In this episode, host David Greely welcomes energy and #fintwit icon, Doomberg, for an in-depth discussion on the European energy crisis covering the team’s take on the winter ahead in Europe and policy’s role in the path forward.
The following Q&A is created using slightly edited excerpts from the episode transcript, optimized for readability. Download full transcript.
Doomberg: As you’ve mentioned, yes, we are anonymous. I’m the head writer for a small team that runs the Doomberg Substack. In our real lives, we are consultants, former industry executives in the commodity sector. Personally me, I am a scientist by training and spent a couple of decades leading worldwide teams of researchers working on tough problems in the energy sector. My editor-in-chief, for example, has a very strong finance background and so together as a team, we were consultants and doing quite well. After having left the industry, we have probably 50 years of industry experience combined on the team, and then COVID hit and put a big dent into our business.. We lost something like 80% of our business virtually overnight, and you have to decide what you’re going to do.
Doomberg: We got a really fantastic piece of advice from a famous hedge fund manager who suggested that we should look into helping people who create content and sell it on Wall Street. Look into helping such people run their businesses better. He recognized our understanding of the finance world from the industry perspective and our abilities as business leaders and strategists,, and we embarked upon that journey. And it really was a fantastic 12 to 18 months after we decided to open up that vertical in our consulting business, and it was much more fun than our prior work, which had focused on C-suites and family office types, and we had a lot of success. One of our best clients suggested that we just start our own. His advice was you will follow all of your own advice, unlike me, and build something from scratch.
Doomberg: I’ll lend you a hand, and it was the beginning of truly the work of our lives. It’s been an unbelievable 18 months, and we’ve grown the brand. We’ve improved the product and we’ve since made it our full-time job. We’ve put our consulting business on hold. We’ve kept only our favorite clients. We’re turning away business, and doing Doomberg for a living, so why stay anonymous? I could tell you why we started anonymously. It’s very difficult to build a brand behind a person from scratch, if you have no social media presence. And one of our rules in marketing, when we would help clients is you can’t be remembered if you don’t stand out and the green chicken just, we sort of designed it one day. We were playing around with names. We did some preliminary AB testing. It scored amazingly well, and we just went with it.
Doomberg: Now, why stay anonymous? We have observed that when popular Twitter accounts or big anonymous social media accounts reveal themselves, sort of the error is let out of the balloon, the mystique, the intrigue is gone. So Doomberg has grown so big and so fast that we just can’t have a reveal ourselves. It’s not some big secret. There are lots of people on the street who know who we are. Substack knows who we are; Stripe knows who we are. Our painters know who we are and that we’re doing Doomberg ice. It’s just part of the brand now, and the last part I would make is that I’m the person who sort of the head writer and the person who appears on podcasts, but we truly are a team, a very tight-knit team. And it wouldn’t make sense to rebrand around a person at this point. So we’re just going to stay as the, as the green chicken. It’s a fun character and that’s the background.
Doomberg: It’s a very good question, and I would say the way we analyze the world is we begin with a very basic but critically important question, which is the world currently experiencing an abundance of primary energy or a shortage of it? Unless until you make an intelligent assessment of the answer to that question, it’s very difficult to analyze the markets for the better part of the past two decades, the Western world and the group of leaders within it have been bathing in excess of primary energy driven predominantly by the boom in shale oil and gas production in the US. When you are swimming in excess of primary energy, it is easy to think that the energy commodities are yesterday’s industries can be thought of and treated like just any other fungible commodity, and don’t really matter all that much.
Doomberg: It’s only when you enter into an unexpected period of primary energy shortage through the laws of physics take over and dictate the policy choices for our leaders, and a confluence of many events occurred in the past couple of years that pivoted the world from an era of excess to an era of chronic shortage. The three main ones are one the ESG movement and the desire to defund fossil fuels when we do not have bridging technologies other than nuclear, which is also opposed by the environmentalists. We do not have bridging technologies to get us from where we were to where we want to be with regard to carbon emissions, and yet we still sort of saw it away at the legs of our own stool by chopping away at the acceptability of funding fossil fuel development projects, that’s one. But to be fair to the environmentalists, it’s also true that the shale booming incinerated a lot of investor capital, and this was all driven by access to cheap debt and abundant money.
Doomberg: And that investor capital was burned, and then the precipitating event of the shutdown of the economy in response to the pandemic was really the catalyst that marked the pivot point from the era of abundance to the era of shortage. So when those three things converged in March of 2020, you saw a wave of bankruptcies, particularly in the shell patch and the companies that emerged from
court-supervised reorganizations, have a cash-oriented mindset. They aren’t investing, and now we have what we have, which is chronic shortages of primary energy. And one of the themes that we’ve been pushing in a phrase we’ve become known for is energy is life, and energy commodities in times of shortages are extraordinarily elastic. What is the price elasticity of demand for life and who can pay it? The clearing price for life is far above what most of the world can afford. And that’s what we’re experiencing right now. The genesis of the crisis was born in Europe. It has spread globally. The economy cannot survive in a way that we’re accustomed to, if Europe collapses. We believe we at a really significant turning point, and a historical one that is unfolding in real-time before us.
Well, that’s by choice too, though, in some ways, right? I mean, it doesn’t need to be this way, which is why we’ve been so critical.
So Putin certainly has the leverage as it pertains to the economic part of this hybrid war. We believe and has written, and we’re writing as far back as a year ago, that by handing our energy cards to Putin, we should not be surprised when he decides to play them. We just put out a piece about it. And we had a fake quote that we put in. We normally open our pieces with a good quote, and this piece was called – Europe on tilt. The fake quote that we used was in times of war hand all the leverage to your enemy, then complain loudly when they use it. And we said, Sanzu “Probably!”. We handed Putin the keys to Europe’s energy future. We believe that he understood the leverage that he had and is now using against Europe. When he decided, I think terribly incorrectly, to cross the border into Ukraine and initiate a kinetic war in the heart of Eastern Europe.
Doomberg: I think that was a total blunder to be very clear. We’ve been accused by some on Twitter of being sort of relatively pro-Putin in our analysis. We don’t think it is unpatriotic to point out the reality on the playing field and to suggest alternatives that we believe would actually help achieve our geopolitical objectives. That’s what we’ve always tried to do. The cards that Putin has, were given to him by the west. He’s playing them now, and some would say, and I would concur that completely shutting off the gas from Nordstream one is potentially a sign of weakness and desperation on his part, but it is certainly going to hurt Europe in the near term. What it does for Putin in the mid to long term is a different question whatsoever. But I do believe he has the leverage. He is using it, and we’re on the cusp of a very serious situation in Europe. In fact, we’re in the middle of one given the headlines of the past week, which have been literally unbelievable.