What Happens If Biden Declares a “Climate Emergency?”

This Green Policy Could Mean the End of Ukraine.

Today’s dispatch comes to you from the very sunny, southern Portuguese coast known as the Algarve—specifically the town of Lagos. It’s been warm here all week. Temperatures are in the mid-80s. But the near-constant ocean breezes are cooling.

Basically, what I’m saying is that this is nothing like much of the U.S., where so many people are roasting under a dome of stifling heat that, all summer, has been in the 90s and 100s.

I saw a story recently that noted July was the hottest month in history. Not sure if that’s true since it’s based on estimations of what temperatures were back before anyone had any way of measuring or recording temperatures… but we’ll assume scientific estimations are accurate for the purpose of today’s dispatch.

And the reason we do so is because headlines like “hottest month in history” are helping fuel a political agenda that emerged last summer… when environmental activists begun harassing and haranguing President Biden to declare a “climate emergency.”

Those calls are heating up again (pun intended) because of the extreme temperatures baking the U.S. and Europe, and which have set ablaze seemingly all of Canada’s wilderness.

I definitely understand the rationale: Before I moved to Portugal a couple of weeks ago, I was living in an apartment in Prague, on the top floor of a six-story building, and the ceiling in my main room was a wall of glass angled toward the sky.

Amazing light… but at a dreadful cost in summer. We had no A/C in that apartment, and there was a week in early July where the daytime temps inside the apartment were well above 90 degrees from about 11 a.m. until 7 p.m.

Miserable.

That said, declaring a climate emergency would be a disaster for America and the global economy. It would send energy prices soaring. Inflation would skyrocket. Transportation costs would soar. Hoarding would erupt, which would exacerbate all of those problems.

And very little would ultimately be accomplished in terms of reducing global temperatures quickly. After all, climate change took decades to unfold. Declaring a climate emergency isn’t going to reverse that in a year or two. Or even 10.

Now, before we dive in, let me say that I am not anti-green energy. I own green energy investments. But this rush to transform the economy by abandoning oil and gas immediately—as in, before 2030, which is what the greens want—is self-defeating and will cause a global economic catastrophe long before the planet is too hot for human life.

Nevertheless, this is where green activists are pushing our government.

Which means there’s an investment opportunity here in oil and gas stocks for those of us who understand how this would play out.

So, what would a climate emergency entail if Biden relents to these activists?

Generally speaking, there would be three elements… the first being ending crude oil exports and restricting natural gas exports.

U.S. export restrictions would create a haves vs. have nots situation around the world.

America is one of the top five oil-exporting countries, accounting for more than 7% of daily, exported supply. Last year, we exported some 9.6 million barrels per day to 180 countries.

Wiping out more than 7% of daily supply on a global basis would see oil prices surge higher immediately, leading to a global recession.

How high might prices go? Hard to say, but the initial shock to the market would see oil prices almost immediately race well past $100 per barrel, probably up towards $120. Over time, they’d settle even higher as countries fight for available supply.

Meanwhile, restricting natural gas exports would body-slam the European economy. The immediate effects of the Russia/Ukraine war saw Europe begin to eliminate Russian oil and gas imports, while Russia defensively halted gas exports to hurt Europe. Natural gas prices on the continent rocketed to more than $300 per million Btus from about $15 before the war broke out. (British thermal units, or Btus, are a measure of the amount of heat required to increase the temperature of a pound of water by 1 degree Fahrenheit. They’re also how natural gas is quantified.)

As gas prices increased, European inflation soared… economies slowed… prices for electricity double, then tripled, and then quintupled for consumers and businesses.

Much of the replacement supply Europe found came from liquified natural gas imported from the U.S., the world’s largest supplier of LNG.

A Biden climate emergency that restricted exports would see gas prices in Europe explode again, and would absolutely see European governments racing to Moscow to woo and fete Vladimir Putin. They’d have no other choice because social upheaval at home would be off the charts as exorbitant electricity prices—particularly amid summer heatwaves or winter deep-freezes—drained consumer wallets.

Ukraine would very likely cease to exist because European leaders would, however reluctantly, sacrifice the country in order to access vast and cheap Russian energy reserves once again.

And then there’s the impact on food prices.

The reason Big Agriculture has been able to feed the world’s ever-growing number of stomachs is because of man-made nitrogen fertilizer… which is a direct byproduct of natural gas-fueled processes. In the wake of the war and high natural gas prices, nitrogen fertilizer spiked to more than $900 per ton from a consistent $200 pre-war.

Such high costs would obviously flow through the food chain. Everything from fresh produce to meat to fast-food and sit-down restaurant meals would ratchet higher simply because the input costs are so much higher.

This is the reality of ending crude oil exports and restricting natural gas exports… basically, global recession and chaos.

And that’s just stage one of the plan. The other two elements of the “climate emergency” agenda—ending all offshore oil and gas leasing, and dramatically accelerating a transition to clean energy—would have even more devastating impacts.

But I’ll discuss those in tomorrow’s dispatch…