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From the BOE REPORT

Terry Etam

Some very big and important things are happening in the world, and it seems that we’re not paying attention at all. We are becoming so fixated on the simple, the sensational, that we’re not noticing the storm clouds.

Now, to be clear, the ballistic winging of a high-level American politician is most deserving of our attention, particularly when the circumstances and outcome are frankly not just nearly apocalyptic but bizarre. The circumstances are so strange and run counter to our expectations that have been baked in from viewing a thousand shows of that very theme (Half the audience watched the shooter wandering around, ratting him out to the cops, who did nothing? Secret Service left the roof unguarded because it’s nearly flat structure was too dangerous for SWAT teams? Huh? And on and on.).

We are no longer in the age of the Zapruder Film, where a singular grainy video captured all we know about the Kennedy assassination. Trump’s shooting was so well documented from every angle that we have acoustic engineers taking to social media with impressively detailed analyses of where shots came from, and equally impressive counter arguments based on some other esoteric analysis of another aspect. Thus, we analyze all.

Sunlight is indeed the best disinfectant, so all these viewpoints are of value and will hinder any miscreants from hiding anything. And yet I can’t help but marvel at the tectonic shifts happening in the world, almost unnoticed in the west, or ignored in the west, that are rearranging the global geopolitical landscape in significant ways, for decades to come, and it’s like we’re not even paying attention. 

The biggest, quietest movement must the the rise of BRICS, the affiliation of nine countries that have formed an alliance to ‘counter western influence’ and work to chart a new direction. The founding countries – Brazil, Russia, India, China and South Africa – were joined by new members at the beginning of the year, including Egypt, Ethiopia, the UAE, and Saudi Arabia (who has been coy about explicitly affirming membership but is considered member last I checked). These countries are not a chain of unpopulated tropical islands; they have a combined population of about 3.5 billion people and annual GDP of over $28 trillion. 

The BRICS group is growing quickly; earlier this year, it was reported that an additional 34 countries have expressed an interest in joining, with many applications from Africa, South America and Asia. It would not be hard to envision Russian satellite countries looking that way as well.

What makes the rise of this group so significant is that the west has charged down an economic/socioeconomic path that is reliant on at least some BRICS members/applicants (Saudi Arabia, various African countries with critical minerals, and above all China who controls the world’s metals processing capability to an alarming degree). The west is envisioning an energy transition in the next few decades that will be, to put it mildly, heavily dependent on this group’s output and capabilities.

There are two big problems arising here. One is exemplified by Europe, which is successfully reducing emissions in large part by de-industrializing and offshoring anything dirty to the developing world (then getting upset about their emissions). 

The other is the fact that the west gets apoplectic at the sight of this group frolicking in the sun without putting the west’s wishes first. For example, the west has heavily (and imo justifiably) sanctioned Russia over the attack on Ukraine, in an attempt to cripple Russia’s economy. Sanctions include a price cap on Russian oil, a tactic that was roundly mocked as having no hope of being effective by seasoned oil market analysts, but nevertheless, a sanction meant to show that the world was serious and united. 

But then a few weeks ago, India’s Prime Minister Modi paid a visit to the demon himself, Vladimir Putin, on Russian soil, and was greeted with a big hug (the hug was reciprocated; the humiliation for Putin otherwise would have been unbearable). “Why is Modi sucking up to Putin? It’s simple and cynical: China and Oil” snorted the UK’s Guardian through socialist and imperialist nostrils. The Guardian article is snide, provincial, and reeks of the arrogance of the once-relevant that won’t recognize the ‘once-‘ : “Modi knows well how to opportunistically turn someone else’s war to his advantage.” (Such pompous piffle isn’t unique; in 2023, the Economist’s editor-in-chief Manny Zinton Beddoes introduced an Economist article that explained “why the Middle East still matters to the world.” Note the complex arrogance embedded in that comment, that it is or has been a reasonable question as to whether the Middle East matters, and that you, as a dimwitted reader, will need some pedigreed ponce to explain to you the ‘why’. Go back to the 19th century.)

But anyway, step back and consider what the west is focused on, versus what the rest of the world is focused on. We follow the minutiae of sheer crap like Taylor Swift’s love life or George Clooney’s open letter about old man Biden like it is worthy of something; BRICS countries are quietly rearranging the furniture and changing the locks on the doors. We demand the world switch to ‘green initiatives’ like EVs, then slam the doors on Chinese EVs that would make them affordable to North Americans and hasten a transition. 

I’m not sweeping under the rug any of Putin’s considerable transgressions, or commenting at all on China’s strategic moves that may not align with Western ideals. They do what they do internally, and we can’t do anything about that. The point is that all of this is going on and we pretend it isn’t, because we don’t like the players or the game. 

Nowhere is this more evident than with respect to energy. Five years ago, we in the hydrocarbon sector had to listen to ignorant grandstanding blowhards explain, without a shred of energy knowledge, that hydrocarbons were so last-century, that there was no need or role for natural gas in an energy transition, that oil demand peaked in 2019 and would never recover. Every one of these dumbass claims lies trampled in the dust, and there has been not an iota of soul-searching or admission of error or recalibration; all we see is a doubling down on the same dumb thinking that went into the first cocktail of wild-eyed projections (go figure; the zealots strong-armed the International Energy Agency into an energy-transition propaganda  powerhouse, forcing them to behave as some sort of macro support dog as their leg of ‘science’. It’s no wonder they have not much to say when the results are so hopelessly far off the mark from what they were wishing for.)

Related to energy is the auto industry, where calamity now reigns supreme. Western automakers were ensured that consumers were going to switch en masse to EVs – not hybrids, but EVs – because governments were going to make them. Many countries including Canada have legislated internal combustion engines out of existence past dates in the mid 2030s. So all you SUV-spewing auto companies, get on with the transition. 29dk2902lhttps://boereport.com/29dk2902l.html

Fine, they all said, and set about building EV manufacturing facilities and battery plants. Five billion here, ten billion there, and they’re off and running, ready for governmental zero-emissions mandates. Then, a scant few years into the forced migration, a few unforeseen developments arose (not really unforeseen, more like ‘wished away’, they should have been obvious…). Consumers became lukewarm on the whole EV idea, and have decided hybrids are what they really want. Now, big players like Ford are scrambling to get more hybrids to market (wise ones like Toyota never bought into the whole idea in the first place, and now have a hybrid version of every vehicle). 

On the EV front, imagine that, China took their battery and metals processing dominance, their growing engineering prowess, and all the tricks they’ve learned from forced JVs with western companies and began a global flood of reasonably priced and well-built EVs. (China, in 2018, net imported $30 billion worth of autos. In 2023, they net exported $80 billion, and climbing rapidly. Some turnaround.) Now the west is panicking because of what those machines could do to home market manufacturers, and they’re caught between a rock and a hard place: consumers are reluctant to switch to EVs in large part because of cost, and while Chinese firms have solved the cost problem, western governments can’t allow them to decimate native industries, and are thus excluding Chinese EVs from their markets via huge tariffs. China is undeterred, and, coming back full circle to the BRICS story, is developing vast markets for their products in developing countries. 

The 3.5 billion BRICS people, plus a few billion more around the edges, are finding their feet, their strength, and their voice, and saying either overtly or via trade deals that “We think we can get along on our own, thanks anyway.”

This reworking of the global order should be front page news, as it is going to be rather cataclysmic for the golden billion. Haha. Get real. Good luck for that story to fight its way in front of the dancing bears. Another example: As mentioned, about ten days ago, Donald Trump came within an inch or two of being murdered live on national media. Kind of a big deal. And yet that story has been pushed from the front pages by what should be the most obvious and anticlimactic story imaginable, that an 81-year old with severely diminishing mental capacity stepped down from the most powerful seat in the world. Gee, who saw that coming. 

And next week will be an damning/hilarious/embarrassing/brilliant (ok scratch brilliant)/ridiculous video clip of Kamala or Donald or some grandstanding political boob, and we’ll watch it 50 million times and argue about it like our lives depend on it, and in the background China will quietly sign billions of dollars of development deals with developing countries; Russia, Iran, India and many others will continue strengthening cooperative channels that the west pretends doesn’t exist (we do see it: “Growing Cooperation Between Russia and China in Arctic, Pentagon Says” reports Reuters, and that the US, Canada, and Norway hope to sign a deal by year end to begin the process of building new icebreakers at some time in the next decade or two, at the regulatory speed these things work), and the frog will find at some point that the water is too hot to leap out of. And the North Korean flat top is going to be next year’s Gangnam Style must see. That we’d watch.

What the world desperately needs – energy clarity. And a few laughs. Pick up The End of Fossil Fuel Insanity,  available at Amazon.ca, Indigo.ca, or Amazon.com.

Read more insightful analysis from Terry Etam here, or email Terry here.

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