Green Energy Policy Will Lead to Anarchy. Please tell me where I am wrong
The effect of a decade of starving O&G industry of capital, shutting down pipelines, activists shifting majors from exploring towards alternatives, Biden talking about profit tax on O&G companies, etc. All designed to de-incentivize E&Ps from taking on new projects.
Producers stop exploring and eventually go offline -> draw down on supply -> price spike (see Europe) -> "Wind and solar are so cheap relative to fossil fuels". Sure, higher oil and natural gas prices make alternatives seem relatively cheap. Side note: assuming we can miraculously build an infrastructure that essentially doubles US electric grid and energy production. If coal mines go offline bc we no longer need thermal, how will we produce coking coal for steel production to replace infrastructure in ~30 years. I digress that's too far into the future. Back to Natty Gas. Natural Gas is used to produce Ammonia (up almost 100% YoY). Ammonia is used for not only fertilizer but most Diesel trucks thanks to EPA (Ammonia -> DEF Fluid for trucks). Without DEF, Diesel trucks cannot drive. All leading to:
Higher Input costs -> higher Food Prices
supply chain essentially unusable if no DEF
No availability to replace energy infrastructure -> power failure (Nuclear)
If we continue down our current trajectory of punishing O&G producers it seems like anarchy is inevitable, making the empty shelves in March 2020 look like child's play. A few questions for either energy experts or someone just more knowledgeable (Im just a dumb analyst not even in the energy space).
1: Where is my logic wrong? Where in that chain of events are there viable substitutes? Or what is a reasonable time frame to undo green initiatives and get O&G back to level of production that can sustain modern supply chains and infra?
2: What was sentiment around these issues in 2006/2008?