Boots & Sabers

The blogging will continue until morale improves...

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Category: Economy

Airlines Look for Profit

by | 0704, 25 Jul 24 | | 5 Comments

Airlines continue to feel the pressure of rising costs and a fickle consumer. There are two interesting moves in the news. The first is Southwest:

Earlier Thursday, Southwest announced that it will do away with its open seating plan and offer some seats on its Boeing aircraft that have extra legroom and add overnight flights, the biggest changes to its business model in its more than five decades of flying. The changes, which start next year, would make Southwest more like its network carrier rivals.

Open seating is a key differentiator and facilitates their boarding methodology too. They are abandoning this differentiator so that they can upsell better seating like other airlines do. Personally, I dislike open seating, but I know a lot of loyal Southwest fliers who swear by it. Will it work for Southwest or will they be just another airline? Time will tell.

Then there is American Airlines:

“We’ve used a lot of sticks. We’ve got to put some more carrots in place and make sure that our product is available wherever customers want to buy it,” Isom said at the Bernstein Strategic Decisions conference on Wednesday.

 

American in February said it would limit some travel agency bookings from being eligible to earn AAdvantage frequent flyer miles. Isom said Wednesday that the airline would reverse that decision.

 

“That’s off,” Isom said. “We’re not doing that because it would create confusion and disruption for our end customer.”

After terrible earnings, American is backing off on a sales strategy to cut out travel agents and aggregator booking sites. The strategy pushed a lot of potential customers away who buy through those channels.

Personally, I am a Delta flier and most familiar with them. I’ve been a perennial platinum, occasionally diamond, flier for 20 years. The changes that Delta has made in recent years is making me fly with them less. The benefits for being a frequent flier are less attractive and harder to get. Meanwhile, their ticket prices are often higher. This has me shopping flights instead of just going with Delta. I know a number of other Delta fliers who are doing the same. If the experience is the same as any other airline, then why bother being loyal?

I don’t know what the answer is for airlines. They seem to have figured out the capacity/demand issue. I rarely see an empty plane anymore. The availability and quality of remote meeting technology has raised the bar for when business travel is necessary. Leisure travelers are very cost conscious. I expect that the only solution is further consolidation of the airline market and further erosion of routes until they reach reliable profitability. The result will be fewer flight options for consumers and an even worse travel experience.

Half of Student Loan Borrowers are Deadbeats

by | 1809, 2 Jul 24 | , | 0 Comments

We’ve cultivated a generation of deadbeats.

At the end of March, six months after the hiatus ended, nearly 20 million borrowers were making their payments as scheduled. But almost 19 million were not, leaving their accounts delinquent, in default or still on pause, according to the latest Education Department data.

“The nonpayment rate really is emblematic of a system that’s not doing its job,” said Persis Yu, the managing counsel for the Student Borrower Protection Center, an advocacy group.

 

Some 7 million borrowers with federally managed loans were at least 30 days overdue on their payments at the end of 2023. That’s the highest delinquency rate since 2016, as far back as the department’s public records go. Because of a policy adopted by the Biden administration, those borrowers will face no penalties for their nonpayment until October at the earliest.

 

Millions more had their accounts frozen through deferment or forbearance (which allows borrowers to temporarily stop making payments), and nearly 6 million borrowers remain mired in defaults that began before the pandemic.

Monthly Cost of Owning a Home is Highest Ever Recorded

by | 0639, 25 Jun 24 | | 0 Comments

Biden’s economy continues to sting. Equity in a home is nice for your net worth, but it doesn’t pay the bills every month. And as house values go up, so do all of the things associated with the price of the home (replacement value, repair costs, etc.).

As home prices soar, property owners are sitting on historic levels of home equity. The average homeowner’s equity has soared by $28,000 just over the past year — growing to an average of about $305,000, according to Corelogic.

But even many of those lucky homeowners are increasingly struggling with the rising costs of home insurance premiums, home repairs, and property taxes. And they can’t afford to move.

Lower-income, older people, and people of color are among the most vulnerable. Their options for moving or downsizing are increasingly limited with high mortgage rates and a scarcity of smaller, accessible homes.

The number of cost-burdened homeowners — those who spent more than 30% of their income on housing and utilities — rose by about three million people between 2019 and 2022. Most of this increase was among those who make less than $30,000 a year. A full 30% of Black and 28% of Hispanic homeowners are cost-burdened, compared to 21% of white homeowners, the Harvard report found.

“The all-in monthly costs of the median-priced home in the US are the highest since these data were first collected more than 30 years ago,” the Harvard report found.

Biden Proposed to Defraud Lenders By Faking Credit Reports

by | 2046, 11 Jun 24 | , | 0 Comments

The entire purpose of a credit report is to give lenders some insight into whether or not a person will pay them back based on past history. It doesn’t matter where a person’s debt originated. In yet another election year stupid scheme, Biden is setting up the next debt bubble and market crash as he blinds lenders to the credit worthiness of their potential customers.

In a sweeping change that could improve millions of Americans’ ability to own a home or buy a car, the Biden administration on Tuesday proposed a rule to ban medical debt from credit reports.

The rule, announced by Vice President Kamala Harris and Consumer Financial Protection Bureau Director Rohit Chopra, comes as President Joe Biden beefs up his efforts to persuade Americans his administration is lowering costs, a chief concern for voters in the upcoming election.

CFPB’s research estimates that the new rule would allow 22,000 more people to get approved for safe mortgages each year — meaning lenders could also benefit from the positive impact on peoples’ credit scores, by being able to approve more borrowers.

Americans Being Priced Out of Home Ownership

by | 1940, 27 May 24 | , | 0 Comments

Owning a home is a central part of the American Dream for most Americans. Biden’s policy decisions are making that dream more and more difficult to realize.

Such frustrations are spreading, fuelling dissatisfaction and contributing to the widespread pessimism about the US economy that is looming over the country’s upcoming election.

 

The median home sale price in the US has jumped by nearly 30% since the end of 2019, hitting $420,000 this spring.

 

At a time of rising property values globally, the leap has been one of the most dramatic in the world, according to the International Monetary Fund.

 

And that’s not factoring in the added costs from higher interest rates, which now stand at roughly 7% for the 30-year, fixed-rate mortgage that is typical in the US, up from about 3% in 2020.

 

Homebuyers today need an annual income of more than $100,000 – well above the country’s household median of about $75,000 – to comfortably afford a home in most places in the US, research firms such as Zillow and Bankrate say, and face monthly payments that have roughly doubled in just four years.

Republicans Try to Prevent Californication of Midwest

by | 0743, 24 May 24 | , | 0 Comments

One of the myriad reasons we are seeing the prices of everything increase is the omnipresent finger of regulation unnecessarily shoved into every market.

As Congress begins the process of passing a new version of the farm bill this week — a twice a decade process — House Republicans are hoping to include a provision that prevents states such as California from determining how others raise their livestock.

In effect, the provision would allow California to apply its law to California pig farmers, but not to farmers in states such as Kansas and Missouri.

 

“My farmers and ranchers love their animals, they want to treat them as humanely as possible,” said Sen. Roger Marshall, a Kansas Republican. “We don’t need California to tell Kansas ranchers how to raise Kansas beef. It’s that simple.”

 

Secretary of Agriculture Tom Vilsack is in favor of legislation the curb the impact of the California law, saying that the Supreme Court decision could result in all 50 states setting their own rules and regulations.

 

“If we don’t take this issue seriously, we’re going to have chaos in the market,” Vilsack said. “Because there’s nothing preventing any state from doing what California did.”

 

He acknowledged, though, that there may not be interest in dealing with this during the current Congress.

 

[…]

 

Californians, who make up 13% of the pork market but less than 1% of U.S. production, voted to set standards for in-state sales to ensure consumers knew they were buying animal products that weren’t raised in cramped spaces.

 

[…]

 

Early studies have found that the provision has already increased prices for pork products covered by the regulation by 20%, according to the U.S. Department of Agriculture.

 

That means products like pork chops, pork loin and bacon have risen for California customers compared to the national average, in a moment when many customers are already dealing with high inflation.

Yellen Rejects Global Wealth Tax

by | 0738, 20 May 24 | , , | 1 Comment

Hey! She did something right!

FRANKFURT—The U.S. opposes a proposed global wealth tax on billionaires, Treasury secretary Janet Yellen said, rejecting an idea floated by Brazil, France and other nations to tip the economic scales away from the megarich.

It is Brazil’s turn to lead the Group of 20 major economies this year and the country has called on the group to develop a coordinated approach for taxing ultrawealthy individuals who can move their money into low-tax jurisdictions. The goal is to mirror a global minimum tax on corporations, which roughly 140 countries signed up for in 2021 but has since run into roadblocks in the U.S. and elsewhere.

Setting aside, for a moment, the principle that people should not be taxed by extragovernmental bodies in which they are not represented, all of these kinds of proposals are designed to do one thing: redistribute the United States’ wealth to other countries. The U.S. has the most billionaires, the most wealth, the most Fortune 500 companies, etc. Other countries want to take that wealth for themselves. That’s all this is and Yellen is right to oppose it.

Trump Likely to Roll Back Onerous Regulations

by | 2007, 2 May 24 | , | 0 Comments

I’m in.

If Trump were to defeat President Joe Biden in November, the SEC under his administration would likely start by curtailing many of the rules recently put in place tied to the environment, according to experts and people close to the former president. An initial target of the SEC under a second Trump administration would be to roll back the new climate disclosure rules, these people explained.

Gensler and the SEC adopted a rule in March requiring large publicly traded companies to disclose their levels of greenhouse gas emissions. The largest companies are required to make climate disclosures as early as fiscal 2025, with specifics on greenhouse gas emissions as soon as fiscal 2026.

 

Gensler argues greenhouse gas emission levels and other climate related data have a material impact on businesses, and investors deserve to know this information.

 

But an SEC chaired by a Trump appointed Republican would likely remove these Biden-era disclosure requirements, these people said.

 

The rule “costs companies and investors a tremendous amount of money, and provides them no benefit,” said a person advising Trump on SEC related matters. Like others in this story, they were granted anonymity in order to recount private conversations.

 

The prospect of a Trump pullback on the SEC’s climate disclosure rules is also tied to the former president’s dislike of environmental, social and governance investment standards, some of these people explained.

During his term in office, Trump issued an executive order that made it harder for employers to offer ESG funds in employees’ 401(k) retirement plans. The Biden administration later softened the Trump rule.

 

In February, he said in a Truth Social post that if he is elected to a second term, he would reinstate his previous rule.

Californians Shocked at Food Prices After Government Forces Wage Increases

by | 0709, 1 May 24 | , | 0 Comments

Cry harder.

Greg LaVay, a 79-year-old retired entrepreneur from San Diego, says he used to visit McDonald’s a few times a month — but recently decided to switch to sit-down restaurants for dinner instead.

 

Why? LaVay noticed the price of hamburgers in his area inching up to $2.50 apiece, with a Big Mac going for $5.39 today.

 

“I feel ripped off a little,” he told The Wall Street Journal.

Since September’s ruling that California fast food franchisees would be required to increase its minimum wage for employees to $20 starting in April, several eateries have embarked on cost-cutting measures such as raising menu prices.

 

A recent analysis from market research firm Datassential reveals the Golden State’s fast-food and fast-casual restaurants, like McDonalds, Chick-fil-A and Pizza Hut, have lifted prices by about 10% overall since September. This growth far surpasses that of the U.S. as a whole, which has seen chains inflate prices by just over 5%.

 

Several fast food chains have said they’re raising menu prices in response to the minimum wage hike.

Americans Dipping into Savings as Inflation Rages

by | 1741, 27 Apr 24 | | 3 Comments

Our consumer culture continues to rage despite rising prices.

In the aggregate, Commerce Department indexes that the Fed relies on for inflation signals showed prices continuing to climb at a rate still considerably higher than the central bank’s 2% annual goal, according to separate reports this week.

Within that picture came several salient points: An abundance of money still sloshing through the financial system is giving consumers lasting buying power. In fact, shoppers are spending more than they’re taking in, a situation neither sustainable nor disinflationary. Finally, consumers are dipping into savings to fund those purchases, creating a precarious scenario, if not now then down the road.

WIAA considers implementing NIL

by | 0724, 25 Apr 24 | , , | 1 Comment

My full column for the Washington County Daily News is below. I was delighted to see that the WIAA rejects NIL in its meeting yesterday. Well done.

On Wednesday, the Wisconsin Interscholastic Athletic Association, the voluntary governing body for high school sports in the state, will take up the question of whether high school athletes should be allowed to profit from their name, image, and likeness (NIL) as in college sports. I strongly urge the WIAA to reject this proposal.

 

To date, 31 other states have already allowed NIL in high school sports. Wisconsin’s high school athletic directors, who comprise the membership of the WIAA, have been reluctant to follow suit, but it appears that such reluctance may have been overcome.

 

At issue is the definition of “amateur.”

 

The simple definition is that if one is not directly paid to compete in a sport, then one is an amateur. For decades, high school and college sports insisted that their athletes be true amateurs to preserve the competitive balance of sports. We did not want rich schools to pay professional athletes to dominate a sport. The loophole in the system was that wealthy school supporters would give gifts or highly paid noshow/ low-show jobs to talented athletes to attract them to a particular school. To combat this, the WIAA, NCAA, and other athletic governing bodies banned athletes from profiting from the fact that they are athletes. These governing bodies tended to over-enforce the rules to the point that athletes were wary of even having a regular job for fear of losing their amateur status.

 

A push began several years ago to allow athletes at the college level to profit from their NIL. I was a supporter of this. The rationale is simple. College athletes are adults competing within a highly profitable athletic monopoly and it is unfair for everyone to make money off of their talent except them. The vast majority of college athletes do not receive scholarships and will never compete as professionals. If they can make a few bucks supporting the local car dealership because they are a popular track star at the local college, then we should not stand in their way.

 

The implementation of NIL is currently ruining college sports. Between the transfer portal and lucrative NIL contracts, the competitive and rooting nature of college athletics is being gutted. While I still support NIL for college athletics for the reasons above, it needs significant reform to preserve college sports. The National Collegiate Athletics Association should, for example, reinstitute the rule whereby college athletes must sit on the bench for a year if they transfer to a different school.

 

While I support NIL for college sports, high school sports are different for one significant reason. The athletes are minors.

 

They are dependents of their parents who are responsible for their care. Money made from the athletes’ NIL does not go to the athlete, but to the athlete’s parent or guardian.

 

This fact makes NIL at the high school level take on the attributes of exploitation of a minor rather than freeing the athlete from exploitation.

 

The other movement in sports that corrupts this issue is the spread of legal sports gambling. Americans have always gambled on sports, but it was relegated to shadowy corners of society. We shunned it from the light because of the corrosive nature of gambling on competition. The availability of online sports betting and a growing cultural acceptance has made sports betting a big business and many people participate.

 

The corrosive effect of gambling is already seeping into high school sports. Infusing NIL money and influences into high school athletics will only increase the incentives and abilities of bad actors to corrupt the games.

 

It is not difficult to imagine someone with a betting interest in a high school sport using NIL influence to change the outcomes. We have a long history of cheating on sports to win a bet.

 

It is important for high school athletes to be able to work a job or receive reasonable gifts without jeopardizing their amateur status and ability to compete. The WIAA should work to clarify those rules so that athletes can work and compete without fear. But the WIAA should reject implementing NIL in Wisconsin. The risks to the athletes and their sports are not worth the rewards.

Biden Rule To Exacerbate Inflation

by | 0751, 24 Apr 24 | , | 1 Comment

Why is everything getting so expensive?

Millions of salaried workers will soon qualify for overtime pay under a final rule released by the US Department of Labor on Tuesday.

The new rule raises the salary threshold under which salaried employees are eligible for overtime in two stages. The threshold will increase to the equivalent of an annual salary of $43,888, or $844 a week, starting July 1, and then to $58,656, or $1,128 a week, on January 1, 2025.

About 4 million more workers will qualify for overtime when the rule is fully implemented in January, the agency estimates. In its first year, the rule is expected to result in an income transfer of about $1.5 billion from employers to workers, mainly from new overtime premiums or from pay raises to maintain the exempt status of some affected employees.

Retail Stores Ditching Self-Checkout Due to Theft

by | 0736, 24 Apr 24 | , , | 1 Comment

Shift.

Walmart is continuing to remove self-checkout machines from its stores in what it claims is an effort to improve the ‘in-store experience’ for customers.

 

In two stores – in Shrewsbury, Missouri, and Cleveland, Ohio – the retailer said it would replace kiosks with staffed checkout lanes which will ‘give our associates the chance to provide more personalized and efficient service.’

 

In reality, many retailers are ditching self-checkout kiosks because they are especially vulnerable to shoplifters – and the biggest retailer in the world’s U-turn could be a landmark moment.

In a related note:

Although the company is ditching the cashier-less checkout system at its Amazon Fresh grocery stores, it plans to sell the technology to more than 120 third-party businesses by the end of the year. Reaching that goal would double the number of non-Amazon enterprises that use Just Walk Out compared to last year.

The cashier-less system is the perfect antidote to the theft problem of self-checkout. I used the automated system in the San Francisco airport a while ago. It’s really simple. You scan your card when walking into the store. You can’t get into the store without scanning your card. When you have what you want, you just leave. The products all have RFID chips and are scanned on the way out with no effort. Theft is near impossible without an RFID blocker big enough for the products. I suppose you could bring in a lead-lined tote, but that’s a lot of effort for your average shoplifter.

The problem is cultural. I don’t want to scan my card before I know if I’m going to actually buy anything. Also, there is no “appeal process” if the price is wrong or it scanned wrong or whatever. I don’t want to have to call some number to resolve a $2 mistake.

With labor rates continuing to rise, retailers will continue to seek ways to reduce labor spend and expensive automated technologies will continue to evolve.

 

WIAA considers implementing NIL

by | 0745, 23 Apr 24 | , , | 10 Comments

My column for the Washington County Daily News is online and in print. Here’s a part:

On Wednesday, the Wisconsin Interscholastic Athletic Association, the voluntary governing body for high school sports in the state, will take up the question of whether high school athletes should be allowed to profit from their name, image, and likeness (NIL) as in college sports. I strongly urge the WIAA to reject this proposal.

 

To date, 31 other states have already allowed NIL in high school sports. Wisconsin’s high school athletic directors, who comprise the membership of the WIAA, have been reluctant to follow suit, but it appears that such reluctance may have been overcome.

 

At issue is the definition of “amateur.”

 

The simple definition is that if one is not directly paid to compete in a sport, then one is an amateur. For decades, high school and college sports insisted that their athletes be true amateurs to preserve the competitive balance of sports. We did not want rich schools to pay professional athletes to dominate a sport. The loophole in the system was that wealthy school supporters would give gifts or highly paid noshow/ low-show jobs to talented athletes to attract them to a particular school. To combat this, the WIAA, NCAA, and other athletic governing bodies banned athletes from profiting from the fact that they are athletes. These governing bodies tended to over-enforce the rules to the point that athletes were wary of even having a regular job for fear of losing their amateur status.

 

[…]

 

While I support NIL for college sports, high school sports are different for one significant reason. The athletes are minors.

 

They are dependents of their parents who are responsible for their care. Money made from the athletes’ NIL does not go to the athlete, but to the athlete’s parent or guardian.

 

This fact makes NIL at the high school level take on the attributes of exploitation of a minor rather than freeing the athlete from exploitation.

 

The other movement in sports that corrupts this issue is the spread of legal sports gambling. Americans have always gambled on sports, but it was relegated to shadowy corners of society. We shunned it from the light because of the corrosive nature of gambling on competition. The availability of online sports betting and a growing cultural acceptance has made sports betting a big business and many people participate.

 

The corrosive effect of gambling is already seeping into high school sports. Infusing NIL money and influences into high school athletics will only increase the incentives and abilities of bad actors to corrupt the games.

 

It is not difficult to imagine someone with a betting interest in a high school sport using NIL influence to change the outcomes. We have a long history of cheating on sports to win a bet.

 

It is important for high school athletes to be able to work a job or receive reasonable gifts without jeopardizing their amateur status and ability to compete. The WIAA should work to clarify those rules so that athletes can work and compete without fear. But the WIAA should reject implementing NIL in Wisconsin. The risks to the athletes and their sports are not worth the rewards.

China is the Green Energy Giant

by | 0753, 18 Apr 24 | , , | 0 Comments

The “green” energy push from the Biden Administration is a lifeline to China’s economy at the expense of the American consumer.

But now the old industrial pillars of furniture, clothing and electrical goods are struggling, Beijing is looking to its “new productive forces”: solar panels, lithium batteries and electric cars.

“We are exporting to the UK, Belgium, Germany, mostly European countries, but also to Africa, Australia, South America, North America and also South East Asia,” salesperson Yan Mu says as he shows off the company’s storage batteries.

His is one of the stalls at an exhibition held by hundreds of green energy storage companies in a refurbished and repurposed steel plant on the edge of Beijing.

Ford Drops Prices to Lure EV Buyers

by | 2015, 11 Apr 24 | , , | 2 Comments

Market working.

DEARBORN, Mich. — Ford Motor is lowering the starting prices of some all-electric F-150 Lightning pickup trucks as it prepares to resume shipping the vehicles after quality issues.

 

[…]

 

The cost reductions are the latest electric vehicle price changes for the broader automotive industry amid slower-than-expected consumer adoption. Ford’s cuts come three months after it adjusted Lightning prices, including increasing some model prices.

Auto Insurance Up 45.8% Since December of 2021

by | 2012, 11 Apr 24 | | 0 Comments

Ouch

Auto insurance costs have been on the rise for some time, growing every month as part of the index since December 2021. Since then, costs have increased by 45.8%, according to U.S. Bureau of Labor Statistics. However, auto insurance remains a small portion of the CPI, with a 2.85% weighting.

 

The uptick comes on top of historically high prices for new and used vehicles since the coronavirus pandemic. It’s also become increasingly more expensive to repair vehicles due to supply chain shortages, mechanic wage increases and additional technologies in vehicles such as microprocessors, cameras and other sensors — all of which contribute to higher vehicle and insurance costs.

Biden’s Inflation Continues to Hammer Americans’ Paychecks

by | 0853, 11 Apr 24 | , | 0 Comments

Ouch. It’s frustrating that the media continues to push the notion that the Federal Reserve is the only entity that has a lever to manage inflation without even mentioning the root cause of inflation – massive government spending. As long as Biden continues to spend, inflation will continue. It really is that simple. If you want to pull inflation back, start ending government programs and reduce spending.

A hotter-than-expected consumer price index report rattled Wall Street Wednesday, but markets are buzzing about an even more specific prices gauge contained within the data — the so-called supercore inflation reading.

 

Along with the overall inflation measure, economists also look at the core CPI, which excludes volatile food and energy prices, to find the true trend. The supercore gauge, which also excludes shelter and rent costs from its services reading, takes it even a step further. Fed officials say it is useful in the current climate as they see elevated housing inflation as a temporary problem and not as good a measure of underlying prices.

Supercore accelerated to a 4.8% pace year over year in March, the highest in 11 months.

 

[…]

 

Further complicating the backdrop is a dwindling consumer savings rate and higher borrowing costs which make the central bank more likely to keep monetary policy restrictive “until something breaks,” Fitzpatrick said.

 

The Fed will have a hard time bringing down inflation with more rate hikes because the current drivers are stickier and not as sensitive to tighter monetary policy, he cautioned.

Renting Is Much Cheaper Than Buying

by | 2019, 21 Mar 24 | , , | 1 Comment

The powers that be want a nation of renters.

Buying a house in the United States is considerably more expensive than renting right now, and the real estate market is expected to stay that way for at least the next five years, according to a new analysis.

 

The analysis out Thursday from CBRE, a firm that tracks real estate prices, shows the average monthly payment on a new apartment lease in the U.S. is $2,165. The average monthly payment on a mortgage for a new home is $2,997, meaning it costs households, on average, 38% more to buy than to rent, according to the analysis.

 

Notably, the gap between buying and renting will continue to be a big hurdle for aspiring homeowners for at least five years, the analysis found — mortgage payments are still expected to cost 11% more than rent in the year 2030.

 

Higher mortgage rates and a nationwide housing shortage are key factors behind persistently high home prices, according to the CBRE report. The report estimates there is a shortage of 3.8 million housing units in the U.S., mainly in single-family homes and smaller multi-unit dwellings.

Of course, even though renting is cheaper in terms of monthly expense, you will pay it forever and never own anything. Buying a home is still the #1 way that most families build wealth. That’s what they want you to rent and build their wealth.

Aramco CEO Says We Should Abandon Fantasy Energy Goals

by | 0801, 20 Mar 24 | , , | 0 Comments

Yes. This has been obvious for a while, but what is different here is that there is a major energy company CEO saying it so forcefully. Major energy companies have been unwilling to voice these views for fear of regulatory punishment and because they wanted a slice of the taxpayer pie being doled out for alternative energy schemes. Nasser’s comments mark a break in the SOP.

HOUSTON — Saudi Aramco CEO Amin Nasser said Monday that the energy transition is failing and policymakers should abandon the “fantasy” of phasing out oil and gas, as demand for fossil fuels is expected to continue to grow in the coming years.

 

“In the real world, the current transition strategy is visibly failing on most fronts as it collides with five hard realities,” Nasser said during a panel interview at the CERAWeek by S&P Global energy conference in Houston, Texas.

“A transition strategy reset is urgently needed and my proposal is this: We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately reflecting realistic demand assumptions,” the CEO said to applause from the audience.

 

[…]

 

Nasser said the world should focus more on reducing emissions from oil and gas in addition to renewables. The CEO said efficiency improvements alone over the past 15 years have reduced global energy demand by almost 90 million barrels per day oil equivalent. Wind and solar, meanwhile, have substituted only 15 million barrels over the same period, he said.

 

“We should phase in new energy sources and technologies when they are genuinely ready, economically competitive and with the right infrastructure,” Nasser said.

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