As volatility continues to swirl, Aussie households have just received more bad news.
Anyone living in NSW, South Australia, or Southern Queensland is set to be slugged with up to a 25% increase in power prices. Yet another crunch on everyone’s budget as inflation begins to take its toll.
The regulator is of course blaming the price rise on wholesalers. But like any market, electricity is about supply and demand.
The only reason prices are going up is because we want more power, whilst we have less of it to spare.
That’s why the real issue of this electricity dilemma can be found in headlines like this:
‘NSW government renewable energy projects delayed and more expensive.’
While everyday people are battling with rising costs of living pressure, governments are making things worse. These renewable ambitions are not only proving more costly and more time consuming than planned, but they’re actively diverting money away from reliable power sources that we need right now.
Of course, that’s not what most people want to hear, but it is the reality we face.
The net zero fixation is once again proving that it will cost us all…
It all comes back to copper
As I’ve already talked about in past Money Morning articles, this isn’t just a localised phenomenon. The push toward renewables is of a far bigger scope with far bigger ramifications.
Last Friday, for example, I explained how we’re likely to see a copper shortage in the near future — a trend that certainly isn’t a new idea, but one that is growing in relevance.
As I said at the time:
‘If copper demand is growing this aggressively, we simply need to put forth policies and investment that support existing and new mines. But of course, the governments — the ones pushing for this net-zero goal — aren’t doing that…’
Well, in the US, turns out it’s not just a governmental issue…
A handful of US congressmen and senators recently pushed to add copper to the list of critical minerals, a move that would echo similar policy seen in Europe.
But the US Geological Survey (USGS) has rejected the idea. As they noted in their dismissal of the policy:
‘Continued supply trends and solid data confirm that the supply risk for copper is not a short-term issue that will self-correct without determined, immediate, and strategic action,’
The only problem is that this ‘solid data’ is ridiculously out of date. The USGS is relying on figures from 2014 to 2018 to inform its decision.
I suspect it won’t be long before the US regrets this decision. Because like I said last week, globally, we need more copper investment and production, not less. If the US had added copper to its critical minerals list, that might have helped push this notion just that little bit further.
A shortage of grave proportions
The worst part of all this is that none of it is surprising to anyone following this theme.
James Cooper, our resident commodities expert and geologist, has been drumming this theme into his readers for weeks and months at this point. He understands the foolishness of this net-zero pipe dream and the need for more critical minerals like copper.
That’s why, as an investor, as mad as it is, you have to play around it.
You can’t afford to ignore these trends because it is going to offer up incredible opportunities to profit from. As James will tell you, the global supply of copper only has up to four days’ worth of inventory stockpiled at any given time.
If that supply is impacted in any significant way shape or form, the price will likely explode higher.
That’s why you should listen to what James has to say.
Because at the end of the day, whether it’s higher bills, government squandering, or consulting ineptitude, the simple fact of the matter is we don’t have the resources. As noble a goal as it would be to get to net zero by 2050, it just doesn’t seem possible given what we know.
So prepare as best you can, because the critical minerals shortage seems imminent.
Regards,
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Ryan Clarkson-Ledward,
Editor, Money Morning
