Let’s check in on the not exactly impressive energy and inflation results of Biden’s Inflation Reduction Act (IRA).
Biden’s energy policy has been an inflationary disaster. And make no mistake, the IRA was nothing but energy policy, more precisely, climate policy.
The Inflation Reduction Act Is a Climate Bill
Bloomberg flashback, August 15, 2022: The Inflation Reduction Act Is a Climate Bill. Just Don’t Call It One.
“It does seem kind of wacky and counterintuitive for the most consequential climate legislation ever to be called the ‘Inflation Reduction Act,’” says Angela Bradbery, a professor of public interest communications at the University of Florida’s journalism school. “For the public, it’s probably more confusing than anything.”
Congress once passed bills with simpler and more intuitive names, such as the Clean Air Act. But today’s political and media landscape demands that legislation be packaged to steer public debate in a direction the sponsors can better manage.
“Words matter. Names matter,” says Ed Maibach, director of George Mason University’s Center for Climate Change Communication. “Inflation and the price of gas are top of mind concerns for most Americans today, so calling the bill the Inflation Reduction Act was a stroke of rhetorical genius.”
Since the IRA’s surprise unveiling on July 27, analysts have debated how much its contents pertain to inflation. “The IRA speaks to the high energy costs” Americans are struggling with, says Stokes.
Hoot of the Day: Rhetorical Genius
In retrospect, the name is such a disaster that Biden even admits so.
Green New Deal by Another Name
Biden’s Green-Energy Price Shock
The Wall Street Journal comments on Biden’s Green-Energy Price Shock
Do White House officials pay electric bills? They strangely keep saying the President’s climate agenda is reducing electric-power rates even as the cost of running your dishwasher is sky-rocketing, as illuminated by the Labor Department’s consumer-price index.
By our calculation, electricity prices have increased 13 times faster under Mr. Biden than across the previous seven years. His policies aren’t entirely to blame. But most of it is a result of the left’s climate agenda, and the price increases will get worse.
Federal regulations, renewable subsidies and state green-energy mandates are forcing fossil-fuel and nuclear plants to retire prematurely. Solar and wind need backup from so-called peaker gas plants, usually at a hefty premium. During power shortages, spot prices can hit $10,000 per megawatt hour compared to $30 to $60 on a normal basis.
State net-metering programs also subsidize people with solar panels for excess power they remit to the grid. People without solar then pay more for the grid’s fixed costs, which are also growing as more renewables are added. In California an average customer without solar pays 10% to 20% more to subsidize solar.
How Much Did the IRA Cost?
It’s much worse than Moore suggests.
Inflation Reduction Act Cost
The following chart is courtesy of Penn Wharton.
A year ago I commented The Inflation Reduction Act Price Jumps From $385 Billion to Over $1 Trillion
The true costs begin to emerge.
The key word in that sentence is “begin”. Expect more revisions to this newly revised $1 trillion+ cost estimate.
Nothing in the bill will reduce inflation. It was a known lie right from the start.
Bear in mind, the $1 trillion and counting estimate does not factor in higher energy costs for consumers and businesses.
So let me ask again: How Much Did the IRA Cost?
It’s Been a Bloody Month for Bond Market Bulls
If you are a bond market bull, it’s been a tough month. Let’s review what happened, why, and what’s ahead.
Earlier today I noted It’s Been a Bloody Month for Bond Market Bulls
Summation
The inflationary pressures include demographics, the IRA, energy policy, regulations, tariffs, child tax credits unless the Senate kills that, and another unconstitutional push by Biden for student debt cancellation.
And there’s much more. Click on the above link for details.
Governments are powerless to stop inflation — we’ve burned up most of the affordable energy….
Why the death of North Sea oil is a disaster for Britain.
In the waters around the UK, hundreds of oil and gas installations are falling silent. Fifty years after the North Sea bonanza began, the final decline is upon us. As well as hauling the retired rigs to shore, nearly 8,000 wells that were drilled deep into the seabed must also be plugged.
The decline of the North Sea has implications not just for energy policy and tax income, but public finances more broadly. We face a huge bill – potentially up to £60bn – to clean up the North Sea. The energy companies are responsible for decommissioning, but tax breaks mean much of that money will be reclaimed from the Exchequer – and ultimately taxpayers. link to archive.md
Mexico to cut at least 330,000 bpd of crude exports in May. Mexico’s state energy company, Pemex, is planning to cut at least 330,000 barrels per day (bpd) of crude exports in May, leaving customers in the United States, Europe and Asia with a third less supply, two sources said. The plan follows the withdrawal of 436,000 bpd of Maya, Isthmus and Olmeca crudes this month, ordered by Pemex to its trading arm PMI Comercio Internacional because it needs to supply more to its domestic refineries as it targets energy self-sufficiency.
Combine that with a decline of the AMOC and 50 degrees north latitude will become much less hospitable.
How in the hell can you not have inflation when the annual deficits are in the trillions.
“Biden’s energy policy has been an inflationary disaster.”
Yes, but maybe that’s because people keep looking at it the wrong way. Namely, they keep thinking that kWh of electricity are priced in dollars. Instead of thinking that dollars are priced in kWh.
Let’s imagine for a moment that you lived in a world where electricity was real money, and dollars worthless bits of paper/numbers on a screen issued by an authority likely to crash. Much like the world of the goldbugs, but with electricity instead of gold. Then the IRA would make a lot more sense. Increase sustainable electricity supply by any means, never mind what happens to dollars because in a little while nobody is going to accept them as payment.
link to edition.cnn.com
Taiwan microchip manufacturing investing in Arizona!
The reason inflation keeps spiking up is because lack of regulation on commodities and futures trading. Go back to the 1990s level regulation on futures options and derivatives and prices will fall by 50%. Speculators continue to drive up the price of commodities every chance they get.
Typical third world thinking.
Implement gallactically foolish marxist economic policies that have been discredited countless times already. When the policies produce economic suffering, as everyone said ahead of time that they would, blame nameless faceless speculators.
And to top it off, you suggest an increase in corrupt regulators to fix the problems that marxist policies created?!?!? Gary Gensler isn’t even pretending to blame speculators, he is forcing millions in unnecessary and pointless costs to force green new deal “climate” reporting to the SEC. That’s corrupt regulators for ya!!!
Lots of losers keep threatening to leave the country when Trump wins. PLEASE stop teasing us. Get yourself on a boat / plane, move to a third world economy where your discredited ideas about central planning and corruption are already in place. You get exactly what you claim you want. The USA is spared of your foolish ideas.
The USA will be better off if we attract hard working Latinos who want a better life and are willing to work for it. You and your fellow marxists can gather in Latin America and screw up their economies even worse. Everyone gets what they say they want.
Speculators aren’t jacking up commodity prices. Stupid economic policies are
Yup.
Now if we just had one single oil company that controlled all the rail shipment of oil we would be in much better shape.
Or, maybe not.
BTW the war in Ukraine has done more to stoke inflation than any bill or law. That is something the Biden administration cannot be blamed for. Wars cause inflation. Standing by and doing nothing while Putin invaded Ukraine was never an option.
Actually, the Biden regime started the war in ukraine, unless you want to blame VP Biden back in 2015 when he, Vicky Nuland and Jake Sullivan staged the first coup
Biden’s own CIA director told him (and everyone in Washington) that Russia — all of Russia not just Putin — would never tolerate NATO forces in Ukraine, anymore than the USA would tolerate Soviet missiles in Cuba.
Biden may be too senile to know what is going on now, but he was definitely in on the NATO expansion in 2015. His drug addict son has been taking bribes from Bursima for years, despite not knowing anything about Ukraine or natural gas or pipelines. And Biden is the guy who appointed both Vicky Nuland and Jake Sullivan to implement foreign policy while Biden himself has more and more “senior moments”
Biden started the war in Ukraine. Putin responded exactly the same way JFK did many years ago when the shoe was on the other foot.
Please review the Minsk Accords of 2014 . They would, most likely, cause even a casual observer, to rethink the actions taken by the Russian government over Border Security. Put America and Mexico in place of Ukraine/NATO and today,s Russia. What would President Biden have done – if he had noticed.
Not discussed much but exporting natural gas is causing the price of electricity to be driven up. This is a side effect of helping Europe against Putin. McCain was right. Russia is still a gas station masking as a country. Europe became too reliant on Russian energy.
I really don’t know why this isn’t brought up more. We must stop exporting anything more than excess production so prices decline domestically. The NatGas reserves won’t be around forever, and to export simply because corporations can make more money now is strategically stupid.
” Global Trade Deals” for political gains and kick backs, while ordinary produce is sent abroad and Americans must accept produce grown in places without our safeguards – like irrigation from clean water.
Dear old McCain’s “Gang of 5” – wittily dubbed by our smarty pants Media, held up ALL action to construct America’s own “Border Security” even after Congress had passed the $$ appropriations. Where did those $$ Millions go ? Have you heard? Crickets zzzzzzz!
Does that mean the United States is a credit card company masking as a country?
“During power shortages, spot prices can hit $10,000 per megawatt hour compared to $30 to $60 on a normal basis.”
Now that’s inflation. How big would a rolling black out need to be to keep the price down to a reasonable level?
link to nbcmontana.com
High cost and high volatility shut down this plant that made electronic grade silicon for semiconductors. You know, that industry we are supposed to be reshoring.
Why are people allowed to “Trade” commodities they never intend to take possession of for real use? Why does this racket exist? Just curious –
So farmers can lock in a living wage and pray for rain.
The Affordable Care Act added millions more patients who demanded care, while keeping* the number of nurses and doctors (aka supply) constant. What happens when demand radically increases and supply stays flat? Exactly what happened to health care costs since Obamacare was passed.
(*) many doctors opted to retire early or switch into concierge practice, so the number of doctors arguably declined. That’s anecdotal though.
Meanwhile, all the regulators and bureaucrats made a LOT of money collecting bribes from pharmaceutical companies. Want your drug to be “covered” under Obamacare? Great, donate to my campaign here, and offer my accomplice a lucrative consulting gig.
That is how Obama can buy multiple $3-5 million homes on Nantucket and in Washington DC. Obamacare was VERY profitable.for politicians.
The Green New Deal (this inflation rubbish) was never supposed to address inflation. Biden’s IRA is about creating lucrative “green” consulting gigs for lobbyists, most of whom can be expected to hire Hunter Biden as a side consultant.
Did you know Hunter can speak Ukranian, is a world renowned expert in natural gas and pipelines, and is the greatest expert ever to get millions from Bursima? Do you think Hunter can spell natural gas?
Washington DC is corrupt to its core, and that is what the inflation reduction act is really about. Corruption, graft, bribery.
Same as Obamacare. Same as all the “defense” spending. Al Capone must be spinning in his grave for not getting in on the scam
rename it please
Inflation PRODUCTION act
“How the Inflation Reduction Act Failed to Reduced Electricity Costs in Pictures”should be Reduce, verb
In 3 years, N-gDp has increased by 40 percent (since 2 qtr./20 bottom).
Biden is in office and he will get blamed for everything including the sun not setting fast enough. The president by definition cant really do much anyway. He/she can deploy the army and nominate judges, but thats about it. And thats the way it should be. No more kings! So back to inflation — I think what you see is a lot of business owners who lost money during Covid want their losses covered. While competition is reduced due to competitors killed off, now is the time to raise prices where they can (Coffee, prepared food, fast food, non-variable utility expenses — Peoples gas continues to raise bottom line bills despite natgas almost free — landline phone bills, insurance of all kinds, tech, vet bills, property tax, etc.) Meanwhile, gasoline (July 2023 thru January 2024) and natgas prices plummeted.
Natural gas prices did plummet, but electricity prices don’t usually follow; you know how those utility companies love to lower prices.
Electric rates here are up 3% this year.
If your power plants used to run on coal, a lot of them transitioned to natgas to boil the water/create the steam/turn the turbines (assuming natgas continued to be near free). A lot of elec bills in the east went down cause obviously they were the first plants and the first plants had coal. Nuke bills like in Chicago didnt change much. Far as I can tell, the only thing going up in terms of utility bills are the fixed charges and taxes.
Don’t forget illegally forgiving student loans.
50 years ago you would have demanded your kids get educated for a lot less anyway. Tomato, Tomaaaato. 🙂
Presidents write executive orders. Agency heads appointed by the president, create regulations that affect the public. Education Secretary refused to acknowledge physical differences between men and women this week. Biden appointed him. It affects women’s sports in school.
Back to inflation, it is a supply and demand thing. +6 trillion in money supply chasing a lack of goods. EV oversupply, causing Ford to cut the price of EV pickup truck. Gas co. worker wages went up, which raises gas co. base costs. Cost of basic maintenance rose as well, as equipment supplies are more expensive. Cattle herds are smaller so beef prices are up. In CA, fast food wages jumped 25% this month. Restaurants affected are combo raising prices, cutting jobs and hours to compensate for government dictate.
[retired Federal employee] Im no expert on regulations as we never read them (we just did what they told us to do), but I believe laws are passed, Code of Federal Regulations (CFR) and United States Code (USC) are written to empower the laws, and the Executive orders are just to push and remind everyone HEY THERE ARE LAWS HERE!::)
And I dont think you list anything that Biden controls.
$4.28 a gallon for gas does not qualify as a plummet.
Admittedly a good part of this is Seattle’s tax on people living in the country in the name of Green. It’s still part of inflation though.
chicagogasprices.com There are plenty of “plummets” in there, and pump prices almost always plummet between July 4th and New Years. Up and down and up and down …
I guess that’s why summer gas prices have always increased after the Government required “summer blend” gasoline to reduce pollution.
Talk to any renewable energy developer. The deployment of these plants is limited by transmission system interconnection bottlenecks, not economics.
Giving them more subsidies just increases increases their profits. None of the benefits leak out to the public. They’re entirely captured by developers.
On the hydrogen side, there is a limited supply of electrolyzers. Post IRA, their prices skyrocketed enough to cancel the value of the tax credit.
The Chinese approach of injecting cash to increase production and confiscation of property to reduce barriers to construction is more effective at lowering prices, but with the tradeoffs of a lawless command economy.
locally solar got lucky. built it on scrubland next to a transmission intertie station for distribution
President Tlaib will sort it out.
Cannot believe any sane person would have expected it to do so.
Portland, ORs electricity rates have risen 31% since 2022, and will go up another 7% next year. Climate activists did it. They are rich.
Google search ;
( Search Results Featured snippet from the web ) Renewable energy is cheaper than new and existing fossil fuels plants. The IEA reported that in 2023, an estimated 96% of newly installed, utility-scale solar PV and onshore wind capacity had lower generation costs than new coal and natural gas.
Lie of omission. The costs of RE extend far beyond the plants. First, comparing a baseload power plant to an intermittent power plant is a ridiculous comparison. The intermittent power plant needs many other components including new transmission capacity, backup power plants / energy storage, complex control systems for far flung transmission capacity, and negative energy pricing to dump unneeded power. In addition, the natural gas power plants providing backup capacity for RE plants operate inefficiently with more pollution.
That’s probably why they need to be so heavily subsidized. Most people hate getting the same thing for less money.
Did you even read it, you slug?
The first word of your post makes it satire: “Google”.
Google do no evil,
Old Google.
New coal?
Where?
ZH was commenting on this today subject today, as well.
“Food has been a worry, but now electricity is the worry,” 75yo Alfredo De Avila told Bloomberg, adding, “Unless you want to go to candles and firewood, we have no other choice but to bite the bullet and pay.”
Don’t forget the hand pumps for your water.
Inflation reduction Act may not be success, but Build Back Better has a brighter future for a bridge in Baltimore.
Only it was meant for a different (3rd) world.
My electricity cost per kwh went from $0.09/kwh in 2020 to $0.11/kwh now. Electricity costs have absolutely gone up.
California Green Electricity went up to $0.62/kwh. You know it is going higher.
$0.62/kwh…..that’s insane!!!
The average US household uses 900 kwh per month. At $0.62/kwh that comes to $558 a month not including other fees that are surely on each monthly bill.
White people are leaving California as fast as they can sell their homes, but they can’t.
I get the low rate of $0.52/kwh and I cut back to less than 200 kwh/month.
The average US household does not pay 62 cents a Kwh.
That rate is even higher than Pacific Gas & Electric’s rates. How did your utility manage that?
Let’s take a baseball bat and smash the Cult of Green:
The $2.5 trillion reason we can’t rely on batteries to store energy
Fluctuating solar and wind power require lots of energy storage, and lithium-ion batteries seem like the obvious choice—but they are far too expensive to play a major role.
link to technologyreview.com
Why Germany’s nuclear phaseout is leading to more coal burning
Between 2011 and 2015 Germany will open 10.7 GW of new coal fired power stations. This is more new coal coal capacity than was constructed in the entire two decades after the fall of the Berlin Wall.
The expected annual electricity production of these power stations will far exceed that of existing solar panels and will be approximately the same as that of Germany’s existing solar panels and wind turbines combined. Solar panels and wind turbines however have expected life spans of no more than 25 years. Coal power plants typically last 50 years or longer.
At best you could call the recent developments in Germany’s electricity sector
contradictory.
link to carboncounter.wordpress.com
Germany Runs Up Against the Limits of Renewables
Even as Germany adds lots of wind and solar power to the electric grid, the country’s carbon emissions are rising. Will the rest of the world learn from its lesson? After years of declines, Germany’s carbon emissions rose slightly in 2015, largely because the country produces much more electricity than it needs.
That’s happening because even if there are times when renewables can supply nearly all of the electricity on the grid, the variability of those sources forces Germany to keep other power plants running. And in Germany, which is phasing out its nuclear plants, those other plants primarily burn dirty coal.
link to technologyreview.com
The Germans were stupid for getting rid of their nuclear power. Let them freeze in the dark or get used to dirty air from burning coal.
A year ago, Biden promised to build 500,000 electric car charging stations. How many of these charging stations have been built?
six
Seven.
Give em a break they working on #8
6 billion$?
Energy. One of my favorite topics. We need more energy every year. Economic growth depends on it. Population growth depends on it. Increased standards of living depend on it.
More wind, solar, nuclear, and hydro please. More oil and gas please. Coal, we can replace with natural gas.
I expect energy costs to increase, no matter what government does, or doesn’t do. Still lots of money to be made in oil and gas stocks.
link to artberman.com
Its the beginning of the end for the Permian basin.
The spruiking (lying) to raise capital and debt to drill unprofitable wells is coming home to roost.
50% annualised decline rates are catching up.
The promoted growth in the Permian (6 month lag in the data) is a growth in Natural Gas Liquids (BOE – barrels of oil equivalent –> not all oil).
This is a sign GOR (gas – to – oil ratio) is rising and oil wells are turning into gas wells.
I follow Art Berman. And I agree with “much” of what he says on both the reality of climate change and the eventual decline in the Permian.
I agree that Permian wells are becoming more “gassy” and have commented on that several times. However, I believe that the Permian oil production will not decline as quickly as he thinks.
US production is plateauing between 13-14 mbpd and should remain there for a few more years.
I also follow Doomberg occasionally. He is of the opposite opinion. He thinks that will be more US production then ever going forward. He believes that ng liquids are just as useful as oil.
My position is half way between these extremes. Stable production, rising demand, better prices.
Propane is certainly useful, what do they do with all the butane?
In many cases they are interchangeable. Though Propane has more outdoor uses and butane more indoor uses.
link to rockymountainair.com.
Use it as on-site fuel.
Crack it to methane/ethane and make stuff.
Like fertilizer and plastics.
You can’t drive a car with NGLs.
The oil that is coming out in newly discovered tier 1 wells declines by 80% in the first 18 months. Tier 1’s are dissappearing.
“In May, Pioneer CEO Scott Sheffield said that Permian output will peak in 5 to 6 years. In November, Continental Resources Chair Harold Hamm suggested that core areas of the Bakken play were reaching their peak, and that deeper “tough rock” objectives would be needed to sustain production. Goehring and Rozencwajg wrote in May that the Permian basin was depleting faster than generally believed and that output might peak in 2023.”
These are all guys that have an incentive to lie about shale productivity being better than it is……
Yet production continued to increase in 2023. And will increase a bit in 2024. There are still plenty of T1 drilling locations and improved technology is increasing recovery.
In addition, the majors are showing great discipline in not pushing too hard to expand production. If prices go high enough, then they will expand drilling a bit.
Don’t get me wrong. If production actually begins to decline in the Permian it will make my investments (particularly the Canadian oil companies) worth even more. However, I do not expect production to decline this year or next.
Yes, you can’t drive a car with NGL’s. But as more EVs and PHEVs are sold, the demand for gasoline will slowly decline anyway. While gasoline supply will remain more than adequate. The long term trend for gasoline prices will be lower (not counting taxes of course).
A bigger concern for supply will be Russia and Iran. Conflicts in both those producers can interrupt a lot of supply.
Agreed. Ukraine taking out Russian oil refiniries is an underatted geopolitical event at the moment.
Russia can’t stop this!! And the Ukraine is hitting 1200 km in near siberian oil pipelines.
The increase in the Permian is NGLs..
This makes the Permian bottlenecked by Natural Gas prices which are negative at the moment ( I think…but are very low).
Do you want to drill for 50% natural gas/50% oil per barrel when Natty Gas prices are 1 penny?
That last statement is widely missed by non oil pros ( me is not a pro ).
US shale is also disrupted by … not Oil….but Natural Gas prices…
US LNG export capacity is increasing from 13 to 18 bcfpd over the next few years. Which will quickly use up the excess natgas being produced in the Permian. Increasing demand for more electricity and H2 will increase use of nat gas going forward as well. The surplus is temporary so Permian production can be expanded a bit over the next few years.
Dumping more natural gas on the market is not going to improve natural gas prices (from the producers perspective).
Continue your great work Mish!!
Affordable Care Act (ACA)
Misnomers…..pure evil
The name of every government act is a dodge — Inflation Reduction Act. Hilarious! The next from the Biden Administration will be the “Keep Elections Fair Act” meaning legalized ballot stuffing.
State taxes on gasoline, in theory, go toward road maintenance and building. How can those costs be recouped for EVs? Oh, I know, increase taxes electricity sold through EV chargers! Problem solved.
I believe that a ‘mileage tax’ has been floated about to take care of EVs using the road.
Which conveniently requires government to track your movement.
Many states already do this now when you get your annual inspection sticker. So tracking mileage is nothing new.