Jamie Dimon’s Testimony Caps A Confrontational Energy Week

When, at some point in the distant future, we are all able to pause to catch our breath and reflect on the causes of the expanding energy crisis, it seems likely that this past week will be seen as a key moment when reality about the crisis facing the world began to set in. It was a week that saw the reversal of a national fracking ban, an extraordinary speech by the leader of the United Nations, and some very frank statements by two high-profile CEOs.

It was also a week that saw the release of a new study detailing the disturbing possibility that a continent could run out of a key energy commodity.

Will Europe Run Out of Gas This Winter?

On Wednesday, energy analytics and intelligence firm Enverus released a new study titled “The Hope for ‘A Normal Winter’ Key to European Gas Outlook.” An emailed summary of the findings projects that “If colder-than-expected weather hits, Northwest Europe could run out of natural gas by March 2023.”

“Our scenarios show that failure to ration gas supply sufficiently this winter would mean that European countries would exhaust stocks by February 2023 if winter temperatures are lower than usual,” Krishna Sapkota, Enverus Intelligence senior associate, said.

Sapkota goes on to note that, should the EU countries successfully implement the 15% demand reductions that are their stated targets, then they could emerge from the coming winter with natural gas stocks standing at similar levels seen this past April. If, that is, the continent experiences what is considered to be a “normal” winter, in terms of temperatures.

The reality is setting in that we should all hope for such a normal winter.

The UK Rescinds its Fracking Ban

Early Thursday, officials in the United Kingdom announced the recission of the 2019-imposed ban on hydraulic fracturing – or “fracking” – for shale natural gas. Sky News quotes business and energy secretary Jacob Rees-Mogg as saying that strengthening the UK’s energy security is “an absolute priority” in light of “Putin’s illegal invasion of Ukraine and weaponisation of energy”.

The ban had been imposed due to concerns over seismic tremors allegedly resulting from such operations, after years of anti-fracking activism in the UK. Like other European countries, policymakers in the UK decided that such concerns outweighed concerns over energy security, the diminishment of which would be inevitable as the nation chose to forego development of its own known mineral resources in favor of importing its needs from other nations whose national interests aren’t necessarily aligned with the UK’s.

But now, the building energy crisis and the resulting skyrocketing costs being borne by ordinary citizens and the British economy have caused a re-thinking of that energy security equation. Thus, the ban considered so essential just 3 short years ago now seems somewhat less so, even expendable. Nothing causes reality to begin to set in more reliably and quickly than a major crisis.

Dimon Rejects Taking the “Road to Hell”

J.P. Morgan CEO Jamie Dimon informed congressional inquisitors at another show-trial-style hearing staged on Capitol Hill this week that his bank would not refrain from making new investments in major oil and gas development projects, telling the members when asked that question “Absolutely not, and that would be the road to hell for America.”

When asked for his thoughts about the progress of the energy transition, Dimon was just as clear. “We are not getting this right,” he bluntly said. “The world needs effectively 100 million barrels of oil and gas every day, and we need it for 10 years. To do that, we need proper investing in the oil and gas complex.

“Investing in the oil and gas complex is good for reducing CO2, because as we have all seen, because of the high price of oil and gas, particularly for the rest of the world, you’ve seen everyone going back to coal. Not just poor nations like India, Indonesia and Vietnam, but wealthy nations like Germany, France and the Netherlands.”

Mr. Dimon’s answers run decidedly counter to the ESG-focused investment narrative that has prevailed since the outset of efforts by western governments to promote this energy transition. They come as one more sign that the reality of the unintended consequences of such policy actions is starting to set in at the big banks.

UN Chief Lambasts Fossil Fuel Companies

Another notable set of remarks came this week from U.N. Secretary General Antonio Guterres, who has been major proponent of the policy decisions in the west that have led to the current energy crisis. Sec. Guterres’ comments, delivered to the U.N. general assembly on Tuesday, stand in stark contrast to Dimon’s, and are most notable for the Secretary’s decision to not only double down one more time on the ESG-focused narrative and harsh climate alarm rhetoric, but to also advocate punishing anyone who strays from that narrative.

Admitting that the world’s governments “are gridlocked in colossal global dysfunction,” Guterres accused fossil fuel companies of “feasting on hundreds of billions of dollars in subsidies and windfall profits while households’ budgets shrink and our planet burns.”

The Sec. General advocated that these industries and their “enablers” must be punished with taxes and heavier regulations, adding “That includes the banks, private equity, asset managers and other financial institutions that continue to invest and underwrite carbon pollution.”

Thus, as the reality of the consequences of efforts by mainly western governments trying to subsidize a premature transition into being start to set in, we see one of the leading global advocates for those efforts pointing fingers at the same old set of boogeymen.

Aramco CEO Slams Governments’ Failure to Plan

On the same day on which Sec. Guterres delivered his intemperate remarks, the CEO of the world’s largest oil company was effectively deconstructing them, point by point. Speaking at the Schlumberger Digital Forum in Lucerne, Switzerland Tuesday, Aramco CEO Amin Nasser took global policymakers to task for what he called a failure to properly plan for this energy transition.

“Perhaps most damaging of all was the idea that contingency planning could be safely ignored,” Nasser said in part. “Because when you shame oil and gas investors, dismantle oil- and coal-fired power plants, fail to diversify energy supplies (especially gas), oppose LNG receiving terminals, and reject nuclear power, your transition plan had better be right.

“Instead, as this crisis has shown, the plan was just a chain of sandcastles that waves of reality have washed away. And billions around the world now face the energy access and cost of living consequences that are likely to be severe and prolonged.”

Reality about the energy crisis is setting in, along with the consequences that a rising number of observers can see coming at the world like a speeding freight train. The question now becomes whether time remains to clear the tracks before the locomotive arrives.