Hello, Peter Zeihan here coming to you, March eight. I wanted to talk about what’s going on with the markets because of the Ukraine war.  

We had nickel prices more than triple today. And so the London Metals Exchange, which is where most metals and minerals are traded, had to cut off trading for a while this morning. 

Now nickel is important for any number of reasons. It’s used to make stainless steel, which we use in everything from bridges to cutlery. 

But in terms of the green transition, it’s a critical material because when you’re making something with green tech, whether it’s a wind turbine or an electric vehicle, you need a lot of metals that are good at conducting and resisting electricity. Nickel makes the list. 

Take a look at this graphic from the upcoming book of ours, The end of the world is just the beginning.

You can see at the top there just how much more material you need in order to make an EV than an internal combustion engine. And then look down at the bottom and you can see the same logic holds true for the other green techs, in terms of power generation.

A lot of folks are concerned that Russia was able to do what it’s doing because of fossil fuel sales. And that’s absolutely true.  Russia is the top exporter of natural gas. The second is exporter of crude oil and the third largest exporter of coal. Collectively that’s over half of government revenues. 

So that argument is sound, but that doesn’t necessarily mean that Russia’s absence is going to push us towards a greener future.

Because we understand the supply chains of petroleum and natural gas. You know, you need to deal with Russia and Venezuela and Iraq and Iran and Saudi Arabia. But if you want to switch to green tech, you have to replace that one complicated supply chain with 13 others, that are, if anything, even worse involving 40 to 60 different countries, based on what you’re looking at, one of which is typically Russia, because Russia is absolutely integral to the nickel market, to copper, to aluminum.

Can’t live with them. Can’t live without ’em. 

Bottom line of all this.

We’re looking at higher energy prices for the foreseeable future cuz as many as 5 million barrels a day of Russian crude is gonna be coming offline very soon. And that doesn’t mean we can move to a green transition. We have to find a new technology, a new battery chemistry, that allows us to avoid the Russian system.

Since Russia is the physically largest country on earth, and so has a lion’s share of materials, that’s gonna be a very, very heavy carry from an energy point of view. We really are kind of in the worst of all worlds right now. Until next time.