You no doubt heard that President Biden invoked the Defense Production Act to promote additional sources of energy.
He takes the action against the rising specter of rolling brownouts expected to occur throughout the country as we face another hot summer. And people turn on their fans and air-conditioners to seek relief.
But he will only provide support for certain renewable sources of energy. For solar, electric transformers, and other grid components, heat pumps, insulation, and fuel cells.
It is an extremely targeted and specific group of grid support systems. But aside from solar, does essentially nothing to actually provide more electricity.
The President’s actions remind me of offering the thirsty man all the water he could drink. As long as he uses a teaspoon.
It’s an action that makes great headlines. But once you dig a little deeper, will provide precious little help.
The first thing you’ll note about this action by the President is that it’s another one of those executive actions. Extraordinary Actions that have little to no input from anyone outside the Administration. This allowed the President to set all the terms and conditions. And I believe this was critical, as we will see in just a moment.
Now the Defense Production Act was enacted back in 1950. During the Korean War, as a way to provide the needed goods and materials to fight that war. By invoking the Act now, Biden is signaling just how serious an energy crisis we are facing. And I absolutely agree with him here. I do think that we are indeed in the midst of a growing energy crisis.
But as to those terms and conditions, that’s where we see the real flaw in this action.
Let me give you a little background that you will not see on the six o’clock news.
One of the facts you may find surprising. From 2007 until 2021 our country’s energy production rose by only 2%. This includes both electricity and natural gas. That’s a 2% increase over a 14-year period.
So energy production has been essentially flat for 14 years. While our demand for electricity continues to climb.
Think of how many more electric devices we have today versus a generation ago.
And don’t forget those new electric automobiles, the Tesla, Prius, and all the rest. Just the kind of vehicle this administration wants you to drive.
While at the same time, not allowing additional conventional energy plants.
Fact number 2. President Biden and those on his side of the Aisle will reply that green energy: wind, solar, and biomass, will make up the difference. After all, we are currently producing 4 times the amount of green energy as we did in 2007.
Today 12% of our energy comes from these renewable sources. Just the type of energy that Presidency Biden is supporting with this current action.
But that’s only one side of the coin. The other side of the coin has been an aggressive opposition to all carbon-based sources of energy. Since 2007, we’ve lost nearly a quarter of our oil and coal-based energy plants.
This is especially pertinent to those of us who live in Pennsylvania. Home to the world’s largest deposit of clean-burning anthrax coal. All during the Obama Administration, we saw coal-powered electric plants shut down. Most of which have not been replaced.
This means that old nuclear, gas and other power plants must now work overtime in a vain attempt to make up the difference.
Fact number 3. The two types of energy, are conventional and green energy. Are measured very differently. You see conventional is available round the clock. Whenever you need it. Whether the wind is blowing, or the sun is shining. You’ll always have conventional.
Not so with these renewable sources which rely upon the sun to shine or wind to blow.
Yesterday the White House touted this action as (quote): “Executive Action to Spur Domestic Clean Energy Manufacturing.”
But when you boil it down, the only actual energy produced will be the electricity from solar cells. All the other systems are either for power distribution or insulation.
This is a President, in the face of a threatening energy crisis. Who simply will not allow this country to access traditional carbon-based systems. Even though they still produce 88% of our electricity. And do so reliably 24/7/365.
Overnight we saw a couple of interesting reports on GDP.
First Japan reported that their third and final estimate for Q1 GDP shrank by 1/10th%. This is as Japan’s economy continues to float around the zero point. A quarter barely above zero followed by a quarter below zero seems to be their pattern. As 3 out of the last 5 quarters for Japan have been below zero growth.
On the other hand, the Euro Zone saw their GDP numbers for Q1 revised slightly higher. But only slightly, from three ticks to six ticks above zero.
Any way you slice it, these two economies are struggling to keep their collective heads above water.
Closer to home, we’ve just had the latest Mortgage Applications reported. And for the fourth month in a row, and 8 out of the last 10 months, we’ve had fewer mortgage applications. A continued indication that we are starting to see the hot real estate market beginning to cool.
In some interesting international reports today. In just a couple of hours, Russia will report on its current inflation rate. Expected to remain at more than 17%. Indicating that Russia is also having trouble sourcing goods and materials.
And then late tonight, US Time, China will report their latest Balance of Trade numbers. Expected to come in at better than $50 billion in US Dollars. And should be the last report reflecting the lockdown of the ports around Shanghai. Next month should show a huge jump as the ports are re-opened.
So far this morning we’ve had some positive earnings posted. Campbell Soup is trading fractionally higher on their results. Along with gains for RV maker Thor Industries and discount retailer Ollie’s Bargain Outlet. Adult beverage maker Brown Foreman, and discounter Five Below report a little later today
Have a great day!