Tom Luongo writes at his blog The Oil Nationalization Two-Step. Excerpts in italics with my bolds and added images.
You’ve all heard me rant about the “Straussian Two-Step,” which is nothing more than a retread of the Hegelian Dialectic. Here’s the formal definition:
An interpretive method, originally used to relate specific entities or events to the absolute idea, in which some assertible proposition (thesis ) is necessarily opposed by an equally assertible and apparently contradictory proposition (antithesis ), the mutual contradiction being reconciled on a higher level of truth by a third proposition (synthesis ).
In modern politics it’s used to create a false reality by asserting something that is
partially true (at best) or a truth that you yourself created as a person in power.
In today’s case it’s a manufactured energy crisis across the West.
In order to see the Straussian Two-Step however you have to work backwards. This process is not an a priori deduction or an exhaustive fit of investigative journalism.
Rather it is an inductive conclusion based on awareness of the motivations of those in power and seeing how they lead a mass of people to a pre-ordained conclusion. In other words, schizo-posting.
So, say your goal is to legitimize the state takeover, or advance another step forward the state takeover, of an industry. Let’s use oil and gas for today’s lesson.
The first thing you do is manufacture a crisis that will disrupt the supply of the product you want to takeover. In this case, it started with COVID-19, which disrupted far more than just the energy sector.
More than 2 million barrels per day of refining capacity was lost world wide thanks to COVID-19. Given the current hostility to new refineries (more on this later), those barrels are not coming back.
Don’t forget, that for a “Straussian Two-Step” this big you will have to brainwash and/or gaslight two entire generations into hating themselves for being rich, wasteful, spoiled, alive or worse, just plain white.
So, they are already primed to hate all the things at play here — capitalism, Big Oil, Banks, Old White Guys (rich or poor) — and enrage your useful idiots by pushing their already tenuous hold on reality to the literal breaking point. “I can’t even….” isn’t the most common phrase uttered on Tik-Tok for nothing.
That’s the Thesis part.
So, when the crisis hits thanks to natural gas disruption you forbid buying of from a particular country… you demonize not only Vlad but the industry itself for price gouging and preying on the widdle guy during a war. There’s a word for this… chutzpah.
Predictably, you then allow your fake political opponents …[enter Cocaine Mitch from Stage Right]… to produce the opposite argument. In this case, the counter is obviously we need free markets to produce oil and gas. The refiners are just responding to the market.
That fake opposition, of course, also blames Vlad for this crisis to ensure the market’s champion looks not only patriotic but also suitably bought and paid for by Big Oil, Old White Guys, etc.
Both sides of this argument have now been framed 90 degrees away from the real source of the problem–government intrusion into the flow of oil and gas to your homes.
This is a crisis that if left solved to human ingenuity and, yes, the studious application of greed, would be over in a matter of weeks as refineries shut down during COVID would come back online, supply chains reorganized etc.
While the crisis phase would be over quickly, the long term investment cycle set off in refining would take longer to structurally immunize the industry against future supply shocks to accomplish.
Prices may not return to normal for years but the market, without intervention by rapacious morons both in government and running them from behind the curtain, would eventually grind the arbitrage out of the fuel industry nearly entirely.
Remember the goal. Destroy free markets, nationalize oil and gas.
This means also preparing the next move to get rid of another aspect of the free market while zeroing in on the current crisis. In this theoretical case, we’re looking at the massive diesel crack spreads of refineries, fueling the perpetual motion machine of Marxism’s inherent envy.
Moreover, this situation exploded on the eve of a crucial election to put into the mouths of the crisis actors we call colloquially, “Members of Congress.”
Their solution? Put windfall profit taxes on refiners who are taking advantage of the vulnerable and needy common man. They are evil ‘price gougers’ by accepting the bids from the market for the fruits of their labors which occurred precisely because of artificially inducing a shock to the system.
In the case of diesel fuel in the US this is clearly a manufactured crisis.
COVID took a lot of refineries in the Northeast (PADD-1) offline. And given the hostility of the Biden administration and environmentalists to the oil industry as a whole, as I alluded to earlier, those refineries are not coming back online anytime soon.
Don’t take my word for it, take it from the ones who own the refineries.
“Building a refinery is a multi-billion dollar investment. It may take a decade. We haven’t had a refinery built in the United States since the 1970s. My personal view is that there will never be another refinery built in the United States.”
According to Wirth, oil and gas companies would have to weigh the benefits of committing capital ten years out that will need decades to offer a return to shareholders “in a policy environment where governments around the world are saying ‘we don’t want these products to be used in the future’”.
Why would they? If it were your money would you begin the insane process to build an oil refinery in the US today even with crack spreads at $70+ per barrel? Of course not. By the time you filed the first Environmental Impact Assessment application form the spreads could be back to $20 because it’s politically advantageous for the “Straussian Two-Steppers” to take the pressure off for a few months.
Government is keeping the market in a supply/demand mismatch on purpose. That’s the only conclusion you can draw. Because if “Biden” wanted to solve this problem he wouldn’t be draining the SPR, he’d be rolling back regulations on refining oil or offering some of that ‘infrastructure money’ to help the industry rebuild post-COVID.
High Bid Wins the Prize
Diesel fuel demand is mostly inelastic, since it’s simply necessary for our daily life. Any supply disruption will cause massive price spikes because people will fall all over themselves bidding up the price of available supply to get what they can.
This is the one thing morons leftists can’t wrap their head around. Producers aren’t withholding supply and ‘raising prices’ in an open market economy. That’s propaganda. The reality is that consumers bid up the price for everything in demand or withhold those bids when the cost/benefit isn’t in their favor.
This is the dynamic at play when I use the term cost-push inflation. A supply shortage pushes the bids for basic goods up out of necessity and pouring money into the system through government handouts only accelerates this effect.
Low cost or free dollars flow to the things people need the most and that is the main source of our inflation today.
So, when you see the headlines full of scaremongering like the US only has 20 days of diesel fuel left, this undergirds the bids for limited supply. The futures markets are stripped of their power to coordinate supply over time and producers are stuck being demonized by low quality agitprop from the likes of AOC and Lizzie Slapaho.
Nationalization: The Next Two-Step
Windfall profit taxes are already on the way in Germany, 90% of all profits taxed away to the state. Energy production, when that bill passes, will be nationalized in Germany. The end of rational energy pricing will be gone.
Germany will become another energy subsidizing hellscape like we see all over the world.
The choice in front of German energy companies now is Uniper’s fate, nationalization through bailout, or remain ‘private’ but on a government-mandated cost-plus business model the profits from which will never outcompete the depreciation curve.
Today here in the US the Democrats are pushing for outright nationalization of all oil and gas production. That was the goal all along, the thesis. The fake antithesis is the “Drill baby, Drill,” crowd on Capitol Hill, crying crocodile tears over the loss of the Keystone XL pipeline for more than a decade.
The synthesis this time around will be finally getting through their long-sought after billionaire’s tax in the form of a windfall tax starting with evil Big Oil. Even if they don’t get it, it’s not like they don’t have other things on their to-do lists to get it done.
They are starting here again because they know no one will seriously consider outright nationalization (the next synthesis) unless there’s a war with Russia…