Fascinating discussion with Jarrod Agen, Executive Director of the National Energy Dominance Council, presented by Steve Clemons
@SCClemons of The National Interest and Widehall. The title of the webinar was âThe Next Map,â but I think of it as, The New Great Game of Resources and Energy; based on a new political reality and an old physical reality.
The new political reality is the candid Hamiltonian developmentalism, even mercantilism, of this administration. This pro-commerce tack is, of course, a change from the past, when administrations of both parties were deeply influencedâsome might say, ensorcelledâby multilateralism, globalism, environmentalism, and outright Malthusianism.
The old physical reality is the inherent abundance of the Earth, which refutes, of course, Malthusianism. The Earth has always been what it is, albeit we typically lacked the knowhow to extract resources; indeed, in the case of silicon and rare earth elements, we simply didnât recognize the value underneath our feet. But now we do: As venture capitalist @PMarca17 puts it, âWeâve taught sand to think.â (Tech reminds us of the Julian Simon-ian reality: The human brain can put just about anything to work and make it usefulâand, in its abundance, inexpensive.)
The White Houseâs Agen got right right to his point: On resources, âThereâs been a shift to the Western Hemisphere.â The U.S., of course, is now the worldâs leading oil producer, producing more oil than Saudi Arabia and Russia combined. This hemispheric shift is real, even if it hasnât necessarily translated into think-tank-based strategizing, still dwelling on farwaways such as the Strait of Hormuz and the Strait of Malaccaâor, more broadly, on whatever findings emerge from Davos.
As Agen put it, âThe U.S. has ultimate supply.â Yes, thereâs this is America First, and thereâs a further element of Fortress America. Those phrases are distasteful to many, especially among the chattering elite, and yet they speak to the basics of national power and sovereignty. Of course, those concepts, too, are distasteful to some, to those who prefer to think in terms international organizationsâparticularly those that can be used to restrain or even diminish American power.
Yet the plain realityâwe are seeing this in Europe, now, belatedlyâis that countries and regions only flourish when they have a secure resource base. To put it bluntly: Wide prosperity comes from digging for things and making things. Thereâs a ceiling on the wealth that comes from what left-leaning pundit Mo Tkacik has called âthe nothing-based economyâ (think Enron in the U.S., and some would say crypto and predictions) and on the idea that physical inputs matter less than virtue-signaling (think Merkel-era Germanyâs pretensions as a âhumanitarian superpower,â and the belated discovery that post-industrial good thoughts donât keep the lights on and the Russians out).
Agen put his focus on Venezuela and Alaska, two huge resources bases that, even though they have long been tapped, still rate as mostly *un*tapped. That is, for all the carbon fuels (and other resources) that have been extracted, thereâs plenty more remaining in the ground, and offshore. In both places, politics have interfered with maximized production: socialism in Venezuela, environmentalism in Alaska.
Yet since the U.S. intervention in January, Agen observed, âthree consecutive months of increased production in Venezuela.â He added that there are now direct flights between the two countries, a further boost to business confidence and investment.
Agenâs discussion included a bevy of operations, including the Departments of Energy, Interior, and State, as well as the Ex-Im Bank and Development Finance Corporation. It is, indeed, heartening to see that so much leverage is being applied to the mission of securing the wares of wealth and national defense.
Clemons interjected, that U.S. policy has complemented âdrill, baby, drill,â with âmine, baby, mine.â
Speaking of the recent State Department initiative on mining and supply chains, Cullen Hendrix of the Peterson Institute added, âThe intention behind Project Vault is not just to be a buffer for the United States, but a buffer, you know, for U.S. industry and for industry and allied countries.â Thereâs real money behind these efforts, in the tens of billions, public and private, and they offer the prospect of a new kind of self-interested cooperation, as like-minded countries agree on the value of developing their own resources and trading them as neededâbut only as needed. The old idea of pooling and cooperating for the sake of pooling and cooperating is an artifact of earlier times.
(As a side-note, we will see this in the looming debate over the pernicious Outer Space Treaty; those who wish to see steady development in space will need to get past the current socialist stipulations of the OST.)
The deepest terrestrial reality, of course, is that the Earth itself is the vault. Natural resources arenât scarce; they are abundant. Literally, the Earth, all 6.6 sextillion tons of it, consists of nothing but natural resources.
As noted earlier, the two huge variables on mining are political and technological. The political variables, of course, include regulation, nationalization, and Malthusian-ization.
The technological variable is our ability to drill and dig. Currently the deepest mines only go down about 2.5 miles, and the deepest oil drill, about six miles. Yet important techno-pioneers, including Elon Musk and Palmer Luckey, are figuring out how to dig deeper, for the sake of both wealth and national security. And when all these diggers make their inevitable breakthroughs, our understanding of resources, based on calculations of âproven reserves,â will expand, even explode. In a good way, as we realize that the economic calculations made when we could drill down X-miles become much brighter when we can drill down 2X miles, or 10X miles.
This future abundance applies not only to rare earths (which arenât rare), but also to more humdrum resources, such as copper. Citing projections showing a 50 percent increase in demand for copper, mining executive Pavel Bruzek quipped that his goal is, âMake Copper Great Again.â
Listening to executives and technologists discussing the future of this sort of development, a kind of cognitive dissonance sets in. After all, as anyone, such as this author, who has lived inside the beltway for decades, knows: The dominant discourse has been scarcity, limits, even gloom. Weâre running out of things, and so we must cut back and put the U.S. government, or a world government, in charge of managing the cutting. At the same time, a minority faction within the elite, sharing the same Malthusian framework, has argued for foreign wars somewhere to gain resources.
As an aside, these are the sorts of issues raised by the Briton C.P. Snow in his 1959 work, The Two Cultures. Thereâs a culture of letters in one silo, and a culture of science in another silo. And the cultural silo, of course, is where most diplomats come from. Both cultures are needed, of course, and yet it would be nice, Snow argued, for our overall well-being if the first culture was less disdainful of the second.
In that vein, another participant, Ian Brzezinski, long familiar with corridors of power, now involved in mining projects in Africa, observed of this predominant thinking, âwe totally dropped the ball.â That is, the expertsâ expertise was misplaced, they were thinking about the wrong things.
In a plangent moment, he was asked about his late father, Zbigniew Brzezinski, who served as a presidential national security adviser during the Carter administration. He answered, âI think he would recognize . . . how ignorant [weâve been] about how dependent we allowed ourselves to become upon China for these critical minerals that are so essential, not just to our telephones.â
To be sure, the current development boom is not the final word. As participants noted, much of this confidence is based on the policies of this administration. Those could, of course, change in the future; the old Snow-ian indifference to commerce and materials, even the old soigné pessimism and wet-blanket Malthusianism, could return. The hope is that as these current developmental policies are proving to work, a strong constituency will develop that will prove to be a bulwark around go-go policies. That is, the realization that we need stuff will prove more powerful than the desire to lay a wreath at the tomb of arch-Malthusian Paul Ehrlich.
If a new pro-growth consensus can, in fact, be achieved, then investment will *really* take off, as developers lengthen their time horizons to infinity.
Unmentioned in the discussion: Canada and Greenland. Canât win âem all. Also not mentioned: the Naderite negativism of the Foreign Corrupt Practices Act. The session was, after all, only an hour.
Thanks again to Steve Clemons, Richard Vague, and the Widehall team. Iâm sure this webinar will be online soon, as a permanent contribution to our collective understanding of the brighter prospects we can enjoy.