Joe Biden’s Industrial Scale Cognitive Dissonance
Today, we’ll discuss energy, industry and doing energy-related things at industrial scale.
We’ll look at what one industrialist is doing, namely Elon Musk. Apparently, he has his head screwed on.
Next, we’ll look at President Joe Biden, a political lifer who seems far behind the learning curve.
Of course, each man has his own job and plays a certain role.
Musk runs an electric vehicle (EV) company Tesla… And a rocket company SpaceX… And a slew of other business and technology interests.
While Biden is merely President of the United States. And to perform that function, he has plenty of staff to do the heavy lifting, if not the deep thinking.
The comparison comes up because, to his credit, Musk appears to have a firm grasp of what it takes to make his dreams come true.
While Biden, in many respects, lives in some fantasy land that’s disconnected from the material reality of national-level policymaking.
Indeed, with Biden, we see literally industrial scale cognitive dissonance. And of course, it’s dangerous to have that kind of crazy at the top.
Let’s dig into this…
Begin at a news site called Teslarati, which publishes about matters related to Tesla and other of Musk’s many pursuits.
Recently, the site reported that Tesla is, “poised to become a technical adviser at the massive Goro (nickel) mine in New Caledonia, as the electric car maker extends its efforts to acquire more nickel for its battery initiatives.”1
At first blush, this news seems rather granular, if not obscure. A nickel mine in New Caledonia? Who cares, right?
Meanwhile, it might seem odd that a high-tech EV company like Tesla is engaging with a far-off mining concern. Generally, that sort of vertical integration is not part of the curriculum taught in modern business schools. And in fact, the last namesake carmaker who owned his own mines and mills was Henry Ford, back in the 1930s.
Then again, looking ahead it might make sense for Tesla to become involved in nickel mining. Especially when you consider that the metal is a critical component of Tesla’s advanced battery designs that power its EVs.
In particular, Tesla has a new battery design called the “4680 cell” that the company unveiled last year on Battery Day. Energy-wise, it has more of everything.
Tesla’s new 4680 battery cell.2
What gives this new battery its extra juice is nickel-based chemistry, hence the focus on that particular element.
Along these lines, last summer Musk singlehandedly sparked a mini rally in miners when he enthusiastically urged mining companies to dig more nickel, while dangling prospects for a giant contract for efficiently mined product. He said:
“Well, I’d just like to re-emphasize, any mining companies out there, please mine more nickel. Okay. Go for efficiency, obviously environmentally friendly nickel mining at high volume. Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way. So hopefully this message goes out to all mining companies. Please get nickel.”3
This is how it’s done, people…
Musk offered quite a lure, considering how he runs a Wall Street darling of a company with a market cap in the range of $650 billion or more.
Indeed, Musk’s nickel-talk was music to the ears of mining investors. He sprinkled that magic Tesla holy water onto one humble metallic element. But by extension, he implied the upside potential for Tesla-style momentum and share price movement to any miner fortunate enough to have a nickel deposit.
Of course, there’s no free lunch, even when it seems like Tesla is offering to pick up the tab.
There’s that down-to-earth matter of physical reality. Because Tesla already buys batteries from third party companies with highly developed industrial niches: LG Chemicals, Inc. of Korea, and Japan’s Panasonic Corp. These guys have mature supply chains, including assured access to supplies of primary material from upstream nickel miners.
Meanwhile, much of the world’s primary nickel comes from well-known players with long-term mining plans, namely Brazil’s Vale, Russia’s Norilsk and Australia’s BHP Mining.
But still, it’s intriguing that recently Musk and Tesla have moved ahead to secure long-term supplies of nickel to the point of becoming involved in this mining play in New Caledonia.
Evidently, Musk and his company are thinking things through and thinking far ahead. They will not be caught flat-footed when they need nickel. And they will put money on the table to make it happen.
As opposed to… well…
Consider this statement from the White House on Jan. 27:
“Today, President Biden will take executive action to tackle the climate crisis at home and abroad while creating good-paying union jobs and equitable clean energy future, building modern and sustainable infrastructure, restoring scientific integrity and evidence-based policymaking across the federal government, and re-establishing the President’s Council of Advisors on Science and Technology.”4
Wow. Where to begin?
Obviously, this missive contains buzz words galore: “Tackle the climate crisis” (at home and abroad no less!). “Good-paying union jobs.” “Equitable.” “Clean energy.” “Sustainable infrastructure.” “Scientific integrity.” “Evidence-based.”
It’s a hodgepodge of frothy, self-promoting jargon, all packed into a single, run-on sentence. It’s stupidly propagandistic. It’s silly and childish, let alone entirely unprofessional.
All this from the White House, no less. Foreign countries are watching. It’s embarrassing…
And it’s enough to make you want to say, “C’mon, man.”
As in, who writes this kind of crap? Did the Biden administration hire some young, millennial protégé version of Mohammed Saeed al-Sahhaf, aka Baghdad Bob?5
Okay, yes, sure… This is just one press release. But there are more, many more like it. This is what passes for communication from the White House these days. Pass the airsickness bags, please.
Which brings us to the so-called “Biden Plan” for energy and where Biden wants to take the country in terms of literally keeping the lights on. This plan was a key part of the Biden campaign last fall.6
In essence, the Biden campaign promised to spend $2 trillion on a litany of political shiny things like infrastructure, transit, power generation, housing and building upgrades, research, agriculture, conservation, environmental restoration, “environmental justice” and more.
It was a long political promise of sugar, spice and everything nice with the added benefit of people doing all these things while belonging to a labor union and earning high wages. What kind of defeatist sourpuss could possibly oppose such lofty ambitions?
Yet there was nary a hint from Biden as to how any of this might be accomplished. In particular, no discussion of America’s lack of basic mines and materials to build the essential elements of anything remotely related to these greenish ambitions. No discussion of the nation’s lack of industrial capability.
I outlined some of the problems in an article entitled Biden’s Green New Disaster. These range from lack of critical materials like rare earth elements for magnets and electronics to the ability to manufacture large amounts of polycrystalline silicon for solar panels. All this and more.
Indeed, when you look at it in a certain light (the light of reality) the Biden Plan itself is a testament to how much of the world’s supply for critical energy materials and equipment comes from China.
Other elements (literal and figurative) in short supply within U.S.-focused supply chains are elements like nickel, see above; and cobalt for magnets and batteries; lithium and graphite, again, for batteries; and exotic alloying elements like vanadium, niobium, scandium and much more.
Even basic metals like copper, lead and zinc are in large measure imported to the U.S.
In essence, any plan to restructure the current U.S. energy system — to maintain the current level, let alone to rebuild it from the inside out — must address these kinds of issues, or it’s nothing but smoke, mirrors and political trash talk.
So Biden and his handlers have been in office for a couple of months, and what do we know at this stage?
Well, it’s crystal clear. When it comes to energy issues they really, truly, absolutely have no freaking clue what they’re talking about.
First, just look at the money side of things. The Biden Energy Plan calls for $2 trillion for infrastructure, etc., as outlined above. Okay, rebuilding infrastructure is expensive, and Biden has not yet made any such proposal to Congress, let alone for that level of funds.
Meanwhile, Biden just signed a $1.9 trillion “Covid relief” bill that the Democrats rammed through Congress without a single Republican vote. Partisan politics aside, there goes the federal checkbook. Poof!
That $1.9 trillion Covid bill has money for vaccines, “stimmy” checks and much else. But not a dime for infrastructure, energy or anything tangible.
Instead of rebuilding roads and bridges, upgrading power systems, etc., a massive chunk of federal credit is going into an epic giveaway to bail out poorly run states, counties, cities and mismanaged pension funds. I discussed it here.
Along these lines, one of my Navy friends pointed out (tongue in cheek) that for $1.9 trillion, the Navy could buy 543 Virginia-class submarines at the current unit price of $3.5 billion each. That would increase the number of submarines in the Navy by a factor of 10. And do wonders, of course, to rectify the current correlation of forces in which China’s combat navy is quite a bit larger than the entire U.S. fleet.
Looked at from another angle, that $1.9 trillion Covid bill is over twice the annual defense budget. Or think of it as in the ballpark for the cumulative cost of the war in Afghanistan over the past 20 years.
The point is, the Biden administration just spent a big chunk money. It has tied up what’s left of the country’s bank account before stringing a single new power line anywhere.
Meanwhile, as energy issues go, the Biden administration is waging war on fossil fuels. It openly advocates to get rid of internal combustion vehicles within the next 15 years and to shift U.S. transport to widespread use of EVs.
So the country is going to kill off fossil fuels, go electric with an inadequate grid and unbuilt “new” systems, all constructed out of materials we don’t produce as a nation and with equipment we mostly don’t manufacture here.
Events will unfold in their own way, of course.
No doubt, the Biden administration will eventually come up with proposals to flesh out the details of its energy plan. Indeed, one of Biden’s aids (Baghdad Bob II, perhaps) may well be in the White House press office right now working on the release.
More than likely, the implementation of this bold Biden vision will be to drape vast swaths of the fruited plains of the nation in Chinese-made solar panels and pincushion the majestic purple mountains with giant windmills turning Chinese-made magnets. And then to connect these systems via transmission lines yet to be sited and built, made with materials purchased from many a foreign vendor.
It’s all a far cry from how Elon Musk does it. Of how he figures out that his batteries will need nickel and then goes out and nails down the supply.
What we are witness to is industrial scale cognitive dissonance, and all focused on the country’s energy system no less. Yes, it’s crazy.
On that note, I rest my case.
That’s all for now… Thank you for subscribing and reading.
Managing Editor, Whiskey & Gunpowder
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6 The Biden Plan to Build a Modern, Sustainable Infrastructure and an Equitable Clean Energy Future, Battle for the Soul of the Nation