Postcards from the florida republic: An independent and profitable state of mind.
The United States is not a serious nation.
If it were a business, you shouldn't invest.
Last Friday, while you were buying hot dogs and hamburgers, preparing for a holiday to celebrate our independence, we experienced another bout of dirigisme – and a bid to choke off the economic engine.
One of the shining beacons of U.S. economic growth and independence has been the Permian Basin, which accounts for 40% of U.S. oil production and 15% of its natural gas output.
Activists, lawyers, and regulators are ready to tear all that economic engine apart piece by piece.
Over a lizard.
Get Me Off This Rock
In yet another pre-holiday document dump to the Federal Register, U.S. Fish and Wildlife Services announced its intention to put the Dunes Sagebrush Lizard as an endangered species under the Endangered Species Act. This lizard's natural habitat is in West Texas, an activist's argument to shut down the American oil-and-gas sector.
Now, let's just get the obvious part out of the way. Your convenience… your standard of living… your ability to travel at an affordable price… must be sacrificed for a three-inch lizard.
This is how these people think. It's a convenient excuse.
But it's even worse than this.
Peel back the onion. You'll find a story of double-crossing, massive hypocrisy, grifting, and the sacrificing of U.S. energy and national security.
Why? For money… that's why.
Let's Start with the Double-Cross
For the last decade, energy producers in the Permian have been working with environmental groups to create conservation efforts for the lizard. They were close to an agreement. The producers had spent tens of millions of dollars on conservation efforts, and USF&WS had to know this. After all, the negotiations went all the way back to the Obama administration's first term.
So, this agency comes out of nowhere, hits the producers, and makes this announcement. Now, maybe you're a fan of lizards and endangered species.
But there is one reason – and one reason only why this order is in place. To take direct aim at fossil energy.
Bald eagles were at one time the most celebrated endangered species in America; they're actually dangerously under threat from windmills. But you don't see governments shutting down wind farms over bald eagle deaths (you see fines because – it's a way to make some money for the government). As I'll explain in a moment – environmental advocates are not trying to shut down wind either over eagles; they're going after lead bullets. I'll explain…
Then, there's the marine life. Windmills are driving whales to beach themselves. Did that shut down the largest U.S. offshore wind program, despite scientists' warnings? Of course not. It's rank hypocrisy.
And if you must ask why… Occam's Razor is usually the right answer. There's a lot of money in the exercise of dirigisme in the alternative energy sector. This is the kind of stuff that keeps think tanks busy and flush with government money; this gives regulators something to do. (While everyone is celebrating the jobs report on Friday, remember that the job growth was driven by people taking second jobs or going to work for the government. Huzzah!)
The money in it is the third part of this exercise. In a Forbes article explaining the Permian-lizard debacle, I noticed a quote from an activist.
"I'm relieved the precious dunes sagebrush lizard is finally on the path to protection," Michael Robinson, senior conservation advocate at the Center for Biological Diversity, said in a statement. "I'm saddened and disgusted, however, that the Service allowed the lizard's habitat to be destroyed for decades."
A few things. First, who talks like this? "The precious dunes sagebrush lizard," Robinson says, as if he's talking about a child in a newborn hospital room. He's both "saddened" and "disgusted." Those are a wild range of emotions over a lizard that most people won't remember in about six months.
But here's the more important question: What is the Center for Biological Diversity (CBD)?
This sounds like a very prestigious conservation nonprofit full of knowledgeable scientists who work to help animals and let nature flourish.
Oh… never mind.
It's a legal center. They have 170 employees. It appears that lawyers comprise about 30% of the ranks. And it appears that their business model is to take donations from people and then use them to sue over every little thing possible in the environmental world.
It's a business model – the very type that I've been warning about.
A 2020 article by Alex Berezow, PhD, breaks down how this center operates.
Berezow cites the company's website for the first clue.
Based on our unparalleled record of legal successes — 83 percent of our lawsuits result in favorable outcomes — we've developed a unique negotiating position with both government agencies and private corporations, enabling us, at times, to secure broad protections for species and habitat without the threat of litigation. [Emphasis added]
So, they sue and settle. Berezow compares them to the Godfather putting "a dead horse's head in your bed to get what he wants."
Be sure to read this analysis, as it's a reaction to the Center accusing Berezow of being a shill for big industry, even though the nonprofit was reportedly founded by a Swiss billionaire.
And that brings me to the final point. Groups like the Center for Biological Diversity take on cases that undermine U.S. energy and food production, and more.
In May, Congress announced plans to investigate various environmental groups over concerns that they were undermining America's economy and security.
The press release states: "The Center for Biological Diversity routinely files lawsuits to stop the production of critical minerals; Navy and Air Force training; building and expanding military bases; and most recently trying to stop our space and rocket program by suing the FAA over SpaceX."
In addition, the "Congressional Committee found that the Center for Biological Diversity arranged meetings with American politicians, held press conferences and coordinated publicity events on behalf of foreign activists in efforts opposed to America's national defense."
In addition, the group has been trying to get hunting banned on federal lands because… bullets. In 2020, it launched – surprise! - a lawsuit to target out hunters using lead bullets. Because they're more dangerous if an eagle finds a stray bullet in a tree than if the eagle flies into a Department of Energy-approved wind farm.
So, not only will you not have oil, if these people get their way, but you won't even be able to hunt to feed yourself.
Makes sense.
There is a lot of money in this game.
And it's going to get worse…
These people not only want to keep oil in the ground, but they are also putting the U.S. in a situation where we will be even more reliant on foreign powers for both oil and gas AND the minerals essential for the green transition.
You won't be shocked to learn that CBD was trying to prevent the construction of lithium mines in Nevada due to concerns about a rare buckwheat that lives in the desert.
If they find a way to succeed, we'll have to get all of our lithium from South America. And we'll still have to rely on China's solar supply chain.
Heaven help us.
What This Means for Investors
As I've said, get used to the term dirigisme.
At a time that the U.S. government is forcing the green transition, it is happy to play along with the grift and game of Calvinball in which the rules change daily.
We need to quadruple copper supply alone over the next ten years to meet the lofty demand numbers expected. As I explained yesterday, Wall Street analysts suggest that we will either see copper prices breakout in the years ahead or we will need unprecedented demand destruction to keep prices in line with supply.
Bet on the former. We'll talk about copper and other commodity plays in the weeks ahead.
To your wealth,
Garrett Baldwin
Florida Republic Capital (Available on Substack)
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.