Ep. 1842 - Gas Prices Are Out Of Control. Here's What No One Is Telling You.

The Matt Walsh Show

Matt Walsh discusses the escalating global energy crisis, specifically focusing on how Ukrainian strikes against Russian diesel refineries a

Key takeaways

• Ukraine has reportedly destroyed roughly one-third of Russia's refining capacity through targeted strikes.
• Diesel prices have reached historic highs, with some reports noting prices exceeding $6 per gallon.

Main topics

• Global energy crisis
• Ukraine-Russia war impact on fuel

Notable quotes

Every civilization requires energy to function. Without energy, we go to the Stone Age.

Conclusion

The episode warns that failing to stabilize energy supplies could lead

Transcript preview

Speaker 1 (0:00) Conventional wisdom is that high gas prices are the result of the war in Iran, that they're going to result in heavy losses for the Republicans in the midterms, and that the cost of living is going to remain high for the foreseeable future. But this consensus view, while not entirely wrong, is actually a simplistic and very optimistic version of events. The truth is actually worse than what conventional wisdom says. The truth is that We're now careening towards a potentially historic energy crisis, and solving it won't be easy because it's a physics problem, not simply an economic one. There are a lot of theories about where this potential energy crisis is coming from. We just spoke to a White House official off the record who posited one theory, which we'll talk about in just a moment. But before we get to that, we need to establish that as hysterical as it may sound, and as depressing as it is maybe to hear on a Monday, It is indeed the case that a full-blown catastrophic energy crisis could be on the horizon. In fact, that is actually becoming something of a mainstream opinion if you know where to look. According to analysts at major financial institutions, including J.P. Morgan, we could soon realistically hit the operational floor for the global energy system, which in the worst-case scenario could lead to the point where pipelines lose pressure, refineries have to shut down to protect their equipment, and gas stations run out of fuel to sell. Now, nobody really talks about this, but as it turns out, fuel infrastructure requires a certain minimum amount of fuel to function. So think of it like your body, you know, requires a certain amount of blood running through the veins or else it will shut down completely. When it comes to our oil infrastructure, that buffer is now in danger of failing, and it's not entirely because of the war in Iran, which becomes clear when you realize that the vast majority of oil exports from the Middle East are sent to Asia, not the Americas. But there is a supply shock, and we need to talk about it because the magnitude of the risk can't be overstated. Every civilization requires energy to function. Without energy, we go back to the Stone Age. I mean, look what's happening right now in Europe. It was just a few years ago that Germany, the biggest economy in Europe, got rid of all of their nuclear power plants. They shut them all down in favor of renewables. And they laughed at anybody, including Donald Trump, who said that they were making a fatal mistake, even though they obviously were. And around the same time, Germany ran out of firewood completely. The price went up 100%, and then nobody could buy it anymore. Loggers put GPS trackers on their firewood because theft became so rampant. People began using wood chips in desperation. In neighboring Poland, Instead of lining up outside, you know, the Apple store for the latest iPhone, people were queuing for days outside of coal mines, hoping for some fuel. Now, this statistic sounds too insane to be true, but it is true. Every year in Europe, more than 360,000 people die from cold-related excess mortality, otherwise known as cold temperatures. And that includes many elderly people living in their homes, which don't have adequate heating and other causes. Now, that's more than eight times the number of Europeans who die from heat-related causes, which is pretty inconvenient if you're a big believer in global warming. Turns out the problem is maybe the opposite. In the United States, by contrast, we only have around 1,000 hypothermia deaths per year, mostly drunk people who get lost in the woods during the winter, homeless drug addicts and that sort of thing. But even by the most liberal estimates, only around 40,000 Americans die annually for a reason that can be linked in some tangential way to cold temperatures. So here's another way to measure the distinction or to put it in perspective. In America, around 44,000 people die from so-called gun violence every year. That includes mass shootings and suicides. That's a whopping 12 % of the total number of people who die in Europe every year from cold weather. So anytime you hear Europeans claim that America is dangerous because of all the quote-unquote gun violence, tell them that Europe is dangerous because people freeze to death all the time. And these are numbers that are unthinkable in the United States. But if we continue on this trajectory, they're not going to be unthinkable forever. We've taken our energy production for granted, and that could be a fatal mistake in a very literal sense. And before I go into detail about how exactly we might see a failure of global energy infrastructure, I want to start with this communication that I just mentioned that we just received from a former White House official. Now, I don't normally share communications with Washington insiders for the simple reason that I don't know any Washington insiders, nor do I have any interest in knowing any Washington insiders. Most people in conservative media go to great lengths to cultivate relationships in Washington. My approach is essentially the opposite of that. But this former White House official got in touch with one of my producers over the weekend while talking about high gas prices. And I thought this statement was interesting, so I'll pass along what the official said. Quote, it's Zelensky. It's literal Western civilization suicide. Europe and the United States are funding their own energy crisis. Now, at first when I heard that, it sounded like typical White House messaging to me. Obviously, they want to distract attention from the war in Iran. Which does also play a part is a factor in this whole picture, obviously And they want to blame Ukraine for high gas prices. Well, let's take the claim seriously for a second So this is footage of President Trump speaking at a golf tournament just a week ago listen Speaker 3 (5:55) Mr. Zelensky has to do one thing. He has to stop knocking out diesel fuel in Russia. Let him go after targets, but not diesel fuel, because he's causing a shortage of diesel fuel. This isn't done by the Middle East. This is done by what's happening with Russia and Ukraine. So we spoke to Mr. Zelensky about it. There are plenty of other targets. Don't hit diesel fuel, because that's hurting the world. We don't want him to hit diesel fuel. Speaker 3 (6:23) He's hitting diesel refineries. Speaker 1 (6:26) Okay, so one day after those comments, Trump posted the following message on Truth Social. He said, quote, Ukraine has agreed not to hit Russian energy targets. Russia has agreed to do likewise. Now, we have no reason to think that Trump was lying about this. It would certainly be a strange thing to make up. And indeed, if true, it would be a major breakthrough. Ukraine has been bombing Russia's fuel infrastructure, their fuel depots, storage tanks, pumps, and so on, for a long time now. They've reportedly taken out roughly a third of Russia's refining capacity, which has led Russia to ban the foreign sale of its diesel, which is no small thing since Russia is or was the second largest diesel exporter. in the entire world. This is why diesel is now more expensive than it's ever been in recorded history at more than $6 a gallon. Yes, diesel is right now more expensive than it has ever been. So there's the chart just to prove it if you didn't believe it. And how does this affect you? Well... I think that should be pretty obvious. It affects you, obviously. But there are two main ways. First of all, pretty much everything you buy was transported on a semi-truck or a cargo ship or a freight train at some point, all of which run on diesel. And when diesel supply goes down, price goes up, which means the costs are passed along to you when you buy things at the grocery store or Amazon or anywhere else. And secondly, refineries outside of Russia are now yield switching to diesel to maximize their profits, meaning they're refining less. regular gasoline as a result, which drives up the price of regular gasoline. Remember, diesel and regular gas come from the same barrel, but many refineries are capable of switching their output to some degree. According to Goldman Sachs, the price difference between diesel and gasoline in the United States is now over $60 per barrel when it was just $3 a barrel one year ago. So there's much, much more money to be made refining diesel right now. And because refineries are already operating at full capacity, any effort to refine more diesel means that less gasoline will be refined. And that's why global exports of gasoline have dropped 24 % in the past year. Everyone's switching to diesel, if they can swing it. From March to August of this year, diesel yields in the United States are well above their historical averages, while gasoline yields have been cut. And