I am sure you have heard that Britain has agreed to pay any costs above a threshold for all households in their country and for businesses for six months. Given Britain has no physical natural gas or fuel oil in storage to cover that contingency this is the equivalent of an uncovered call in energy trading … considered the most dangerously open-ended trading derivative in the game. Almost all of these lead to disaster.
What is worse, by making this kind of a promise, the government has basically written and paid for an energy insurance policy for everyone doing retail energy business in England and thereby discouraging any of them to enter into their own price protections. Why pay for insurance when someone else has promised to cover your losses?
One can only hope no one else in Europe will follow this bizarre and stupid promise, but I worry that other politicians will try to one up Britain by offering the same kind of price protection for their citizens as well. As of the time this was written in the Wall Street Journal, “U.K. Government to Cap Household Energy Prices for Two Years,” they were alone. If others show equal levels of this stunning stupidity we are doomed even here since it will throw energy markets further into constraints.
I thought I had seen everything, but I guess I now realize that you really can’t fix stupid. This should wake up the energy zealots pushing for carbon legislation to realize this is not the right time to continue to imply we are going to put the fossil fuel industry out of business. It is precisely this saber rattling that has lead us into a worldwide shortage of supply vs. demand.
When will we wake up and smell the coffee? Water is really more important to fix … see the Great Salt Lake and the Colorado River issues. We need to curb consumption and to ask critical questions about the correct value of something we all take for granted.
Why are we so afraid of asking the right questions? Once again, Planet of the Humans indicates all the reasons why. Please watch it.