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New Year’s Investment Resolution: Bet on Carbon

Words disappear into the air, but money talks.

Credit: Mark Geistweite

In investment, the adage has it, the trend is your friend. If the trend is with you—think internet stocks in the last three decades—chances are, if you stay with the herd of bulls, you’ll make money. So what’s the trend, in 2024 and beyond, for carbon fuels? (Okay, The American Conservative is not known as an investment sheet, and yet every conservative should be familiar with political economy, the self-evident point that investment, up or down—and anything else to do with money—occurs within a political context.)

To listen to the words coming out of the COP 28 climate change conference that wrapped up in Dubai on December 12, one might think that the trend for carbon fuels is bearish. U.S. climate envoy John Kerry said of the final communique, “The decision embraces transitioning away from fossil fuels in energy systems so as to achieve net-zero by 2050.” Indeed, Kerry added, in a hat-tip to harder-core greens, “we will continue to press for a more rapid transition.” (Emphasis added.)


With money in mind, we might further consider the words of Jennifer Morgan, the American-born Greenpeace activist who is Germany’s chief diplomat on climate: “Every investor should understand now that the future investments that are profitable and long-term are renewable energy—and investing in fossil fuels is a stranded asset.” We can see that the greens have learned to talk the language of the other green. Who would want to invest in carbon fuels if political economics necessitates that the assets will be stranded, left in the ground?  

In fact, ExxonMobil stock fell more than five percent during the COP conference; it’s now about 15 percent lower than it was in September. The green agenda is clear: badmouth carbon energy to talk down business confidence, thereby depressing, and ultimately stifling, investment in carbon fuels. Given that environmentalists are well on their way to pastoralizing Germany—the Morgenthau Plan coming late, and self-imposed!—it’s possible that the greens will succeed in their global mission. Without a doubt, greens and their media allies will be touting, and spinning, COP28 for a long time to come. Sample headline: “COP28 Climate Deal Marks ‘Beginning of the End’ for Fossil Fuels.” 

But there’s just one thing. What if Kerry, Morgan, and the greens are wrong? What if the trend, outside of the echo-chamber West, is actually in favor of carbon fuels among the 150 or more countries—including China and India—that don’t take their cues from the New York Times and the Guardian?  

Late last year, Saudi Aramco’s CEO Amin Nasser took note of rising coal usage, quipping, “If you think about it, we are transitioning to coal.” In fact, we are burning a lot of coal: World coal production is rising. If we drill down we further see that China is far and away the biggest burner, with no end in sight. The communist regime is happy to sell us solar panels, which they produce with coal-fired electricity. 

To be sure, coal use in the U.S. is down—coal-happy India recently overtook America—and yet new coal mines are opening around the world, from China (of course) to Australia to Africa. Even the United Kingdom has opened one. So when Kerry said, post–COP 28, “The first and easiest thing that countries need to do to make this commitment a reality is to stop building new unabated coal,” it’s evident that countries are not stopping. And if they aren’t doing the “first and easiest thing” to get to net zero, where does that leave everything else? We can step back and observe: So long as a person is eating eclairs, there’s no need to take their protestations about a weight-loss diet seriously. 


In fact, world oil production is also movin’ on up. So is natural gas. Indeed, even the U.S. is part of this upward carbonward trend. In the words of Bloomberg News on December 21, “The US consolidated its position as the world’s largest oil producer, with daily output increasing 200,000 barrels last week to the highest in data going back to 1983.” The news service quoted energy analyst Tamas Varga: “It has become blatantly evident that predictions of stuttering growth in US shale production after the Covid-19 pandemic have been misplaced.”  

To be sure, the Biden Administration did come into office with grand plans to decarbonize, and yes, it fought what it deemed to be the good fight to kibosh drilling and burning, and with some successes. Yet the animal spirits of capitalism and energy hunger, helped along by Republicans in Congress, are winning out. American oil production is now at an all-time high

So we’re starting to see the difference between the words of Western officialdom and the deeds of the world’s energy producers and consumers. Carbon fuels are here to stay. Yes, nuclear power is making a comeback, and yes, solar is doing well (wind, not so much), but the world is voraciously hungry for energy. Notably, such post-industrial functions as artificial intelligence and cryptocurrencies are energy hogs on a par with steel mills. Microsoft, for instance, wants to build nuclear power plants just to service its A.I. operations.    

So the whole notion that non-carbon renewables are “the wave of the future” is starting to look like mere backwash. Most likely, we’ll have “all of the above” energy systems coexisting for a long time. Maybe forever.  

But won’t we run out of some energy? What about “peak oil”, Which has been variously prophesied as happening in 1922, 1960, 1971, and so on? So now here’s a possibility that the world’s eco-energy establishment hasn’t yet come to grips with: Carbon fuels, too, are renewable. How so? It’s more than possible that the earth is actively making carbon fuels. The “abiogenic” hypothesis holds that production stems from the vulcanism of the earth, not dead dinosaurs. If we consider that the earth’s core—diameter, 1500 miles—is the same temperature as the surface of the sun, we can start to see how that much heat could crack carbon, the planet itself being Mother Nature’s own beneficent refinery. So, quite possibly, the “fossil fuel” label is a misnomer, to be regarded as one more bit of rhetorical sleight of hand aimed at convincing people that carbon fuels belong on the ash heap of history. 

The abiogenic theory goes all the way back to the 16th century metallurgist Georgius Agricola—with assists from such other legends as the naturalist Alexander von Humboldt and Dmitri Mendeleev, the inventor of the periodic table in chemistry. If it’s true, that explains why we keep finding more carbon fuels; since 1970 oil reserves around the world have tripled. Importantly, reserves is a technical term regarding the current-moment political economics of oil production; the better, broader, term is resources—the actual amount of stuff in the ground. 

Of course, not all the energy is in the ground; a lot of it is in the ocean. Frozen at the sea bottom are quadrillions of dollars’ worth of methane hydrates. And, speaking of energy resources with no connection to fossils that we know of, we can add the oodles of methane, aka natural gas, on Mars and on Saturn’s largest moon, Titan. That’s just what we know about, extraterrestrially.  

To get a measure of resources closer to home, we can look to the Institute for Energy Research, which finds that the U.S. boasts oil resources totaling 2.9 trillion barrels. At the current price of around $75 bbl, that’s a tad more than $217 trillion. That dollar total is more than six times the U.S. national debt, and about eight times our GDP. Given that much wealth, with deficits and all, is it really to be expected that we’re going to leave it in the ground? Maybe Massachusetts will, but Texas won’t.  

Indeed, once Americans figure out that the whole country could be like Alaska—where last year each resident received a dividend of $3,284 from the oil-based Alaska Permanent Fund—the pressure to not strand it, to not leave it in the ground will be, shall we say, beyond the power of the greens to shut down. Interestingly, the U.S. is not uniquely blessed with such wealth; this country accounts for less than two percent of the earth’s surface; there’s plenty of everything everywhere else, too. Drilling or digging it out is just a matter of political economy—capital goes where it’s safe to go. 

Ah, but what about climate change? If there’s too much carbon dioxide in the atmosphere, there’s a simple enough solution: take it out. That’s what trees and other green plants have been doing for a good long time, at no cost to us. And there are other mechanisms, as well, for carbon capture, as this author has detailed in the pages of TAC, here, here, and here. Just in October in Foreign Affairs, Sen. Bill Cassidy, Republican of Louisiana, offered a grand-strategic vision of carbon-fuel production and carbon capture (and a pro-American industry “foreign pollution fee” on China to boot).

Carbon capture and carbon utilization epitomize the circular economy thinking that the greens should love. Yet for now, they don’t. As Politico’s “Power Switch” newsletter explained on December 18, adding its own worried tone, “An idea scientists once envisioned would help remove small amounts of carbon from the atmosphere is steadily being built up as a global excuse to keep on burning fossil fuels.”

Well yes, that is kind of the point: The world is looking for excuses to keep on burning carbon fuels. And those excuses can be summed up in one word: money. So much money—zillions of dollars, under the ground, at the ocean bottom, and even in space—that the chances of the world not using it are close to nil. What a friend we have in carbon! That’s the way to bet, and for those interested in following the money, that’s the way to invest. 


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