RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:WTI above $85I read a report done by the Federal Reserve Bank of Cleveland on inflation. Although I didn't understand a lot of the technical stuff I did understand the main gist. Even when you strip out energy out of the inflation numbers, energy costs remain embedded in the costs of almost everything else in the form of production and transportation costs. The Cleveland Fed estimated that these embedded costs were about 30%.
In order to control inflation, you also need to control energy costs which means that you need to produce more of it. By now, people thought that renewables would be well on the way to replacing hydrocarbons. It's not happening. The demand for energy is increasing. Renewables can't meet the demand.
So my conclusion is that unless they build a lot more pipelines soon and start pumping capital into the oil&gas sector then energy costs will continue to put upward pressure on inflation. Note that energy costs did not cause the initial inflation. Insane government deficit spending did.
So we'll see how the ESG crowd reacts when they finally realize that a hydrocarbon free economy is a pipe dream. They had better redesign their net zero economy with hydrocarbons remaining the predominant source of energy. They talk carbon capture but to me CO2 is not causing climate change. Millions of tonnes per day of industrial pollutants spewed into the atmosphere are. So maybe lets go net zero on the over 5000 highly toxic, greenhouse gases that the EPA has on their list of industrial air contaminants. If CO2 is considered a problem then grow more vegetation.