Deconstructing Western Nations With High Energy Prices

Definition of Energy: Energy is defined as the ability to do work.

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The discovery and implementation of hydrocarbon fueled internal combustion engines 150 years ago has transformed life globally.

Oil has an extraordinary specific energy density whereby a single barrel of oil contains the energy equivalent of all the physical labor that a man can do in 10 years.

The advent of hydrocarbon fueled internal combustion engines allowed work that previously required gangs of men and horses to be accomplished by a machine run by a single operator in a much shorter time.

Farming, transportation, construction, etc. was suddenly much more easily accomplished and the productive output of our economies soared as did our prosperity and quality of life.

But now, hydrocarbon energy sources have become the target in the West of political movements focused on their removal from our society. First we were told that they caused global warming and then the story was revised to that they caused ‘climate change’.

(For an example of focused idiocy by climate alarmists, listen to Edmond Adolphe Rothschild suggest at the 1992 United Nations Conference on Environment and Development (UNCED) (the Rio Earth Summit) that human intervention using dry ice might be needed to maintain the polar ice caps to combat melting from hydrocarbon driven global warming).

That CO2 comprises 4/10,000 of the earth’s atmosphere and that human activity contributes less than 5% of the miniscule annual increase in this trace atmospheric gas while natural earth processes release the remainder is of no concern to this movement - oil had to go or we will burn up, they said.

Germany Wrecked

Nowhere was the ‘green’ movement louder than in Germany. And Germany had just the politician in Chancellor Angela Merkel (2005 - 2021) to radically transform its power generation system.

In the southern US, wind energy produces rated energy output 1/8 of the time and solar energy does so 3/8 of the time. They are less effective in more northern latitudes.

Germany did not let these facts get in the way and for some reason ignored the need for reliable and cost effective baseload electrical generation capacity.

De-Industrializing Germany

Under Merkel, Germany embarked on a $3 trillion (T) green energy program while it proceeded to wind down nuclear and coal powered electrical generation.

To pay for all this, high taxes and duties had to be levied on electricity users.

Figure 1 - Taxes and Levies Driving German Electricity Prices; source: bdew.de

Today, electricity prices in Germany for industrial customers are 300% of those for industrial customers in the US while diesel fuel prices in Germany are 200% US prices again hitting German industrial power users.

Germany’s electrical grid is now powered 47% by wind and solar generated electricity. In the US, just 14% of electrical generation is from wind and solar generators.

Germany Is Being Deconstructed

The impact on German industry has been stark.

“According to a 2024 survey by the German Chamber of Commerce and Industry (DIHK), 37% of industrial companies are considering reducing or relocating production outside Germany due to energy costs. Among those with high electricity needs, the number rises to 45%. For large industrial companies (500+ employees), it's even higher at 51%.”

Loss of manufacturing production is no small matter. Economic activity from manufacturing has a ‘multiplier effect’ of 3x whereby each dollar of manufacturing activity drives another 2 dollars through the economy due to supporting activities. Loss of these high value activities will rapidly drive Germany into intense decline.

Already, the US generates 50% more GDP per capita than Germany and this difference has been increasing.

Energy Taxes Are A Tax On Work And Destroy Living Standards

Because energy is defined as the ability to do work, energy taxes of any type create a hurdle to work and the prosperity it can generate.

Energy taxes need to be paid even if no profit is generated from energy consuming activity and are an attack not just on wealth generation but also on our general quality of life.

The UK has also seen an increase in its energy prices and are now seeing grid stability issues due to the unreliability and instability of its wind and solar electricity generation assets.

Figure 2 - Average British Electricity Price; source: electricinsights.co.uk

As high taxes, high energy prices, and loose monetary policy drive a decline in real wealth generation just as most of the West is at the highest debt level in history, we risk a precipitous unwind of our societies that took centuries to develop.

Both the reckless monetary policy of the last 45 years by central bankers that has led to our record debt bubble as well as the destructive energy policy that is being implemented by our central planners need to stop before we are pitched into an impoverished neofeudalistic dark era.

However, we see over and over that the financial interests and the political parties they own continue to press for doubling down on these ruinous policies.

The question is why.

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A closing note on Angela Merkel:

Angela was born in 1954 and shortly after her birth, her family moved from West Germany to Communist East Germany.

In 1968, Angela joined the FDJ - the Free German Youth movement that was operated by and aligned with the East German government.

Angela worked as a Communist Party recruiter and providing Marxist Leninist youth indoctrination for the FDJ.

Merkel remained a Marxist until 1989.

After the Berlin Wall fell in 1989, Merkel became involved with the Democracy Movement.

Engela Merkel - An Opportunist’s Early Life

https://cafeamericainmag.com/angela-merkel-an-opportunists-early-life/

Merkel Says Has No Secrets About Her Communist Past

https://www.reuters.com/article/world/merkel-says-has-no-secrets-about-her-communist-past-idUSBRE94C0LZ/

Best regards,

David Jensen