#003 Points of Interest

Success is going downhill fast and oil is losing a little luster

It is Wednesday September 15th. And the AQI (air quality index) is still ‘Hazardous’, but mercifully the number is now low enough to merely be the worst thing our scale accounts for instead of being literally off the charts.

I’m fortunate to work inside, I believe most of my readers are too. I’d encourage you to make a donation to an organization that supports migrant laborers who have no choice but to be outdoors doing intense labor and who have already borne a disproportionate amount of the suffering from Covid. In Oregon that is the Worker Relief Fund.

💸 Green shoots

My mind is somewhat fixed on climate change, so the newsletter is staying there too for now. Gazing at the impenetrable smoke cloud out my window I’m asking myself:

What drives pollution and climate change that dries out the west and makes it (almost) spontaneously combust?

Well, driving.

Transportation makes up 28% percent of greenhouse emissions in the united states. Despite the current administration sandbagging fuel efficiency requirements for car companies and showing a cartoon villain level of admiration for fossil fuels a lot of alternative energy car companies have 🌱 sprouted in the US.

Notably Tesla, Rivian, and Nikola are, metaphorically, on fire. Tesla has seen an absolutely unprecedented rally in their stock, Rivian has signed a deal to make 100,000 electric delivery vans for Amazon, and Nikola wooed GM into a partnership only days ago.

Its a big business with huge expectations and billions of dollars on the line. So, its no wonder that with everything that is at stake some of these companies have been…

🚚 Semi Honest

Have you ever rolled your breakthrough alternative energy semi truck prototype called Nikola One down a hill sloped at a 3% grade so that it would gain enough speed to to appear to be moving under its own power over flat terrain when filmed at the correct angle? No?

So, just Nikola then.

A firm called Hindenburg research (which happens to be shorting Nikola stock) made several claims of deceptive practices by Nikola, all of which were quickly refuted by the company Except the one that said their original semi couldn’t travel under its own power.

"This thing fully functions and works, which is really incredible." - Nikola’s founder

Having worked at multiple startups I feel a lot of empathy for Nikola, often times creating a demo of your product means duct tape, twine, and hope that something you made while under the gun can show the vision of what you plan to produce.

  • The founders of Reddit created hundreds of fake accounts to bootstrap their community early on before enough users gave it critical mass.

  • In video games they often create a “vertical slice” that shows the intended experience long before the actual game is finished. The industry came up with a name for unrealistic screenshots studios would produce: bullshots.

Was it wrong? The SEC will tell us if its legal but this exists in a grey area where the pitch and promise blend seamlessly into projections for investors. While venture capitalists are probably game for the risk the average sharholder isn’t. Maybe thats where the line is.

But the profit motive isn’t always bad, and for the environmentalists out there its leading to…

⛽️ Skittish Petroleum

BP, formerly known as British Petroleum, is distancing itself further from the ‘P’.

Aside from no longer having Petroleum in their name, BP is now firmly pivoting away from oil as its core product… though the financials and assets they own don’t show it yet. However, their latest projections for Peak Oil now put 2025-2035 within the realm of possibility due to climate policies across the globe. The writing is on the wall.

The energy industry calls infrastructure that produces energy that can’t be sold profitably, or legally, stranded assets.

The risk of owning stranded assets has grown very quickly from theoretical to inevitable over the past decade. BP risks becoming a company holding a very large bag of stranded assets with little else to show for it if they don’t take climate action and the increasingly great economics of renewables into account.

Its a big about-face for a poster child of oil spills in an industry where, if you look for immorality, you aren’t lacking good examples.

Should we just let energy companies rehabilitate themselves? Despite corporate person-hood a company can never be held accountable as a real person can, so right now we aren’t given a choice. BP is trying, but i’m not so sure we should forget what the acronym stood for.

Some questions I have…

  • Making oil extraction unprofitable works. We’re decades late on a carbon tax, but what other levers can we pull to make BP’s peak oil worst case scenario a reality?

  • Do we have the political will to make America’s electric car market look like Europe’s? China’s?

  • Some of the best alternative energy companies are growing in America, what will it take to make the connection between clean energy and a competitive economy?

  • If we go fully green will we be able to play jazz inside all the empty pipelines?

That’s a wrap

I think i’ll do a deep dive soon on why i’m a lot more optimistic about green energy in the US regardless of our policy. There are some unrelenting trends that make hopeful and let me sleep just a little bit more soundly at night.

Got an answer to one of my question? Want me to dive deeper into a topic? Let me know.

Till next time ✌️,

Jóhann