’s just anybody who has even a passing knowledge of physics knows this is patently untrue. We like to divide the populace into four categories, the hard right and the hard left. The hard left thinks the world is coming to an end and no tactics are out of bounds in order to prevent a cataclysm. The hard right thinks that climate change is a hoax driven by the World Economic Forum in order to depopulate the world and to implement a totalitarian global regime, new world order.
Then probably 80% of the people in between those polls, we would characterize them as soft right and soft left. Full disclosure, I’d probably be in the soft right category. I have my doubts about the alarmist view, and I think that most of this is blown out of proportion for cronyism and grift, but there’s a vast category in the soft left of people who are worried, have bought into the propaganda and who believe that they should recycle and that they should drive an electric vehicle as a spare, of course. They need their SUV as a backup for when you actually need to go somewhere of distance, put a few solar panels on the roof and so on. They’re willing to go along for the ride to a point.
I think we’re getting to the point now where people on the soft left are beginning to wonder what it is exactly that they have signed up for. This push to eliminate meat from our diets is a perfect example. We think it might well be the issue upon which the big lies finally made real for the plurality of everyday voters. So, Clim-Eat, which is just served a Doomberg special served up on a platter, literally, pardon the pun, but this young chap who is very ambitious fellow. Really if you read the piece, you probably caught one of my favorite digs of all time, which is that the only thing surprising about his biography is that it is written in the third person. It’s really quite something neat. Danish, a fearless visionary, determined to shake up our food system and take on climate change.
It’s right out of central casting. So, as we said in the caption to the piece, enough to make John Kerry blush really. So, in the piece, we talk about the climate intensity of various foods, and of course, beef is considered to be the most, as we said, four-legged gas guzzlers, a picture of the cow in the piece. But the United Nations has produced a helpful chart of the kilograms of greenhouse gas emissions per a hundred grams of protein. Now, we’ve since had several readers point out to us that not all protein is the same and the UN fails to account for the quality of the protein. That’s all fair and true and germane, but beef, of course, is the greatest sin.
As we said in the caption to the piece, Mr. Peanut for the win, because nuts of course give you the most protein for the least amount of greenhouse gas emission. Then there’s everything in between. So, if the aspiring global leaders had their way, we would be feasting on legumes and breads and pasta and tofu and we will be foregoing beef and lamb and shellfish and cheese and milk and pork and so on. We talk about this in the piece how most importantly as it always is, we call it the P-7. So, there’s the G-7, which everybody knows, Canada, US, Germany, Italy, Japan, UK, France. But we call the P-7, the seven most populous countries in the world that aren’t currently in the G-7, because the US is actually in the top seven.
This would be Bangladesh, Brazil, China, India, Indonesia, Nigeria, and I believe Pakistan. There’s four billion people in that category and they’re barely eating any meat today. So, if we take the bottom five of the P-7, because actually, China and Brazil, one of the earliest things they did when they developed their economy was to ramp up their meat consumption because that’s what rich people do. They prefer to eat steak. The bottom five of the P-7, which by the way holds seven times as many people within their borders as does the US, consumes 1/17th the amount of meat per capita than does the US. Any small perturbation in that number is going to swamp any “savings”, and that just tells you that the world is going to roll the dice on climate change.
But we ended the piece with an analogy. If we restricted beef, let’s just say we gave Clim-Eat its way, what does that do to the price of pork? Well, they’re substitutes. In the same way that a natural gas shortage in Europe led to worldwide record coal prices, we suspect that a top-down mandated beef crisis would spread to pork and to chicken and to turkey and to fish and eggs and nuts, because the protein complex is very analogous to the energy complex. You have different forms and different qualities, but they’re substitutes for each other. By the way, the rich, like we did in the energy crisis, will set the clearing price. China will scramble for pork.
Pork is central to Chinese culture. No leader in China can survive a pork shortage of any extended period, and that will just cascade like it did in the energy crisis. Who will be left with the short end of the stick? Bangladesh, Indonesia, India, Nigeria, and Pakistan. So, it is forever thus that the G-7 needs… The unspoken thing is we need the global south that don’t develop to reign in climate change.
Grant Williams (41:24):
Well, it’s interesting because you used a phrase there, which has gently over time come to underpin a lot of your work, and it’s this idea that ultimately we’re going to roll the dice on climate change. In the UK, we’ve seen some severe pushback against some of these emissions measures that have been put in place in London by the Lord Mayor, this ultra-low emission zone. It is created havoc. People are just not ready and not willing to acquiesce to that now and cameras are getting vandalized and it’s become quite the battleground. In fact, I think this weekend Londoners stepped in, because the parade prayed was getting ruined by the ultra-low emission zone. So, Londoners took matters into their own hands to get that back on the rails again.
But I agree with you that this is where we’re headed. We are going to be forced to roll the dice on climate change, but how do you see that journey unfolding? Because it’s an incredibly difficult needle to thread given how much time and energy has been invested into amping everybody up into this foaming frenzy about climate change. How do you walk that back? If you are going to roll the dice, how do you manage to walk that back and allow people to stand down a little bit given how much you’ve wound them up?
Our view is the hard left is not going to fade away, as we said in the piece, they will flame out. But anybody who does any logical thinking on the matter necessarily, whether you believe it’s a calamity or not, we are going to roll the dice on climate change. China is not going to stop building coal plants. India is not going to stop developing its economy for its citizens. Nobody in the global south caress about climate change now, especially after having watched Germany retreat to the coal mines at the first sign of crisis. They are watching what we do and now ignoring what we say. So, given that we’re going to roll the dice on climate change, our fear, our prediction is that the hard left will be hyperbolic on the way out.
We’re seeing this, look what happened in the Netherlands with the most recent election. You might disagree with the AFD in Germany on say immigration or pick your favorite hot button social topic of the day, but they’re right on energy and maybe they’re hijacking energy, because they’re just in the business of playing to people’s anger. They’re effective at it. We’re seeing in country after country a right word tilt and I suspect that the German ruling coalition will collapse soon over this $60 billion budget hole that the constitutional court of Germany just opened. The greens are going to get wiped out and populist rightward leaning parties will take their place. The pendulums swing. Means get regressed to. This is what happens.
I’ve been trying to warn our friends on the progressive environmental left that the path function matters. If you push too hard, too far, too fast, the people will revolt on the path from abundance to starvation as riot. We’re beginning to see the early signs of political riot all across Europe. I mean, you tell me, you follow the European political scene as much as anybody. This election in the Netherlands is a shocking result to the establishment in Brussels.
Grant Williams (44:18):
Yeah, no, look, it is and it’s the first time that one of these candidates has got it over the line. We’ve had Marine Le Pen came close in France several times. Obviously, we saw Farage create a lot of noise in the UK. We’ve seen other right wing leaders in, without wanting to upset anybody, less important geopolitically countries like Hungary and Europe, but we haven’t seen one of the core EU nations turn to the right like the Dutch just have and that shocked a lot of people. It shouldn’t have. To your point, I think it shouldn’t have shocked people at all. The writing’s been on the wall for probably seven or eight years now in terms of the way that the politics of Europe has been progressing.
The question is, is the election of Geert Wilders, is that a wakeup call or is that a tipping point? I fear and suspect it’s more of a tipping point than a wakeup call and we will be heading in that direction in a more comprehensive way, right across Europe. Giorgia Meloni was tagged with that same brush when she won election in Italy and she was an old school Italian talking about family values and all these kinds of things which are near and dear to Italian hearts. She gets painted with a far right brush. She moderates considerably when she gets into office, does a pretty good job. It remains to be seen if Wilders will moderate because he’s much more of a fire brand than Meloni was. I suspect he will be much more reluctant to moderate, but we wait and see.
But I think your point is absolutely right. The trend has been rightwards and one of the problems I think is that there’s no room in the media for center right or rightist policies anymore. As soon as you are right of center, you are branded far right or at least that’s the attempt is made to brand you’re far right. When was the last time you read about a right leaning candidate? I would argue it was probably a decade ago. Everybody’s far right. So, we’ll see. It is changing, the politics is changing, and I think the climate change debate is central to that change. I think you’ve done a brilliant job of covering that.
A couple of milestones for you to consider. I mean, it’s not clear that he’d be allowed to form a government.
Grant Williams (46:30):
No, this is true.
It’s not clear that the AFD in Germany, they’re talking about banning the party. This is all Streisand effect type behavior, which will only make matters worse. I think he’s hoping that he will be shunned from being able to form a government in the back of his mind, because that’s only going to make things better for him in the next election. In Germany, they’re talking about making all of the other parties commit to never welcoming the AFD as part of a coalition partner, as if this is going to do anything but increase the popularity of the AFD. This is a protest vote, you see. You can’t stifle a protest vote. Look at what’s happening in Argentina. That’s the other example.
If Canada held an election today, how badly do you think Trudeau would get trounced? If Germany held an election today, do you think that the coalition partners would get swept out of office? Of course, they would. It’s there. It’s pent up, and it all frankly has to do with energy in our view. Even immigration, one could imagine the amount of energy produced divided by your population is your standard of living. If you’re not producing enough energy, why do you want to want to increase enumerator? One could argue that this itself is also an energy policy.
Now, of course, there are other issues in cultural and tribal and all the other stuff that goes with it, but I could even make a case that if you’re not generating enough economic wealth for your limited number of citizens, then of course there’s going to be pushback in expanding the number of people seeking ever larger portions of a limited energy budget. I speak of energy broadly like food and so on. So, these things, it all comes back to getting your energy policy right. Everything else gets a lot easier.
Grant Williams (47:59):
Yeah, no, it’s so true. It’s so true. The pieces you’ve written recently just add to a fantastic kind of work that has been consistent on this theme from the very first piece you published. So, if there’s anybody out there listening to this that hasn’t subscribed to you, it’s just on the free emailing list and stuff, this would be the perfect time. I suggest to you to sign up for a paid Doomberg subscription, because this trend is not going to reverse very quickly and it’s going to continue and you need to understand it. Doomy, as I said earlier, nobody does a better job explaining this stuff than you. So, congratulations on all the tremendous work you’ve been dropping.
I really appreciate it. Grant, as always a pleasure. It’s all ours to talk with you and to have hosted you here in the chicken coop. There’d be no Doomberg without Grant Williams, as you know. So, the whole team and our families are very grateful to you. Really let’s not let the time pass so long in between this and the next recording. Of course, I understand why and then we had busy schedules, but it always is a great pleasure to speak with you. I really enjoyed this one, which comes as no surprise to anybody.
Grant Williams (48:55):
Yeah, we will do it again. We’ll do it again soon. In the meantime, having encourage everybody to sign up, why don’t you tell them how they can do that and where?
Yeah, the only place to find us now is doomberg.substack.com. Everything is there, our pro page, our podcast appearances, our archive. As you said, free subscribers get our free views and paid subscribers get the full article. Hopefully, we will entice enough free subscribers over time to keep going, because we do think it’s important that energy get taught and get implemented correctly at the local and regional and national levels. To the extent that we can play a small part in educating people in that regard, it was what we were meant to do and we certainly love doing it.
Grant Williams (49:30):
Tremendous. Well, more power to you, my flightless friend. I will see you again soon, and you’re right, we won’t leave it so long between the conversation next time. Take care of yourself.
Grant Williams (49:55):
Nothing we discussed should be considered as investment advice. This conversation is for informational and hopefully entertainment purposes only. So, while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets.