US Natural Gas and Global Energy Supplies

Today, we’re looking at the US natural gas market based on energy data from 2023. The US natural gas market was remarkably stable in 2023, so being the world’s largest producer and exporter of natural gas has its perks.

Thanks to shale and fracking tech, the US maintained an average natural gas price of just over $2.50 per thousand cubic feet (and the low was about $2.20). As soon as we zoom out, we see much more volatility in the global natural gas markets…

Most of the world faced higher prices due to disruptions in Russian supplies and increase in demand across the board. As the Russian natural gas system continues to degrade, the world will struggle to find a suitable replacement. Liquified natural gas (LNG) is a top contender, but it’s expensive and quite technically challenging. A Russia-China pipeline has also been tossed around, but I just don’t see them overcoming the logistical and financial hurdles.

As the rest of the world scrambles to figure out their energy solutions, the US will be well equipped to ride out the wave and even emerge as a key player in the global energy landscape.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

TranscripT

Hey everyone. Peter Zeihan here coming to you from flat on my back in bed because I threw out my back. This is the last what I heard from here. We have a dead update from the U.S. government, specifically the Department of Energy’s Energy Information Agency, which tracks energy production, usage and prices and everything and their data for a calendar year 2023 indicates that the average price for natural gas in the country was just over $2.50 per thousand cubic feet.

In fact, it bottomed out at just below $2.20 in May. And this is after a really volatile year in calendar year 2022, when because of the Ukraine oil cuts a slow, we’re because we’ll just we’ll just do that we’re because of Ukraine or there was high demand everywhere and everyone was trying to get away from Russian natural gas in that calendar year.

U.S. prices hit nearly $10, but that was nothing compared to what happened in the rest of the world. With prices for several months being above 50 and even approaching a hundred in a few areas, which still boggles my mind that we actually hit those numbers that way. 2023 was much calmer. And the reason for it is twofold. Number one, that the United States is not just a producer, an exporter of natural gas, but it does so using a series of technologies that are broadly not applicable in the rest of the world.

The shale technology and fracking. Because of this, the United States has a break even price in our pure shale natural gas fields, typically below five in some places below $3 per thousand cubic feet. And second, we get a lot of associated natural gas production that comes from our shale oil operations, which, you know, technically based on how you run the numbers, that could be free anyway.

It means the United States is the world’s largest producer of natural gas, kicking out about 120 billion cubic meters a year. And most of that is trapped in the system at home because moving natural gas from A to B is kind of difficult. There’s really only two routes. One is to have a pipeline network that sends it from production to consumption locations.

Usually those are within individual country because natural gas being a gas is hard to store. And the U.S. does have the world’s largest system for distribution by far. The second option is to chill it down to -300 odd degrees into a liquid form and then put it in onto a special sea tanker to send it across the ocean to someone who has a specific receiving facility, who can take the liquid and reclassify it without it blowing up.

All of that is as expensive as it sounds. So what happened in 2022 in Europe was the Europeans used to be on a pipe system that brought in stuff from northwestern Siberia for the most part, and that gave them access to reliably, large and reliably cheap supplies. So when the Europeans decided to move on from the Russians, they had to go to some other piped suppliers that they have, specifically Algeria, Libya, and especially Norway.

But that wasn’t enough. So they had to go out and tap the world for liquefied natural gas, which is not available in large volumes in the way that piped gas from a neighbor can be. And so prices went up and up and up and up. And in the United States, we sent everything that we could and that allowed the Europeans a degree of energy security, but only at a very, very high price point.

What we’re seeing now is the slow motion so far, slow motion degradation of the Russian system, because the pipes are all oriented towards Europe and they are falling into disrepair because they’re not being used. And the Russians are using all their technical experts to maintain their war effort. They do have a couple of liquefied natural gas facilities, some in the Far East and the island of Sakhalin, north of Japan, and some on the IMO Peninsula in far northwest Russia.

But it is foreigners who provide the technical skills for those facilities to operate. And as those technical skills are increasingly withheld, these facilities will fall into disrepair. And well, let’s just see when you’ve got a refrigeration unit that is dealing with billions of cubic meters of flammable materials and something goes wrong, something goes wrong all at once. We haven’t had any industrial accidents at these facilities yet, but it’s only a matter of time, one year to year, five years.

I don’t know how long before those facilities go offline and then Russian natural gas will be gone. Getting it out by other means is nearly impossible. There are very few countries that can do LNG liquefaction. China is not on that list. Most of them are part of the Western alliance plus Japan that is backing Ukraine. And if you’re going to get a pipeline for the small peninsula to populated China, you’re talking about the world’s largest chunk of infrastructure with roughly 70% of the train it’s going to cross being virgin with no existing infrastructure at all.

So you’re talking tundra and tiger and permafrost and mountains. Building that pipeline would be $100 billion project. It would take a minimum of 15 years. And even if it was done, the cost of operating would be two, three, four times as much as the natural gas would be worth. So the Russians and the Chinese repeatedly say that this pipeline is going to happen.

They’ve been saying that for 20 years. And then you get down into the details and the traders again, the Russians are going to pay for the operation pipeline. And the Russians, like, you know, the Chinese are going to pay for the operation of the pipeline. And that’s why nothing has started. So the world has to get by without Russian natural gas.

And until a year and a half ago, they were the world’s largest exporter. That is going to have big price implications everywhere except in countries that produce natural gas for themselves. Read the United States. Now, that means in the United States, the 2 to $3 range we’re in right now is more or less normal. We’re not going to go above five for any more than very short periods of time, because what we’ve discovered is that the shale gas guys can bring on well, wells in a matter of weeks.

If you remember your shale history back between 2004 and 2011, roughly, it was all about the natural gas. And then in 2011, the 2013 oil really came into its own and natural gas faded, not because we were producing it, but because we were producing it as a byproduct of oil production. What we saw in calendar year 2023 when prices were going up is that the shale guys went back to the old natural gas fields and were able to produce using the tricks they’d learned in the shale oil fields the last ten years.

And that pushed down the cost of production and push up the volume of natural gas that was produced by massive volumes. And we basically got back to a balanced market. Now, the United States does have takeaway capacity to get some of that natural gas to international systems. We have roughly 10 billion cubic feet of pipeline capacity, mostly in Mexico and about another 10 billion cubic feet for LNG, which is mostly going to Europe now.

That’s in comparison to 120 billion cubic feet of overall production, which is a number we now know that we can increase in fairly quick succession when we need to. So again, prices should be lower for a longer. We might have those occasional spikes, but then the shale guys will just drill and bring the price right back down. Now, why does that matter to you?

Three big reasons. Number one, natural gas remains the number one fuel source for electricity generation in this country. About 40% of the total. So anything that requires electricity, which is almost everything, natural gas is the solution, at least in the mid-term. And since the United States needs to roughly double the size of its industrial plant. As the Chinese fade away, we basically need 50% more electricity, and natural gas is going to be a huge component of that.

Second, let’s say you don’t like fossil fuels at all. Let’s say that you’re a greenie and you like solar and wind. Well, you should still like natural gas because when the wind doesn’t blow or when the sun doesn’t shine, which happens, you know, every night, you need a partner, a fuel in order to keep the lights on. And natural gas combined cycle power generation facilities can spin up and spin down in less than 15 minutes.

So they are the best partner for GreenTech that we have. And while the Californians don’t like to say it out loud, about half of their energy that they generate within California itself comes from natural gas, specifically because of this pairing capacity batteries cost an order of magnitude more. They don’t last very long and they have some other problems with their construction That is ugly from any number of strategic and green points of view.

Natural gas is a known and as long as we’re going to be moving towards wind and solar for most of this country, even in increments, natural gas is the logical partner for all of it. And then the third thing is a little bit more esoteric, and that has to do with what happens in manufacturing. Once you decide you want to really get into everything in globalization, we have broken up the supply chains.

Energy comes from someplace, iron ore comes from someplace, steel comes from someplace else, plastics comes from someplace else. It’s brought together for assembly, different locations. As the world breaks apart and we have a more national or continental system, more and more of those intermediate steps need to be done at home or near home. And a lot of those intermediate steps use raw materials that are made from natural gas.

So natural gas makes naphtha, makes polyurethane makes plastics, naphtha makes fertilizers and pesticides, makes agricultural products. Natural gas is the base material for a lot of this stuff. And now the United States is the largest producer, supplier and exporter of all of those intermediate products. And what we’re seeing now is the U.S. moving up the production chain, moving in a greater value added production system for all of this so that we can still do the classic manufacturing and have the entire input system at home.

So to have natural gas at these price levels for a very long time is great and it’s going to be a very long time. We largely stopped looking for natural gas about ten, 15 years ago because we knew at that time we had over 30 years of supplies at current rates of production. And we proved in 2023 that it’s pretty easy to bring even more on line.

So this is going to be the norm for the United States while it goes through these massive re industrialization phases. And natural gas will both power fuel and provide the base materials to make all of the possible. And that is not going to be replicated any where else. No one else can produce natural gas at the price point that the United States can.

And no one else has. In natural gas production facilities relatively close to the population centers like the United States does. So this this is our new normal, and it’s going to provide the bulwark for American industry for at least the rest of this century.

How To Do Greentech Well: The SunZia Wind Farm

The largest Greentech power generation system in the hemisphere is under construction in New Mexico. SunZia has raised $11 billion for this project and aims to generate 3.5 gigawatts of wind power for the NM, AZ, and CA energy markets.

This is a massive step for the green transition, and it will play a pivotal role in bolstering green power generation within the US. You might be wondering why they chose wind power; well, it’s more cost-effective than solar, more reliable, and tech advances have enabled us to tap into more stable and powerful currents.

The transmission component of this project is important to; it shows that the energy can be generated and captured in regions with low demand and moved across state lines into areas with high demand. We’ll have to wait and see how this will work in practice, but this is looking like a ‘win’ as of now.

The SunZia project is just the tip of the spear as we’ll continue to see more of these projects pop-up soon, but this is a great start for the green transition. The first energy from this plant isn’t expected to be generated until 2026, so don’t pop the bubbly quite yet.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

TranscripT

Hey, everybody. Peter Zeihan here coming to you from Colorado. Now, I get a lot of flak for never having good news. So I figured, you know, here, here’s something fantastic that’s happened over the holidays. There’s an organization called Sun Zia, which is a company that produces and transmits electricity that has closed funding and started construction on what will be the largest green tech power generation system in the hemisphere, 3.5 gigawatts, which in electrical terms is huge.

Why does this matter? A bunch of reasons. Number one, $11 billion is how much money they had to raise. Raising money these days is difficult because the baby boomers are majority retired. All of their capital, all their savings has been put into relatively static things like cash and T-bills. And so if you’re trying to raise funding for anything, it’s gotten a lot more expensive.

In addition, unlike if you were to build, say, a natural gas power plant or anything that’s fossil fuel based with those systems, fossil fuels, only about one fifth the cost of your of your full lifecycle cost for your facility has to be raised at the front end to pay for construction. But most of it is instead raised from fees when you’re generating the power as you go.

Instead with green tech, two thirds of the cost is upfront because there’s no fuel costs, but the upfront cost is much higher. So you’re talking about two thirds of the total value of the entire lifecycle of the project has to be raised before day one. And so doing that at all is difficult. Now the capital costs of roughly tripled, but Sunsilk was able to pull it off.

So our number one big achievement for the capital cycle. Number two, the size 3.5 gigawatts, biggest in the hemisphere. If we are going to do the green transition, we need to increase the amount of power generated in the country by at least 50%. This is a nice little bite taken out of that. But from my point of view, if we’re going to deal with the post China world and expand the industrial plant to manufacture everything we need, we need to expand it by another 50%.

So regardless, if you’re a green, if you’re pro-development or both, this takes us a significant step forward. We still need another 500 of these steps, but you know, we’re going in the right direction. Okay. Number three, what it is, it’s wind and it’s in New Mexico. So wind, as a rule, is much more cost effective. And solar in large part because every time the sun goes down, all those solar panels just become paperweights, whereas the wind blows at night.

In addition, while we have had incremental improvements in the capacity of photovoltaic cells over the last 15 years, it’s nothing compared to what has gone on with wind. It used to be that wind turbines were 100 feet tall.

This year we’re going to have prototypes for ones that are thousand meters, 1000 feet, 300 feet tall. You know, just massive, massive structures. And they generate more than an order of magnitude more power than the old ones do. And more importantly than their size is their height, because they’re reaching wind currents that are far more stable and far stronger.

And so we’re seeing places in Texas, in Iowa, and now in New Mexico that are using some of these taller turbines to not just generate intermittent power, but baseload power. And that’s one of the big problems with green tech. If the wind stops or the sun goes down, you’re kind of out of luck and you have to switch to a more conventional system or a battery system, which is much more expensive.

But if you are tapping a wind current, that never stops, you can use it for baseload and avoid both of those problems. And that’s part of the goal here for the Sun Zia project. But fourth, and I think most importantly is that unlike almost every green tech project that we have done in the United States to this point, a huge portion of his own solar project is transmission.

They realize that there aren’t a lot of people in New Mexico and Albuquerque can only suck up so much power. And so this project includes massive transmission lines that go into Arizona and link into the network that goes into Los Angeles. And of the three and a half gigawatts of power generation that they’re anticipating all but a half a gigawatt of it is for export to the Arizona and California markets.

And the fact that this taps into the L.A. market is beyond awesome. I don’t know how many of you have heard of California, but doing business there is almost impossible. Electricity demand is hardly encouraged, but in many ways, electricity generation is flat out illegal. Very heavy regulatory environment. The state is also very power hungry and they import about a third of their electricity because they’ve made it very difficult for producers to operate in their home state.

Arizona is by far the single largest supplier they have. And every night when the sun goes down and all those panels of Californians built stop working, ten gigawatts of fossil fuel power comes from Arizona across the border, flooding into the L.A. zone. The Sun Zia project will now be able to put roughly three gigawatts of power into that network.

It doesn’t solve it at a stroke, but it’s a much more sustainable program from an environmental point of view than anything that we have right now. So, you know, a great step forward. One of the big things that we forget about in the wind and solar is not just the intermittency. It’s just that not everybody is places sunny and not every place is windy and most people don’t live in those locations.

So our best wind locations are the Great Plains from eastern Montana, North Dakota, going down to the panhandle of Texas and west Texas. Our best solar zone is from southern California. Go into west Texas as well. New Mexico is on the edge of that great Plains region, great wind potential, great solar potential. But there aren’t a lot of people in that entire area.

You got a wire somewhere. And this is one of those projects that has managed to work out the details of crossing state boundaries, two of them, and getting power to where people actually live in Phenix and Los Angeles. So we need many, many, many, many, many, many, many, many, many more of these for this to go. But the fact that we have our first really big one that’s already started construction.

First power is expected in 2026. It’s a great start.

 

Texas Did Not Fall Down: Energy Grid Updates

With cold fronts rushing through much of the country, the Texas power grid had lots of eyes on it this past week. Thankfully, some “updates” over the past couple years have helped the Texans avoid catastrophe.

There’s a handful of reasons this storm was weathered: a shorter cold snap, regulatory changes, and structural updates. The first one is self-explanatory, but let’s breakdown the last two.

Governor Abbot introduced a series of winterizing efforts following the 2021 crisis, which enabled the natural gas system to continue operating through the storm. The winterizing technology used is over 50 years old, so I use the term – updates – loosely.

As for the structural updates, Texas is a bit ahead of the game; they’ve introduced some ‘Texas-sized’ wind turbines and expanded solar capacity. Combine the expansion in clean energy and a more reliable natural gas baseload system, Texas had its bases covered.

These changes made in Texas are just one example of how global energy systems will adapt and evolve over the next few decades.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

TranscripT

Hey, everybody. Winters here. I’m coming to you from Eastern Washington. And today we’re going to talk about winter in Texas. Now, if you guys remember back a couple of years and it was 2021, Texas got hit by a cold storm and basically everything collapsed. All of their energy generation, especially natural gas, just ceased functioning and 200 people died over the course of a couple of weeks because of the loss of electricity.

That has not repeated with this cold front, even though by many measures in most parts of the state, temperatures got a little bit lower. So five things are different now compared to what happened back in 2021. First of all, while it did get as colder, even a little colder, the cold snap wasn’t quite as long. It didn’t last like the two and a half weeks like it did last time.

So the system wasn’t put under as much long term stress. But the bigger issues have to do with organizational and structural changes that the Texans have implemented. The big driving factor for things on the legal side of the regulatory side was Governor Abbott, who had spent a lot of time before 2021 making fun of California for the rolling brown and blackouts because they just have a horrible grid and a horrible energy system.

And then, of course, in Texas you had two or two people die. So he was personally motivated to make some changes and he pushed them through the legislature, which forced the regulatory structures in Texas to adjust. And the biggest part of those changes affected the natural gas industry. So Texas, before 2021 didn’t have its natural gas system winterized at all.

And there’s a lot of water vapor that comes up as a byproduct of natural gas production. And a lot of time it’s in the gathering pipes. So what would happen when we got to subfreezing temperatures is that water vapor would condense into liquid and you go virtually condense into ice and then clogged the pipes. So the entire system across, especially northern Texas in the Dallas area, froze up.

And so there was no fuel to burn, to do everything else. For political reasons, Abbott blamed the wind industry because, you know, when dad stopped going, but it was mostly natural gas that carries the backbone of power generation in Texas, and that is what failed most spectacularly. So in order to get things going, they actually had to waive almost all of their safety regimens and regulations and people were going out with acetylene torches to manually melt the pipes.

And of course, natural gas is flammable explosive. So we were kind of lucky that that didn’t get completely out of hand anyway. This time around, the changes in regulations forced producers across Texas to actually implement some of the best winterizing technologies that we had back in the 1960s. And the Texas grid now is on par with where Arkansas, Oklahoma and New Mexico were about 1975.

So, you know, this is some really basic stuff when it comes to things like insulation. Anyway, it was more than enough to make a difference. Okay. So that was the first big structural change. The other big structural changes had nothing to do with regulation. It’s just how things have evolved. So the new turbines, wind turbines that the Texans had put up more than 200 feet taller than the ones that were up three years ago.

And that means they reach higher. They tap stronger air currents that are more reliable. So even though the wind did drop, we hadn’t seen nearly the drop off in power generating capacity because the physical structure is now different. Second, Texas has put up a whole lot of solar. And when these winter storms come through Texas, usually what you get is a lot of wind, a lot of freezing rain, maybe some snow.

And then once they blow through, it’s cold. Well, but it’s clear air. And so when you have temperatures in the twenties, solar doesn’t really care what the temperature is unless it’s like crazy lower, crazy high. So solar was generating near record energy for the time of year. So you had two different streams of energy coming into the electrical system that they didn’t really have last time.

And they’re baseload system with natural gas worked a lot better than it did. This sort of change is the sort of thing we’re going to see in some way across not just Texas, but the entire country, the eventual world. We’re seeing more and more wind and water and more solar. And it doesn’t always go right the first time.

And we discover that meshing these systems together is more problematic than kind of the breezy things that the Greens say. But when you have multiple systems that do feed into the same network, you do get a lot of redundancy when one works and the other doesn’t. The trick is to make sure you have enough spare capacity that you can dispatch at any given time.

Now, in the past, solar and wind aren’t very good at that because you can’t dispatch them. If the sun’s out, out of the wind’s not blowing, they’re kind of useless. And you have to rely on older fossil fuel. Things like natural gas. But what we’re seeing in Texas specifically, as it were, already seeing turbines that are 800 meters tall.

But in the next year or two, we’re going to be pushing the kilometer tall barrier and again, stronger currents, more reliable use for baseload. So I don’t mean to suggest that all of these problems when it comes to storms and interruptions are going to go away. But as the technology evolves, we’re getting better able to adapt and having a little bit more insulation on the back side as well.

That’s it for me.

 

China’s Energy Problem and Dealing with the Taliban

When one of your best options for securing an energy supply route is with the Pakistani Taliban, you know you’ve got some problems. So go ahead and add that one to China’s ever-growing list of ‘shit to figure out.’

The issue China faces is that securing a safe and reliable energy supplier is practically impossible no matter where they turn. Given their geographical position, the Chinese have to go through Pakistani Taliban territory, deal with rivals like India, go over treacherous terrain or a combination of all those.

China’s energy will remain vulnerable until they can sort this out, but at least they have a stockpile of low-quality coal to keep the lights on until then.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Europe’s Cold Winter Threatens Energy Supplies

We all know Mother Nature saved Europe’s behind last year, but that won’t be the story this year. So, let’s break down the potential impacts on energy supplies across Europe.

With cold temps settling in much earlier than last year, those energy stockpiles won’t last too long. Europe has reduced its dependence on Russian energy, but can the continent’s new energy suppliers keep up with demand?

We will see this energy diversification’s effectiveness put to the test very soon, and any disruptions could carry global implications. This will likely serve as an ‘aha’ moment for countries that source energy from far away and poke holes in that vulnerable system.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

TranscripT

Hey, everybody. Peter Zeihan here. Coming to you from Colorado. It is the 5th of December. You’ll be seeing this the following week. And today I want to talk about the weather in Europe and what it’s setting up for us. Unlike last winter, which was one of the warmest winters on record in Europe, winter has come a little bit early across the continent, and it’s a little colder than normal.

We are in roughly the thirties to the forties in Berlin at about ten degrees warmer than that in Paris, about ten degrees colder than that in Kiev. So much more typical, maybe a touch on the colder side. The problem we have, of course, is that the Europeans have gotten most of their energy from the Russian space and they’re in the process of trying to phase that down to zero.

And they’ve had a relative success in doing that. Lots of hiccups, of course, But, you know, it’s a big place.

They’ve done this by doing two things. Number one, they’ve shut down some of their heavier industry, although some of that did come back on this lot online this summer. They’ve also grabbed a lot of natural gas from the United States. The Norwegians have really bellied up to the bar with some new projects and then they’ve gone into kind of what you might consider their near abroad, places like the Middle East and basically and West Africa and just taken everything.

That means that if you are a country that used to get things from those zones and I’m thinking here about Southeast Asia or East Asia or Africa, you’re now getting your crude from further and further away. And this is going to spell some interesting things this this winter. The Europeans lucked out last year because they had such warm weather that they were able to keep energy prices under control and only had to go through a few controlled brown and blackouts if they were to have a really harsh winter.

We’re going to put to the test all the things they put into place over the last year and a half since the Ukraine war. And it’s too early to say that that’s going to be wildly successful or horrible. But what we do know is that because they have reoriented their supplies from further away now and everyone else is now having to get stuff from you and further away.

For example, the anything that the Russians are exporting right now typically goes still out to the western ports on the Black Sea and the Baltic Sea, then goes all the way around Europe and then through Suez or around Africa. But to get to East Asia, for example, which is, you know, a for almost as far actually I think it’s a little further than halfway around the planet.

It is a big place, especially when you throw in Africa anyway. It means that if there is a disruption for any reason, we’re not just looking at the Europeans having problems this time around, it could be much bigger. Something to keep in mind is that there are very, very, very few countries on the planet who have the ability to project maritime power.

The top of the list, of course, is the United States. But the U.S. is in its own energy bubble, so it’s really a non-factor. The second one is Japan. They’ve got the second largest long reach Navy in the world. The United Kingdom is clearly in the third place. The French are clearly in fourth place. And after that, it’s kind of a mix of regional navies.

The Japanese get a lot of credit for having a lot of ships, but most of their ships are these very small 2000 ton Corvettes that really can only sail a few hundred miles. So they may have a lot of vessels, but they don’t have a lot of weight and they certainly don’t have a lot of reach. So in any scenario where there’s not enough energy, either because of a disruption somewhere or a strike or a war, the Europeans are perfectly capable of using their regional navies.

And I’m here thinking like the Spanish navy, the Turkish Navy, the Italian Navy, in addition to the French and the Brits to go into their near abroad and ensure the oil and the natural gas comes to them. And it helps that the United States isn’t going to be a security problem from an energy point of view, and it helps that Norway is hooked up by pipe.

No one else has that. So if you have a disruption, the United States is fine, the Europeans are fine, and the Japanese have the reach and the friendship with the United States to make things happen. No one else does. So we’re now entering a situation where harsh winter anywhere in the world can generate an energy crisis or a military conflict anywhere in the world can generate an energy crisis, or a political spat anywhere in the world can generate a energy crisis, and it makes for a much more vulnerable system because it’s not like you can go next door.

You now have to go several countries away or maybe even a couple of continents. And for most of the world, that has never been an option. And for the countries where it is, they’re the ones that have the military to make sure it works. So it’s not so much that I am worried about Europe this winter, although I’m not not worried.

We haven’t put any of this to the test. I’m worried about everybody else because the Europeans have the capacity to use multiple tools to try to address their problems and they’ve got allies to help. No one else can claim that.

 

Generating Geothermal Energy Using Shale Technology

The Google-backed company, Fervo Energy, has launched two geothermal projects that use preexisting shale technology and infrastructure to generate electricity. Could this be a partial solution to the looming electricity shortage?

The pilot project in Vegas is too small for me to place any bets, but the next project in Utah aims to be on par with other large power plants. This technology allows us to tap into the Earth’s crust, detect and access hot zones where they might not typically be found, and develop a reliable and dispatchable energy source.

Again, don’t go counting those chickens until we hear back on whether this project was a success or not. In the meantime, we’ll appreciate this technology as a refreshing solution in light of a rather hefty need for power supply expansion.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

TranscripT

Hey, everybody. Peter Zeihan here. Coming to you from the Denver International Airport, where I am waiting for my flight. It’s my last business trip of the year, so it’s kind of exciting. Anyway, it’s early December, and the news is that in late November, a new project for geothermal launched near Vegas. And by launch I mean began operations. And I’m just starting drilling.

It’s Furbo energy. It’s backed by Google. We don’t have any data on what their cost point is because, you know, it’s Google and as a pilot project. But Google has been sufficiently excited about it to go ahead and launch another project in Utah. The one that’s in Vegas is only about three and a half megawatts, enough for about 2600 homes.

So very, very small scale by really any power plant standard. But the next one is going to be 400 megawatts, which puts it up there with some of the larger power plants in the world, assuming that it is spec, geothermal is awesome where it works because you can tap heat within the crust to generate steam and use the steam to generate electricity.

It’s green. It doesn’t have any chemical issues. And one of the best things about geothermal is you can use it either for surge or for baseload. You just decide when you’re going to use it, which makes it a lot more reliable and dispatchable than, say, solar or wind would be. Because, you know, the earth is pretty much always hot.

That’s part one. Part two, what makes this interesting is that it’s not a typical geothermal project. So normally with geothermal, you’re tapping something like a geyser or hot water worth a hot spot that’s relatively close to the surface, usually within just a few hundred feet. But this is the first project that’s been attempted in so far successfully that uses shale tech to go after a different sort of geology.

So rather than letting the earth put something that’s up close to the surface that only happens in a few places, it’s almost exclusively in the Rockies. And as you guys know, the Rockies are not exactly densely populated. So geothermal with the old style is only providing about 0.4% of overall American electricity supply. But with the shale tech, you can drill down, in this case, 7000 feet into a hot spot that is nowhere near the surface.

And that means assuming this works and works at scale, that means we can do this everywhere where there’s shale, where there’s not geologic activity. You’re not going to do this in the San Andreas Fault, obviously. Let me do a better job of explaining that the two things that make shale technology really appropriate for geothermal and you know why it works in general is, number one, you’ve got really good acoustical detection by using some version of sonar and you can bounce sound waves off of different types of formations at different levels within the formation and map them out from the inside out.

That’s how they know exactly where to go to the petroleum rich strata when they’re doing oil and gas production. And then second, drilling has advanced in courtesy of shale. So you go down and then laterally in order to access whatever the specific layer is that you don’t have in a straight line. So it’s like you can go up into like the fingers of a curved hand.

So you apply this to geothermal and really what you’re looking for impermeable zones that are really, really hot, and you can pick that up with the acoustics. So by taking these technologies, you can go to the best, densest, hottest material possible in order to then run your liquid into it, which it then captures the heat, which can then be used to generate electricity that is potentially a game changer.

One of the big problems the United States is going to be facing over the course of the next decade is a massive, massive shortage in electricity. Even if we don’t do the green transition, even if all we do is reshore a lot of manufacturing to deal with a post China world, you’re talking about conservatively expanding the power supply by 40%.

50% would make me feel a lot better. That includes processing for things like aluminum and lithium and the rest. You know, that’s a lot of power. We haven’t had that kind of power in decades. The green transition would have problems on top of that. And so if we can take something like geothermal and existing technologies that are now off the shelf and apply them at scale in all 50 states, now you’re talking about a very different sort of math, because these things can, in theory, come online pretty quickly.

And so those of you who follow the shale sector know it only takes 6 to 12 weeks to bring a shale project online. And most of that is involved in the drilling and the fracking. Oh, that’s exactly the technology we would be applying to geothermal. So obviously it’s not a complete plug and play. Electricity is different from generating oil or gas, but the the technology and the ways that confusion are very promising.

We’re just waiting from Google to find out what the numbers are, to know if this is economically viable or not. And that’s the whole point of the Utah project. Okay. That’s it. Take care.

 

Modular Nuclear Reactors Are Not the Future of Energy

A while back, I talked about a few technologies I was most hopeful for – small modular nuclear reactors being one of those. Click below to watch that video…

Unfortunately, we’ll be drawing a line through it (for now).

As we enter a period of capital scarcity and top-heavy demographics, many companies working on these modular nuclear reactors have been forced to abandon ship. This complication adds another layer of complexity to the growing energy demands of the next decade.

So, if you were hoping to go off the grid with a reactor strapped to the back of your truck in 2030, it might be time to change your plans…

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

TranscripT

Hey everyone. Good morning from chilly Colorado. It’s a balmy ten degrees today. I got some bad news. So for those of you who’ve been following me for a bit, you know that over the summer I recorded a video of the five technologies that I was most hopeful one for. The issue we’re facing is that we’re entering into a period of extreme capital dearth and a shortage of people in their twenties and thirties, while the twenties, people in the twenties, in the thirties, and the folks who get together to imagine the future and develop the technology and a lot of cheap capital is required to bring it to mass manufacture.

And without those two factors, the pace of technological change that we’ve been used to seeing these last 2025 years is going to slow considerably. And that’s before you consider any sort of general dislocation because of demographic aging or drops of consumption or breakdowns in globalization. So the pace is way too slow, incredibly. And the question is which technologies are kind of already at the hub, where they’re just right on the edge of mass manufacturing mass application.

And one of the technologies that I identified was something called small modular nuclear reactors. The idea is you have a reactor that’s small enough to fit on the back of a semi-trailer and you can just plug it in to any other power system. So if you’ve got a coal plant, for example, that you were looking to decommission, you can pull one of these in or two of these based on the size, you know, up to ten and just plug them in and they’re good to go.

And the 20% of electricity that the United States gets from nuclear currently could continue in perpetuity. Well, over the course of the last couple of weeks, the companies that were involved in building the prototype of abandoned the project. They say the numbers no longer make sense. They couldn’t get enough sponsors. So if this technology is going to continue, it’s going to continue at a later time with different players in an environment of even sharper limitations on technological development and capital availability, which means it’s probably not going to happen this decade at all, which means the 20% of the electrical grid that is supplied by nuclear right now is going to fade away because with a

couple of exceptions, all of those reactors are older than I am and I turn 50 very, very soon. So not only do we need to massively increase the amount of power generation, we have to double the size of the industrial plant as the Chinese break apart, and we need even more power in order to do the green transition and maybe move to a more electric future.

We also have to replace 20% of our total energy supply, which is at the moment all baseload, which is something that wind and solar can’t come up with or can’t work with because they’re too intermittent. So we just saw our overall challenge for the next decade become inordinately more difficult unless of course, someone picks up this technology very, very soon.

Sorry. All right.

Ask Peter: Can Thorium Solve the Nuclear Problem?

Note: This video was recorded over the summer during one of Peter’s hikes.

Thorium is a potential substitute for uranium-based nuclear power, but will it solve our nuclear problems? If thorium could help with the proliferation of plutonium and make it harder to create weapons on the backend, adoption of more nuclear power might be easier….but thorium isn’t our knight in shining armor.

Here’s the grossly over-simplified uranium nuclear process: you take the usable uranium and separate it from the other isotopes, then convert it into something like a fuel rod, then it’s placed in a reactor which generates heat which spins a turbine. (Like I said, grossly over-simplified) Once that’s done, one of the waste materials is called plutonium.

The process with thorium is a bit more involved and requires different infrastructure, but you still end up with plutonium. Sure, it’s marginally less of the bomb-making stuff and in a bit more complex compound mix, but there’s STILL plutonium.

While this is an interesting tech that should be explored by countries with a bunch of thorium (like India), this doesn’t solve our proliferation issue. Plus, there’s still an entire set of other problems that need to be considered, such as disposal and storage.

Barring the development of fundamentally new tech, nuclear power might be losing its place in the US energy mix. As a result, growth in electricity production will be seriously hampered even if all this new Greentech works perfectly.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Lithium: The False Profit of Electrification

Note: This video was recorded over the summer during one of Peter’s hikes.

Lithium has played an important role in the green transition and remains a crucial resource for the future of electricity; however, it’s not going to be all sunshine and rainbows for lithium…

While lithium is the primary option for electric vehicle batteries, its low energy density and safety concerns leave much to be desired. Unfortunately for us, lithium is pretty much the only option at this point. There remain some much-needed breakthroughs in the battery chemistry space, but even if those happened tomorrow – reaching mass production would take at least a decade.

The lithium supply chain is no clean sheet either. Chile and Australia are the top producers, but between nationalization efforts in Chile and a slower extraction method used in Australia – disruptions are pretty standard. The bottlenecks don’t end there. Processing capacity is concentrated in China, and with collapse right around the corner, get ready for a whole new slew of problems.

If I controlled the flow of investments into this sector, I wouldn’t be dumping billions of dollars on lithium production. Instead, I would allocate funds to the physical science research to develop a better battery chemistry. Diversifying our battery technologies is the only way to make the green transition stick without hindering global progress toward sustainable energy solutions.

If we put all of our eggs into the lithium basket…We’ll have a long road ahead of us.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Why Green Energy Can’t Satisfy Electricity Demands

Would you try to fly a kite when there’s no breeze? Or try to surf when there are no waves? If you answered ‘no’ to those questions – CONGRATS – your basic analytical skills are much better than those tasked with the green energy buildout. Now we just need to test your math skills…

With a resurgence of manufacturing and industrialization in the US, electricity generation needs will skyrocket. I’m all for green energy, but it needs to be done the right way, in the right places, and with the right energy infrastructure to support it.

Conservative estimates show electricity demand increasing by more than 50%, and the green transition will complicate that even further. I’m still a Green, but no matter how hard we try – green energy isn’t going to solve this problem alone.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Transcript

Hey Everybody. Peter Zeihan here coming to you from northern Indiana at the Nipsco coal power plant. That is not a nuclear cooling towers, just coal cooling tower. This power plant is on schedule to be decommissioned around 2025 and then replaced with wind and solar. But I don’t know how many of you guys have been to northern Indiana, but this is neither a windy nor sunny area.

More to the point, if things go with the Chinese and to a lesser degree the Europeans in the direction that I think it’s going to. And if the Americans decide they still want stuff, the industrialization wave that’s coming here is going to be unlike anything we’ve seen before. And it’ll be a lot faster than what we did in World War Two.

But it also means that we need to generate a lot more electricity wherever that comes from, because manufacturing takes more power than services. And doing the processing for things like lithium and steel and the rest takes a lot more power than it does for normal manufacturing. So we need to conservatively increase the power plant in the country and transmission capacity by at least half.

And there’s only been one year since 1960 where we’ve increased power generation in the country by more than two and a half percent. And that’s what we did the year we were coming back from COVID. So that was just turning things back on as opposed to actually generating more. So I’m not saying that coal’s the future or anything like that.

I’m just saying we need a lot, a lot, a lot, a lot, a lot more. And that assumes we don’t do the green transition because if we electrify transport, then we need to double the power plant. And honestly, we need to do this before the end of the decade. So chop, chop.