Fwd: Get ready for ‘fossilflation’

[Loretta Lohman]

Plus, the New York Times finds no evidence that a FEMA official teleported to a Waffle House.

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Welcome to another week of absurdity.

We have an update on the teleporting FEMA official, a story I first brought to your attention a few weeks ago. The New York Times sent a reporter to Rome, Georgia, where FEMA official Gregg Phillips claims he was transported to a Waffle House against his will by supernatural means. Times correspondent Richard Fausset spoke with employees of the three Waffle Houses in the city, showing them a photo of Phillips. None recognized him.

Indeed, longtime Waffle House employee Shastoni Burge said she’s never seen anyone teleport to her restaurant. “I’ve seen it all,” Burge said. “But I’ve never seen that.”

As the Times notes, Phillips leads FEMA’s Office of Response and Recovery: “The office, with more than 1,000 employees and a budget of nearly $300 million, is central to FEMA’s job of responding to disasters like hurricanes, earthquakes and fires.” That means Phillips could play a major role in recovery operations for this year’s wildfires – which are already off to a bad start as a result of abnormal heat and drought.

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What the Iran conflict means for gas prices, clean energy, and the climate

Dana Nuccitelli reports:

The U.S. and Israel’s attacks on Iran have sent oil and gas prices soaring. That could be a boon to cheap, clean technologies like electric vehicles, solar power, and wind – at least in the long run. But in the short run, the outlook is more complicated.

How will the conflict affect consumer prices?

About 80% of all global energy is supplied by fossil fuels, so when oil and natural gas get more expensive, the price of nearly everything goes up. Isabel Schnabel, a member of the executive board of the European Central Bank, coined the term “fossilflation” to describe this relationship between rising fossil fuel prices and economic inflation.

Products like gasoline, diesel, and nitrogen fertilizer derived from raw fossil fuels are likely to become more expensive. Fertilizer shortages could cause global food prices to increase significantly, and higher costs for diesel, fuel oil, jet fuel, and associated shipping will lead to rising prices for most products.

Australian global financial services provider Macquarie Group forecast that if the restrictions last through June, oil prices could spike to $200 per barrel, which would drive average U.S. gasoline prices to around $7 per gallon.

How might the energy crisis affect deployment of renewable energy?

The long history of global fossil fuel instabilities, especially over the past five years, has demonstrated the value of domestic energy security.

“You’d be hard pressed to find 20 consecutive years without some type of energy crisis with ballooning fuel costs,” said Robbie Orvis, senior director of modeling and analysis at Energy Innovation, in an email. He noted that more clean energy deployment would help protect countries against those price spikes.

For example, Spain has weathered the conflict with relatively stable power prices, even as those across most of the rest of Europe have soared. That’s in large part because nearly 60% of the country’s electricity is supplied by solar and wind, plus another 20% from nuclear power.

But big solar and wind farms are capital-intensive projects, and financing up-front costs requires loans. As a result, the economic viability of solar and wind farms is tightly linked to interest rates.

“We are definitely staring down a period of higher inflation and then likely higher interest rates to tackle the inflation,” Orvis said.

On the other hand, the costs of many competing sources of power have also increased. Not only are natural gas prices soaring, with gas turbines also in short supply, but “capital costs for coal infrastructure, at least that which has pollution controls, are also enormous,” Orvis said.

How will the conflict affect electric vehicles and other clean technologies?

Sales of EVs are already surging in Europe and Asia. Even in the U.S., where EV sales have lagged, interest in EVs is up.

In addition to EVs, sales of rooftop solar panels and heat pumps in many countries are on the rise as homeowners look for ways to reduce their exposure to volatile fossil fuel prices.

What does it all mean for the climate?

Recent global fossil fuel market disruptions have motivated countries around the world to shore up domestic energy production. That can be a boon for solar and wind farms, nuclear and geothermal power, and also climate-warming coal, at least in the short-term.

“You are already seeing things like countries relaxing emissions rules to allow for more coal generation (gas-to-coal switching), for example, in Japan, which is heavily reliant on liquefied natural gas, after just a few weeks of the current situation,” Orvis said. “In the near term, expect to see an increase in coal consumption this year, driven by higher gas prices and limited availability of gas.”

But coal remains a relatively expensive option, “so while this provides some insurance against price swings for gas, it does not unlock the same level of financial security that transitioning to clean [energy] offers,” Orvis added.

The conflict will have an inflationary effect, to which central banks often respond by raising interest rates, which will make it more expensive to build new solar and wind farms. But fossil-fueled competition is expected to remain even more expensive and unappealing.

“Higher interest rates will raise capital costs, and diversification takes time, but energy security concerns will ultimately strengthen the pull toward renewables and nuclear,” said Sverre Alvik, vice president and energy transition outlook director for global assurance and risk management company DNV.

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