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Doomberg on Fossil Fuel Feedstocks and Haber-Bosch Have-Nots

Doomberg

Monday, April 4, 2022

Dr. Chris Keefer  0:00  

Welcome back to Decouple. Today, I'm joined by returning guest and great friend of the podcast Doomberg. If you didn't catch our last episode together, and that's highly unlikely, as it is our most downloaded show ever check it out. It has some more context on who exactly this Green Chicken mystery person might be. And some of their views on concentration, of course, so much more. For those of you who don't yet subscribe to the Doomberg substack, which has the hottest of hot takes on energy, heavy industry, supply chains, geopolitics and more. Get on that. But today, we're gonna jump into your most recent piece hot off the press farmers on the brink. But first How you been Doomberg.


Doomberg  0:37  

Dr. Keefer, it's great to be back with you and been very much enjoying this series of outstanding podcasts that you've published. And we were talking beforehand that I just listened to the one you published this morning with Leigh Guerin, and you're really on a hot streak. And it's a real pleasure to be back to talk about this piece that we just published and looking forward to always intellectually challenging and interesting discussions, I enjoyed my first appearance and I have every expectation that this one will be will be just as much fun as that one. Beautiful,


Dr. Chris Keefer  1:05  

beautiful. Well, as you were saying, Yeah, we just had a leak hearing on something he said that I think fits really well into your piece is that essentially we've had 20 years of relatively good agricultural growing conditions. You know, by and large, the weather has been pretty cooperative with a few little small exceptions, but nothing on a kind of global scale. But, you know, he warned of sort of a black swan event in the making. And, you know, you start this piece off talking about the perfect storm. And it seems to be a mix of the energy crisis, the Russian invasion sanctions, COVID Supply Chain disruptions and the great resignation, that's that's a lot to get into. So you know, I'm going to let you take it away from here, but where's a good place to start?


Doomberg  1:48  

I think a good place to start is in fact, with a perfect storm, which as we say, in the piece is often an overused, you know, descriptor of events. But as it pertains to what we see going on in global agriculture, which is something I'm sure we'll get into, because, you know, what will happen in Canada and, and the United States is probably different than what will transpire in the rest of the world. But really, what we're seeing is a perfect storm in price escalations and or shortages of supply for key inputs into farming. And one of the points that we make in the piece is, you know, in a, in a traditional financial crisis, one of the things that makes a financial crisis a crisis is that the correlation of of seemingly unrelated asset classes tends to converge to one all at the same time. And so there is no safe haven in a crisis. And we're seeing a similar phenomenon, we believe in the inputs into what is necessary to convert sunlight into food, the agricultural sector. And before we wrote this piece, we had spent a couple of weeks criss crossing the US Midwest, consulting with our contacts in the agricultural space with farmers with people who work at, you know, commodity brokerage houses, getting a sense for whether what we were seeing on our Bloomberg terminal was being reduced to practice in the field and with the farmers and, and we were kind of spooked by what we found. And the perfect storm actually happened over Halloween weekend, which is how we started the piece. And it led into what we found, and I'm happy to walk through sort of at a high level, the main conclusions of the piece unless you wanted to take them one at a time.


Dr. Chris Keefer  3:30  

I mean, honestly, I'm gonna I'm gonna leave it in your hands. I just think a good place to start, I think something Alex Epstein said, which was basically fossil fuels or the food of food. And I think your piece did a pretty stellar job at at laying that out. But I mean, take it from there. I mean, energy crisis seems like a good place to start, but it's your piece. I just want to shine some light on it.


Doomberg  3:50  

Sure. So we began with fertilizer and something we've written about and we talked about when we were on your show last time, but the price of fertilizer continues to skyrocket and fertilizer is essentially stored energy from fossil fuels. As you know, ammonia comes from natural gas effectively directly through the Haber process. Potassium potash is from mining and you can't mind without diesel and fossil fuels. And phosphates, of course, also come from mining and and you know, just the refining of those minerals requires an enormous amount of energy. And today, that energy comes from the prime fossil fuels like oil and natural gas. And so what we're seeing is this convergence of accelerated, of course, by the Russian invasion of Ukraine, which has completely thrown lots of previous economic assumptions into the dustbin, and we have to reconsider the world as it presents itself today. Right, Russia, Belarus and Ukraine. Many people focus on sort of the wheat exports. That's fine, and that's an issue. But in reality, the biggest challenge we think For the food supply is the amount of fertilizer that those countries produce and our inability to get those fertilizers today because of shipping restrictions, economic sanctions, you name it, but like potash, for example, is something like 40% of the supply comes from that area, and you can't knock 40% have a highly inelastic commodity like that offline without seeing skyrocketing prices. And we're seeing that today across the board. And to the extent that North American farmers were wise enough to pre buy what they needed to cover this year's planting season. That's all well and good. And we suspect that for many farmers here in North America, that's that's the case, certainly some are caught short and are scrambling and have to respond to the doubling or tripling or quadrupling of the price of fertilizer. But there's a whole pantheon of countries for whom they live, you know, that's cash based business and the cash in the in the tin pays for the supplies that go to the field today. And they're going to be in The Hurt Locker and they contribute to global food trade in a big way. And the social stability of those countries is in serious jeopardy. But then we drill down a little bit further, which is a topic that isn't on a lot of people's radar. And we we covered the situation in the herbicide market. And


Dr. Chris Keefer  6:18  

right let's talk about this is yeah, this was this was super interesting. I, I wasn't thinking of you know, as as you know, when you read a lot of Doomberg, you you learn about supply chains, and you learn about feedstocks, and I had not put this one together in my head. So yeah, go ahead and tell Yeah,


Doomberg  6:32  

it's a glyphosate is it's very controversial molecule, we know it from our our time and industry. And we were reminded of the critical nature of it when we were doing our primary research with the farmers and the and the people in the ag sector that we know. And glyphosate is basically a chemically modified version of a fertilizer, it's downstream from ammonia. So the Chinese process to make glyphosate, for example, goes through glycerin, which is effectively a derivative of ammonia, and it has, you know, phosphorus in it. And so ultimately, the same phenomenon and shortages that are driving the price spike in fertilizer, are leaking their way into herbicides. Now, I should say upfront, glyphosate is a very controversial molecule, it's linked to lymphoma and other blood cancers. It was invented by Monsanto in the 70s. And and, you know, there's a lot of controversy in the anti GMO world because a lot of these seeds are modified. So you know, you can get a roundup ready corn seed that allows you to splash glyphosate around your field, and it doesn't affect the corn plant. And that's great. Until it isn't. And there's resistance to glyphosate as a herbicide. You know, herbicides are designed to control the weeds in your field. And this is a real big deal for farmers and, and obviously, glyphosate isn't the only option. But it's still the dominant molecule. It has, I think a plurality of the share of herbicides, and the shortages of glyphosate and the doubling and tripling quadrupling of the prices of glyphosate has caused a knock on effect where other herbicides are in high demand. And people didn't plan for having to compensate for supply shortages and glyphosate or a big price spike like this. And so the prices are converging to utility as opposed to sort of supply demand basics for any particular herbicide. So if you can control weeds, there's a price to that and glut in the price of glyphosate is, is the clearing price of that. And so it's it's the rising tide of all herbicides, and what that means is, you know, skimping on herbicides for a season is doable. But it only makes the amount you'll need next year. All the more challenging. And ultimately, as as one of our trusted experts in the field, who's helped us on a few pieces said to us, it only takes one year of negligence to do multiple years of damage to a to a field. And once we'd get out of control, it can be a real challenge. But just to be clear, we're not endorsing the use of glyphosate or genetically modified seeds. It's just the reality of the estate that presents itself in agriculture.


Dr. Chris Keefer  9:18  

I have to I have to jump in for a second, having done a little bit of a review of the medical literature on glyphosate. And, you know, the link is certainly there in the legal literature. You know, the courtroom with you know, 12 uneducated jurors has certainly awarded big settlements and yeah, establish that link legally, but in terms of the you know, the lab and epidemiological evidence, it's just not there.


Doomberg  9:42  

Yeah, someday we'll come back and talk about PPA. Yeah. I've been quite familiar with the chasm between legal evidence and medical evidence, but that's a topic for a different day and but for sure, glyphosate is not without its controversy and genetically modified seeds. And it's not just life. to say, but you know, basically today, any sort of a chemical company that also has a sitz division will try to co market their seeds with their herbicides and fungicides and make them sort of tolerant to the application of those, which is it makes life easier on the farm farmer. And that's how things have evolved. Not many people understand that connection. So


Dr. Chris Keefer  10:19  

we've covered like two pretty, pretty major issues here, right? I mean, the the kind of chemical model of agriculture, where you're just looking at these kind of elemental fertilizers like nitrogen, phosphorus and potassium, you've explained those shortages, and then the chemicals needed to control weeds. As a little hobby farmer for a couple seasons, fucking hated weeding. The struggle is real. But but you know, as they say, I think on, you know, some advert advertisements. But wait, there's more. So hit this this, again, this perfect storm. There's a lot a lot of factors coming together here.


Doomberg  10:57  

And again, I think we let me jump to the end, we take no pleasure in writing this piece. And we hope we're wrong. We ended the piece by saying that we've never been more certain that there would be a a famine overseas as a consequence of both where we are and our reaction to it. Where we are sounding the alarm. Try not to be alarmist, which is a hard needle to thread. And we we certainly hope a rock I have we would love nothing more than for this piece to look silly next year, right? Because we're talking about real lives and potentially hundreds of millions of people in food Jeopardy.


Dr. Chris Keefer  11:28  

I mean, it's interesting, because in terms of the area's being affected, you know, and how that's likely to be patterned. I was reading a very interesting piece, because there's been a lot of catastrophizing about Ukraine's exports being, you know, interrupted by both, you know, maybe a failure of the planting season with the war going on. And also the kind of destruction of their ports and the Black Sea, being pretty much shut down, I think for a lot of commercial shipping. But an author Sarah Sarah Faber, no. Haber planning, I


Doomberg  11:58  

think I may have gotten that 15 times via my DMs. I mean, nowhere in our piece that we talked about the wheat exports of Ukraine. Yeah,


Dr. Chris Keefer  12:05  

it's interesting, because it's not it's not like the 25% it's, you know, 1% of total wheat production. But but the places in the world that depend on those exports, or Middle East or North Africa, because a lot of like a lot of populous countries like India and China, I guess, grow, grow have most of their own wheat. But you know, Egypt, I remember being slammed really hard by high faces. And


Doomberg  12:25  

look, I I don't disagree with her opinion, which is the actual supply of wheat in the short term can be compensated for, and probably will be. And that's why we don't cover it in our piece. The things that alarm us have nothing to do with the short term supply of final product, we're talking about the key inputs that are going in on a go forward basis. And those are far more affected by Russia, Ukraine, I mean, the the amount of fertilizer that is being taken offline is catastrophic, which is why you see Western European ammonia prices go up 33% On Friday, before we record this, you know, and so, but I got sent that Twitter thread, which is perfectly fine one and one that I find difficult to disagreeing with, in response to our piece as though you know, one one had input or or, you know, made clear the other like, we weren't talking about it, so it's just funny, but so I've seen that, but is what it is. So the next thing we covered in the piece is diesel and we borrowed heavily from really great energy columnist from Bloomberg. I'm heavier blas who does really great work and as a total must follow on Twitter and he wrote put out a piece on global diesel markets a couple of weeks ago that was very prescient and basically what happens is of course, people don't realize I mean, diesel doesn't just appear diesel is a is a refined product of oil. And in order to refine oil into finished diesel, you need hydrogen and the way you get hydrogen today is from natural gas much like that's why you use hydrogen to make fertilizer. And so, the the lot the spike in natural gas in Europe, you know, Dutch TTF or an Asia jKm has caused the economics of the refining of oil into diesel to be prohibitive for European refiners and the price of diesel wholesale at least that skyrocket. It does come down from the highs since heavier wrote that piece but regardless, you know diesel is kind of a globally fungible commodity and price at the pump in the US for example, retail price of diesel has passed $5 American per gallon and these are real price increases on an important commodity you know, you need to run run those tractors and heavy machinery and most of those farm equipments run on diesel and if that you know you nitric acid situation doesn't resolve itself quickly. Europe itself imports both finished diesel and the semi processed oil precursor for it. And if things continue to dissolve with Putin's gambit to price energy products in rubles and Europe's desire to not do that, you could see a point where we begin to run out of diesel or, or the price of diesel begins to skyrocket. And then from there, you know, it's one thing to not be able to fuel your tractor or have it be more expensive to fuel your tractor. The same chip crisis that has struck the automotive industry has reared its ugly head into farming equipment. And so it's actually difficult to get new tractors and new machinery. But more importantly, and more urgently, spare parts are hard to come by. And we profiled in the piece, there was a Republican farm roundtable where farmers were venting their frustrations with this perfect storm of inflation on their input costs. And one farmer that we quoted in the piece talked about waiting for a $40 emissions related sensor for his tractor, and unsure of when it would arrive. And and, and I quote directly from him, I cannot drive that tractor, a quarter million dollar piece of equipment, because I cannot get that sensor. And our modern machinery is so sophisticated. And the emissions controls on on those machines are so intricate. And our compliance with emissions regulations, which were all for everybody breathe the same air are such that sometimes these heavy pieces of machinery literally get bricked if they're missing one sensor, and if those sensors are in short supply because of the chip crisis,


it can be a real challenge. And then, of course, if you can't have the machines, then you need to increase the supply of labor. And there's a chronic shortage of labor across all industries. One of the charts that we showed in our piece is the growing disparity between open job positions in the US which at last measure was over 11 million, and the number of unemployed but willing, you know, searching for work Americans is just over 6 million and that that 5 million person gap is a is a real challenge that many, many industries are facing and then in particular, agriculture will have a real challenge because it's it's it's physical labor, it's not not like the most pleasant work in the world. And also historically, a lot of that labor was that labor demand was satisfied by immigrant or migrant labor. And in the era of controlled border crossings because of vaccine mandates, for example, finding that labor and have in and filling those roles is becoming a significant challenge. And then the last thing we talked about was something that our friend on Twitter, Trish Schubert had been pointing out for a while and she's you know, at Chai girl Cha Grl. She'd been putting off for many weeks now that the US domestic supply of propane is that sort of alarmingly low levels. And Propane is a critical input into farming during harvest season. Because when you when you harvest, you have to you have to dry these grains and grain drying, it's pretty energy intense, the moisture content allows you to meet specifications, but also frankly, it allows you to store it for longer and limit spoilage the more you know, damp your crops are the quicker they are to spoil. And because many rural farms are not connected to natural gas pipelines they rely on, you know, trucked in propane for running their grain dryers and we're exiting the 2021 22 winter with the lowest supply that we can find in seven years according to the data we have on Bloomberg and and that's just like another challenge in this perfect storm of the convergence of all of these inputs correlating with each other and moving


Dr. Chris Keefer  19:04  

at the same at the appropriate shortages happening in the North American context. I mean that's that was kind of surprising to me given you know, that the US has become such an oil and gas powerhouse. Is there something unique about propane that's that's limiting that supply?


Doomberg  19:18  

I think we're also we're doing a lot of exporting. So in fact, if you look at the natural gas stores for the US coming out, every week on Thursday, the US Department of Energy publishes the, the how much natural gas we have relative to five year average and high low. And we're coming out at some pretty pretty low levels just for natural gas and of course you know propane and and this is flows from natural gas, natural gas liquids and sort of refining is too strong of a word but separation technologies that allow you to isolate those and and so, you know this same tug of global demand and you know with with Henry Hub natural gas trading at 550 today, whereas European natural gas is trading 35 There's a strong desire to export as much as you can. And so all of these sort of seemingly unrelated factors are converging in the same way. But yeah, I would say that the US natural gas storage numbers are a little alarming as well, we didn't get into that, because it doesn't specifically impact farmers. But as we're speaking, I'm just pulling up the the report from last week. So released on March 24, the total US Weekly natural gas storage report pegs, our current storage at 17%, below the five year average and 21% below last year at this time, and so it's not at a critical levels yet. But it is it does raise an eyebrow for sure.


Dr. Chris Keefer  20:44  

So, you know, in terms of these impacts globally, and the regions that will be more affected. I mean, you've talked a lot about Europe being particularly affected, particularly with their natural gas inputs being so dependent on, on on Russian gas, and the uncertainty there. The potential pricing in the ruble. I mean, certainly, I haven't looked at this in a while, but it seemed like gas flows to Europe, from Russia were especially the early days of the war higher than pre war. So they're not able to turn that faucet off. But the there's quite a bit of fertilizer made or used to be, I guess, made in the EU from from that imported gas, right.


Doomberg  21:22  

Yes, it also from Belarus, Ukraine and Russia. So, I have you know, we we didn't get into too much of this in the piece, because there's only so long a piece can be, but we believe that the US and Canada, so I sort of draw a circle around NAFTA. We will make do, we will be okay, prices will be much higher. Farmers will be bailed out, compensated for any losses and encouraged to produce. And the economically unfortunate among us will be taken care of. There will be some combination of charity and or government stimulus to ensure that as few people as possible go hungry here. And look, we're all for that. I mean, who could be against it, except the consequence of that is, we will be exporting even more food inflation globally, as we become the clearing price. For these critical inputs, whatever we need, we'll buy price agnostic. And because we will be the global price setter that will only further exacerbate the consequences for those countries that are today, on or below the line. And I would take issue with the not take issue, I will give you a slightly different interpretation on Europe. I thought it was important that the deal that Joe Biden struck, while he was in Europe to effectively it seems to be to redirect current LNG exports from the US using just a free market and selling it to the highest bidder sort of have a preferential supply arrangement with Europe. And the thing that I haven't seen hardly anybody report on is included in that sort of agreement that was released as part of the press conference with Joe Biden and his his peer from the European Union whose name escapes me now is that they would incorporate a blended price, including some sort of tie back to the Henry Hub price here in the US because you know, the price as it exists today, and the mechanism for determining that price in the eyes of Europe is broken. The net result of this is it has to you would think come at the expense of Japan, Korea, China and Southeast Asia. If the US and Qatar and I don't know where the Australians land on this, although the trade war between China and Australia probably doesn't help the Southeast Asian cars visa V Australian LNG exports. But if if the US and Qatar Who are you know, sort of three great producers of LNG for export today, that's us, Qatar and Australia, if the US and Qatar redirect their previous sort of free market activities towards Europe with a with a blended price, sort of privileged economics, let's call it you would have to think that Japan and North Korea, our allies in Southeast Asia would be the ones that suffer most. And so I don't know how they're gonna sort of square that peg, square the peg into the round hole here, but you can't have if you have constraints, supplies of LNG, you can't commit to sending more to Europe without cutting off the people that were buying it before because it's not like in the timeline in the timeframes that matter. We're going to be able to suddenly snap our fingers and have materially higher LNG export capacity. These are multi billion dollar projects that take years to to permanent built so I'm not sure Europe will be the biggest loser of this. It could be based on on what we saw coming out of Europe last weekend. its commitment to create a blended price for allergy that includes some reference to Henry Hub. It could be that he was the big loser and that's just


Dr. Chris Keefer  24:54  

Yeah, no, it was one of the things some of the thoughts that crossed my mind and reading your piece. is, you know, it's coming out of my context as well, where we're going to be likely closing one of our huge nuclear plants and replacing it with natural gas. And we only really use natural gas for peaking right now where I'm at in Ontario, because we have so much nuclear, but we're going to be burning it as baseload. And I mean, it's not biofuels, it's not quite, you know, burning food. But it when there's a shortage and a crunch on natural gas, in a sense, it is right, because this is such a vital feedstock. And I think about every, you know, nuclear plant that's been shut in Germany, for instance, and their reliance on natural gas instead. And it really starts to when you start thinking about global food shortages, and, you know, the most disadvantaged among us, the Wretched of the Earth, were going to bear the brunt of these food shocks or food stresses. It's just adds a whole other layer of, of, I don't know what,


Doomberg  25:45  

wow. I mean, in a, in a hat tip to you. Yeah, we, it's funny what goes viral on Twitter. You know, it's something I wish I understood better. But we retweeted something, just this sort of one of those classic Bloomberg headlines. And the headline is Germany's Chancellor Schultz. I do not believe keeping Germany's nuclear power plants running would help. So this is the headline, right? And we retweeted it with three simple words, more pain required. And that tweet, I was just looking at it now has 1500 likes, you know, and you might, I might tweet 100 tweets and not get a tweet, have that kind of response. But it's such a simple thing. But it just is very clear to us.


Dr. Chris Keefer  26:26  

Well, they're insulated from they're insulated from so much of that pain, because they're a wealthy country, but But it's like the


Doomberg  26:32  

end, he in particular, so wealthy person in that country, I bet that those on the edge in Germany aren't too happy with that tweet either. But, you know, you cracked and we need to see far more pain before people get serious. And we close the piece, you know, that we we've gotten together to talk about today, with a bit of a call for our political leaders to open up a physics textbook once in a while. I mean, that would be great. If they sort of, could just understand and I must say like, I mean, I've learned a lot just from listening to your podcasts and the things I thought we do versus the things we need to, you know, maybe give a second look on, you know, when we first talked you sort of chastise me for my supportive solar, I've done a lot more reading on it. And I'm open minded to it, I still think distributed solar makes a lot of sense. And I actually do think politically, it's just not going away. So if we're going to be doing solar, we ought to at least be putting polysilicon plants, and Appalachian. But you know, it, we, you and I, and your listeners are so far too, you know, so far ahead of where the the political, the politicians and their belief systems are today that it's almost scary, like the amount of pain that we need to see which is inevitable, that will shock these people into opening up a physics textbook, I'm afraid is is a lot more pain than people think might be coming. Right.


Dr. Chris Keefer  27:50  

Right. You know, I tend to be a little bit of a mystery of catastrophist is the right term. I mean, when, you know, working in healthcare, and at the beginning of COVID, and seeing, you know, the catastrophes and Italy and then New York and waiting for it to come to Toronto. You know, I in my medical education hat, I was designing a lot of simulation courses, kind of almost like astronaut training and PPE, thinking that COVID was going to be like Ebola, for instance, that's an example of, I think, a tendency I have to really, maybe it's Eastern European as well, I think it's kind of a thing where we prepare for the worst, and then we can be pleasantly surprised sometimes. So I always try and have a bit of a cognitive forcing strategy to reevaluate. Again, catastrophes is probably the wrong word. But these kind of very


Doomberg  28:34  

technical phrase for this right, you're familiar with the clinical diagnosis for the the mild mental illness that you just described? It's, it's called defensive pessimism. Okay. Yeah, that makes perfect sense. You should look it up. But it's a it's a very common phenomenon amongst amongst people who think, think too much about certain things. And I would, I would characterize myself as deeply in your camp in that area. But yeah, you are a classic clinical part in the different defensive pessimists.


Dr. Chris Keefer  29:03  

Dr. Doomberg diagnosis, Dr. Keefer. I love it. It but what I was trying to get at there is this sort of cognitive forcing strategy, right, I've had Lee gearing on I was, you know, a hugely impressed and it's really very interesting talking to folks in the financial world and in the commodities, commodity investment world as well. I've seen and this was, again, I think, from Sarah Taylor's piece, you know, her critique was, you know, people are panicking people about shortages, and it's kind of advertising for price bubbles and that commodities investors who have a vested interest in creating panic because that leads to a lot of volatility, and that might lead to them improving their bottom line. Do you think there's a component of that going on? Or how would you respond to that kind of a criticism?


Doomberg  29:45  

Let me phrase it this way. How do you sound the alarm without being alarmist? So there are things we can do today that could bend that curve. And if we don't sound the alarm, then we will continue on the path Ron And then the triggering of the panic that she's worried about will be a distinction without much of a difference, because we're going to get to the end state anyway. We highly doubt that anybody, hardly anybody after reading our piece is going to go start hoarding food, you know, like, it just that piece was meant to alarm our policymakers more than it was to sort of, quote, trigger a panic. You know, the, the analogy would be claiming that your liquidity is fine in the middle of a bank run, like you're going to run out of money anyway. So, you know, I understand that, but it's just sort of, I don't know, it's, it's, when you're in this position, where you firmly believe I firmly believe we firmly believe that Doomberg that we are on the cusp of a global famine. The risk benefit analysis of shutting up about it, and quietly, just preparing ourselves is is, you know, is tough to swallow. I would say we have a lot of influential people that read us, hopefully, maybe we inform them a little bit, we've been invited on your show and a few other shows to talk about it. Ultimately, we will reach the more dynamic equilibrium. And I don't think a a panic catalysis is going to somehow amplify that we're going to end up in the same place, we were going to end up roughly around the same time, unless we can actually have an intelligent conversation about, wow, these trends are converging. And there's things we can intelligently do about it. Like maybe not shut down our our nuclear power plants in Germany, and maybe in the data alone might be a market signal that we're not led by complete energy idiots. And that might cause some of the panic to subside. But yeah, I mean, this is a fine line to walk and we tried to walk it. That's all I can say.


Dr. Chris Keefer  31:51  

No, I mean, I think the energy crisis and the Russian aggression in Ukraine have, you know, had an episode I called the fog of peace. Yeah, and it's wonderful. I love that this idea that, you know, climate climate concern and climate action, at least as as has been pursued up to this point, is very much a kind of luxury good of have easy times of cheap energy and cheap capital. And, I mean, it's just, it's just so frustrating. And I mean, it's in terms of kind of who's who's to who's to blame for the situation we've gotten into. I mean, I think Lee Gehring made a pretty, pretty sound argument in terms of on the supply side that that ESG has seriously curtailed, you know, the investment cycle in terms of in terms of fossil fuels. We're, we're hitting a real crunch. And there's not really an ability to get things going quickly. And of course, I mean, I'm, you know, a climate alarmists myself, I mean, I just think that I hope I'm respecting physics a little more in pursuing the right right approach here. But I mean, I used to have a much more simplistic outlook on fossil fuels. And, I mean, yeah, I mean, your piece is part of this education, but just the the vital, vital role they play in that we're not, we're not getting off them anytime soon. And we're critically dependent on climate action. You know, climate change, particularly, you know, 80 years down the road is a huge fucking deal. But an energy crisis immediately is a huge fucking deal. Pardon my my friend, and we


Doomberg  33:21  

would, we would, we would both agree that the path function really matters. And if you actually care about global warming and climate change, then you have to get it right, because the never has the ESG movement being at more risk politically, because of the path function that they chose, which is excluding nuclear from the equation, for example, and rushing renewables into a grid that was insufficiently stable to receive them. And as your guest on the fog of peace episode, sort of articulated in a way I hadn't really thought about it before. But the sort of entropic penalty imposed upon the other inputs into the grid sort of net out the benefit, potentially, when you do the full analysis, which back to our conversation about solar is something I brought to do a little bit more thinking about before I sort of confirm for sure where my new thoughts are, but it was certainly very interesting and very thoughtful. And by the way, thoughtful debate is, is in fact, necessary for these things. And again, to the extent that we tried to provoke people into thinking about the challenge, the urgent challenge that we see on a global basis. You know, that piece we published on Saturday, hopefully you contributed to that. But again, my most the most frustrating part about the criticism of the piece is the implication that we were implying that the US would have a food shortage, the US is going to have a food inflation problem the rest of the world is gonna have a food shortage. And we laid that in black and white in the piece and as I was talking to you before we before we got on I'm happy to defend what we wrote I can't defend what you read.


Dr. Chris Keefer  34:52  

I have to you know, that I was giving you a hard time on the solar front on the last episode, but something you said earlier in this recording caught my attention which was You're saying something about genetic engineering, that it's not necessarily something that that you endorse it Doomberg? Or can you clarify that statement? Because I mean, we're a very sort of,


Doomberg  35:08  

I'd say, that'd be a very clear. Yeah. I'm very proud genetically modified seeds. Yeah. And I do think that the anti GMO movement is insane. If I misspoke earlier, let me clarify it. The modification of seeds for the use of particular chemicals that may or may not have a toxicity profile that is either damaging to humans or the environment is a different deal altogether. And so I'd like drought tolerant seeds. If if new pesticides and fungicides can be invented, that have a much safer profile than the ones we've used historically, modifying the seeds to be resistant to those so that they can be applied that really we're all for. So I want to be very, very clear that you can't be pro human and anti GMO.


Dr. Chris Keefer  35:55  

Glad to clarify that. Yeah. I mean, it's something I think about frequently is just, it's unfortunately,


Doomberg  36:02  

shocking ignorance on the top. Yeah.


Dr. Chris Keefer  36:05  

It that's it, there's no other way. Yeah, no, and I mean, just just, you know, I call it sort of this rearguard action, that I feel like I'm constantly battling environmentalists and green folks, because they're just so diametrically opposed, I think to, to what is needed for effective climate action, but also, you know, just this, this, this Malthusian ism, which I think this is there's no clear case then then, you know, if we are facing into a global famine, I mean, that is that is kind of Malthusian in that work. And, and it's all caught up in this eco, romantic, you know, fairy tale that we can, we can stop innovating, and we can sort of dial back time and, you know, go to simpler ways, but it's every technology creates a new set of problems that need to be solved, and they need to be solved with new technology and innovation, right? Like, it's,


Doomberg  36:51  

you could do that with far less people. For Alex Epstein's point, like that don't be wrong. Like, again, there are farming practices that are very bad for the environment today that they should be fixed. GMO is very low on the list. In fact, GMO is probably responsible for more people being better fed than almost any other technology in the history of humankind. I mean, we have, if you just look at the productivity per acre, benefits of modern seed technology, it's incredible. But the point earlier that I was making like, for example, you know, nitrate runoff and fields does lead to selenium bleaching, which leads to reproductive issues with certain small, you know, with certain fish, and these are real issues that we should be mindful of, and, and we should be aware of how our farming practices, you know, have long term impacts on soil quality and so on. But, you know, I agree with you that by and large, the problems that are derived from technology can be solved with technology, and the sort of straight line up of bushels per acre heels in the sort of modern world are proof positive that that ultimately, this this benefits more people than it hurts? Well,


Dr. Chris Keefer  38:07  

I mean, who would have thought that, you know, India of all countries? I mean, if you'd said that in the 70s, that India would potentially be filling the void of Ukrainian exports, to keep the Middle East in North Africa fed? I mean, that's, that's, that's wild. And that's totally our


Doomberg  38:20  

season. Yeah. But still, yes, I agree. And, and look, ultimately, I think we're both optimists in the long run, but we are heading into it, we're heading into a period where if we don't begin to act smartly, now, we won't be able to bend the curve later. And that's really the thrust of the piece. In fact, we're also going to publish another piece this week that has sort of nothing to do with energy and more to do with finance, just to sort of clean the palate, Cleanse the palate a little bit. And we don't want to just write pieces like that. But that was a really important piece for us to write. We're proud of it. We believe every word, we stand by every word, happy to defend what we wrote. And it's done incredibly well. And the feedback has been mostly positive. For every critique we've gotten, we have probably gotten 50 emails from farmers thanking us for highlighting these issues, because they're dealing with it, especially for small farmers. You know, they're dealing it if they don't have like global procurement teams getting the very best price and sourcing from, you know, all four corners of the globe. They're really facing down the barrel of a, you know, challenging season and certainly next year is a question and, and so to the extent that we can highlight these issues, we're happy to do


Dr. Chris Keefer  39:32  

it. Okay. All right. I'll introduce you to one one. A friend of mine coined this term, but apoco optimist. I'm not sure if that's gonna fly, but I liked it.


Doomberg  39:43  

It's up there with defensive passengers go


Dr. Chris Keefer  39:45  

exactly. We'll do a Tracy's there. All right, listen. Doomberg Thank you again, for coming back. I hope to make this kind of a regular occasion. And anytime it's been a blast as as per usual.


Doomberg  39:58  

Indeed and direct all hate mail to Chris and all fan mail to the Doomberg account, and that would be great. Follow us at Doomberg T on Twitter, and subscribe to Doomberg substack Doomberg Dunn substack.com. And I will say big week for us, we are going to open up the paywall for Doomberg. And we're still going to be free for the month of April. But after that, we're going to be a paid newsletter. And it's really been an incredible journey for us. Thanks a lot for your help and promoting our work. And big, big, big week for us and one that we are. Let's say we're in the the, the nervous doubt phase, before you actually press go on one of these big projects, but ultimately, we're sort of optimistic that this will be the thing that we get to do for the rest of our lives. And so looking forward to that and great timing for us to be on your show.


Dr. Chris Keefer  40:46  

Excellent, excellent. Yeah, well, I don't think there's a better piece, you know, for you to have launched before before making that move, and I'm sure a lot of people are gonna follow you behind the paywall and all of us here at Decouple will be doing that. So good luck, good luck and adventure D. All right. Well take care and we'll talk again soon. Thanks.



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