Nothing major happened in US markets overnight. Stocks finished a volatile session higher, with the Dow Jones rising 0.44% while the S&P 500 increased 0.37%. Trade ‘worries’ offset the view that strong US economic growth will continue to support US company earnings.
Oil prices rallied strongly. Brent crude was up 2.65% and closed at US$79.44, just below the highs reached in May. Can the rally continue to fresh, multi-year highs?
In Australia, the debate on energy continues. This is interesting, from The Australian:
‘Victoria will emerge as Australia’s “Capital of Renewable Energy” under an Andrews Government plan to build six new wind and solar farms powering up to 650,000 homes.
‘As the Victorian government chases an ambitious renewable energy target of 40 per cent renewables by 2025, the government has approved six new solar and wind projects under a reverse auction system to secure new, renewable energy supply.’
Who needs the Paris Agreement when you’ve got Daniel Andrews in charge?
Victoria’s future energy supply is in a precarious position. Bass Strait gas reserves, which have long powered the state, are in decline. Additional gas needs must now travel down the pipeline infrastructure from up north.
For a state with Australia’s fastest population growth, it’s not a great situation to be in. And now the state government is rolling the dice on renewables? What happens when the sun doesn’t shine and the wind doesn’t blow?
Let’s hope battery storage technology improves significantly in the years to come.
The other question is one of cost, which is a topic Labor governments don’t concern themselves with too much. The new projects will cost $1.1 billion. In addition, the government has announced subsidies of $1.34 billion (leading up the election, of course) to encourage the households to take up solar hot water, rooftop solar panels and batteries.
In other words, the government is taxing, or borrowing, to encourage use of renewables because the economics don’t stand up on their own.
If you’re trying to reduce energy costs, that shouldn’t happen through the use of taxpayer funds. Someone is actually paying to reduce prices, so it’s not a lower cost at all.
It’s a classic Labor line. ‘We’ll make your power prices lower (by taxing someone else to pay for it)’.
Renewables are a part of the solution… but not THE solution
We need a mix of energy to maintain reliability and keep prices down (ensuring economic productivity).
Alan Jones, in a segment on Sky News last night, reckons Scott Morrison needs a ‘game changer’ to win the next election. And that game changer, he says, is energy policy. You can view it here, starting at the 1:40 mark.
Jones says that under the Labor party’s target of 50% of renewable energy by 2030, we’d need to invest $100 billion in new wind, solar and geothermal capacity. That’s a big energy bill.
Jones points out that there are 1,600 coal fired power plants under construction in 62 countries around the world. Australia, despite having an abundance of high quality coal, has none.
He also says that we have 40% of the world’s nuclear energy reserves, but no nuclear power plants. In contrast, as of late 2017, 30 countries operate 450 nuclear reactors. There are 60 nuclear power plants currently under construction in 15 countries around the world. The US generates around 30% of the world’s nuclear energy. We are the only G20 country without nuclear power.
But Australia isn’t even looking at it as an option, despite being in the midst of an energy crisis. The Finkel Review into energy didn’t even look at nuclear.
Jones then quotes NSW deputy premier, John Barilaro, who said in a speech last year:
‘We know we have a power crisis. That energy costs are crushing businesses, farmers and families. Yet we don’t talk about nuclear energy, guaranteed to power millions, lower bills, and next to no emissions. I know I’ll cop grief, because I’m talking nuclear.’
Every year, Jones says, Australia exports 400 shipping containers of uranium, which is enough to generate all of our own electricity, with no emissions. Instead, it helps to provide clean energy for other countries, in the same way our coal does.
So we are happy to sell coal and uranium to our competitors, and for them to use it to help their energy costs and emissions, but it’s not good enough for us?
What a joke. Consecutive governments have for too long sold us out to global technocrats telling us what to do. We’ve been anaesthetised by rising house prices and haven’t noticed the complete undermining of our economic sovereignty.
If you don’t get your energy mix right, your economy ceases to function in a productive manner. And without productivity increases, there are no increases in standard of living.
As I’ve been saying for the past few weeks, there are investment moves you can make to potentially offset some of the energy pain inflicted by successive governments.
There is a new bull market emerging in this form of energy. Alan Jones knows it. Subscribers to my investment advisory, Crisis & Opportunity, know it too.
Click here to find out more.
Editor, Crisis & Opportunity