I may have to brush up on Soviet economics from the 50's and 60's: think shortages and the profits therein.
From The Wall Street Journal, June 4:
The Other Green-Energy Grid Crisis
A lack of transformers has led to a housing shortage, frequent power outages, and dependence on China.
Empty dirt lots are scattered across American cities where developers once planned to build new homes. The problem isn’t that builders can’t find workers or obtain permits. They lack the electric transformers required to connect homes to the grid.
“We were so concerned about things like lumber and appliances, and those all help. But then all of a sudden it was this power transformer—you can’t get them,” a home builder in Greenville, S.C., told a Fox affiliate in March. “We have 106 town-home sites and so we’ve only been able to get the first six going.”
Transformers step up or step down electrical power that passes through transmission and distribution lines. According to the American Public Power Association, 1 in 5 housing projects has been delayed or canceled owing to shortages. The pandemic dearth of semiconductors, appliances and cars eased as demand ebbed and supply increased, but don’t expect this one to let up anytime soon.
Thank President Biden’s green-energy policies, which are increasing demand for transformers and the specialized electrical steel to manufacturer them while creating enormous market uncertainty. The lack of transformers is exacerbating the country’s housing shortage and causing longer and more-frequent power outages.
Broadly speaking, there are two categories of transformer. Large power transformers, which are located at substations and weigh hundreds of thousands of pounds, step up voltage from power generators and step it down for distribution. These are crucial for building out the transmission system to carry renewable energy from rural areas to population centers. Currently it takes utilities from 20 to 39 months to procure them.
Smaller distribution transformers step down voltage to levels that homes and businesses can safely use. These are necessary for connecting homes, businesses and electric-vehicle charging stations to the grid. Until recently, they were easy to obtain and replace but wait times now exceed 18 months.
Both types are made with electrical steel, also a key input in electric-vehicle motors. Yet the U.S. is dependent on a single domestic manufacturer for the electrical steel used in electric vehicles and transformers—Cleveland-Cliffs—and it can’t meet growing demand from the power industry and automakers seeking to electrify their fleets.
Domestic transformer manufacturers can and do import steel but have to pay a 25% tariff even as they struggle to compete with lower-cost foreign manufacturers. The U.S. is increasingly relying on imported transformers, including from China, which presents cybersecurity risks....
....MUCH MORE
If you are going to take this approach* to investing, especially as
my-little-crony direct investment rather than on a portfolio basis,
always, always, always heed the words of our first inductee into the
Climateer Hall of Fame, the 26th Secretary of War, Democrat and
Republican (!) Senator from Pennsylvania, Simon Cameron:
Our Hero
will stay bought."
*"Political capitalism is a private-property, market-oriented system that is compromised by business-sponsored government intervention. It is a socioeconomic system in which many or most regulations, subsidies, and tax-code provisions result from the lobbying efforts of directly affected businesses and their allies...."
—from the Political Capitalism website
