If you think one government can screw things up hugely, look what happens when several act together, or when some supranational government like the EU acts. From Weimin Chin at mises.org:
At the end of September 2021, the Nord Stream 2 project was a reality after many years of uncertainty. At that time, there were only a few more regulatory hurdles remaining for Germany and Russia to seal the deal on the long-awaited and highly controversial natural gas pipeline. Achieving such a feat would have been a milestone in energy cooperation between the two countries. Sadly, the regional order has tilted hard and quick off that track, and Europe has plunged into a perilous future of uncertainty.
In the first weeks of the Russian-initiated war in Ukraine, Germany, along with the rest of Europe, found itself backed into a corner regarding its energy sourcing as Western sanctions cut off routes and links in the established regional energy and financial infrastructures. There has been no perceptible success in breaking out of this bind. Instead, Germany has watched time tick by. Russia’s Gazprom recently cut gas flow for Nord Stream 1 to 20 percent of capacity.
German nuclear power plants remain mostly idle, with three facilities providing 13 percent of the country’s electricity compared to France’s 69 percent. Coal power plants have now ramped up output, with the inevitable approach of the fall and winter seasons in the near term.
Winter could get very ugly this year. From Tyler Durden at zerohedge.com:
At least 20 million households — or about 1 in 6 American homes — are behind on their power bills as soaring electricity prices spark what is said to be the worst-ever crisis in late utility payments, according to Bloomberg, citing data from the National Energy Assistance Directors Association (Neada).
Neada said electricity prices had increased significantly since 2020 after a decade of stagnation. The steep rise has resulted in billions of dollars in overdue power bills.
Electricity inflation is being propelled by soaring costs of fossil fuels, such as natural gas, coal, and petroleum.
The West’s self-inflicted oil and gas supply constraints (sanctions on Russian oil and gas) has and will continue to raise the price the West must pay for oil and gas. It’s that simple. From Tyler Durden at zerohedge.com:
Europe’s extreme dependency on Russian energy products from oil to natural gas is made clear recently from the manner in which they have approached sanctions – with incrementalism, slowly sinking back into the bushes.
The latest agreement among member nations on export bans targeting Russia is largely oil focused, not natural gas focused, with the union demanding an immediate 70% decrease in Russian oil transferred BY SHIP. Oil transferred by pipeline will continue to flow into the EU for now. The ban is intended to expand to 90% of all shipborne Russian oil by the end of this year. Natural gas imports from Russia will also continue.
While some European nations are more dependent on Russian energy than others, overall 40% of the EU’s needs are supplied by the country’s industry. It is not surprising that they are seeking an incremental approach to sanctions, they simply would not be able to survive another winter if they were to go cold turkey and block Russian imports completely. Of course, this does not mean that Russia has to operate on Europe’s timetable.
Russia is already reducing exports of natural gas to multiple EU countries, with Denmark, Netherlands and Germany being the latest to see losses. The EU’s ban was oil and ship focused because they cannot find an alternative source for natural gas that would resolve shortages if they banned everything. Germany in particular would be destroyed by the loss of natural gas supplies from Russia with its 42% dependency.
Nuclear power is as clean as you’re going to get for a non-intermittent energy source. From Rosenberg at freemansperspective.com:
The phrase “clean energy” has emanated from official podiums, world over, in recent years. The implication, of course, is that the energy sources we’ve been using are filthy. That, however, is not the case. We already have and use clean energy. And it is far, far better than replacements the podiums expect us to suffer for.
We use clean energy every day, and it works exceedingly well. I think we should be happy about that.
I was confronted with this fact quite some years ago, while working on an alternative energy project. Here are the pounds of particulate matter (aka, dirt), produced when generating a billion BTUs (British Thermal Units, a measurement of heat):
Natural Gas 7
As you can see, we already have clean energy, in the form of natural gas and nuclear power. (Burning wood in a fireplace, by the way, dwarfs all the figures above.)
The head of the Russian Parliament, Pavel Zavalny, made comments recently addressing the subject of economic and financial sanctions. It’s clear that gold is playing a large role in protecting Russian wealth. That role may get bigger and it could create a paradigm shift in how the world does business.
Russia has a lot of natural gas and oil. And it sells a lot of natural gas and oil to the world. Zavalny made it clear that Russia is happy to sell — in hard currency. And what is hard currency? Not dollars.
If they want to buy, let them pay either in hard currency, and this is gold for us, or pay as it is convenient for us, this is the national currency. As for friendly countries, China or Turkey, which are not involved in the sanctions pressure. We have been proposing to China for a long time to switch to settlements in national currencies for rubles and yuan. With Turkey, it will be lira and rubles. The set of currencies can be different and this is normal practice. You can also trade bitcoins.”
Zavalny said Russia has no interest in dollars, saying “this currency turns into candy wrappers for us.”
The petrodollar is no more, and the dollar is no longer considered the reserve currency in a substantial portion of the world. From Pepe Escobar at strategic-culture.org:
A new reality is being formed: the unipolar world is irrevocably becoming a thing of the past, a multipolar one is taking shape
It was something to behold. Dmitri Medvedev, former Russian President, unrepentant Atlanticist, current deputy chairman of the Russian Security Council, decided to go totally unplugged in an outburst matching the combat star turn of Mr. Khinzal that delivered palpable shock and awe all across NATOstan.
Medvedev said “hellish” Western sanctions not only have failed to cripple Russia, but are instead “returning to the West like a boomerang.” Confidence in reserve currencies is “fading like the morning mist”, and ditching the US dollar and the euro is not unrealistic anymore: “The era of regional currencies is coming.”
After all, he added, “no matter if they want it or not, they’ll have to negotiate a new financial order (…) And the decisive voice will then be with those countries that have a strong and advanced economy, healthy public finances and a reliable monetary system.”
The Ukraine-Russia war is become as much a financial as a military war, if not more so. From Alasdair Macleod at goldmoney.com:
Commentators are trying to make sense of Russian moves. However, there is a back story which differs from much of the speculation, which this article addresses.
The Russians have not put the rouble on some sort of gold standard. Instead, they have repeated the Nixon/Kissinger strategy which created the petrodollar in 1973 by getting the Saudis to agree to accept only dollars for oil. This time, nations deemed by Russia to be unfriendly will be forced to buy roubles – roughly 2 trillion by the EU alone based on last year’s natural gas and oil imports from Russia — driving up the exchange rate. The rouble has now doubled against the dollar from its low point of RUB 150 to RUB 75 yesterday in just over three weeks. The Russian Central Bank will soon be able to normalise the domestic economy by reducing interest rates and removing exchange controls
The Russians and Chinese will be acutely aware that Western currencies, particularly the yen and euro, are likely to be undermined by recent developments. The financial war, which has always been in the background, is emerging into plain sight and becoming a battlefield between fiat currencies, and it is full on.
The winner by default is almost certainly gold, now the only reliable reserve asset for those not aligned with Russia’s “unfriendlies”. But it is still a long way from backing any currency.
Europe would have to deemphasize wind and solar, allow more development of oil and natural gas, and promote nuclear energy to get within field-goal range of energy independence. From Daniel Lacalle at dlacalle.com:
Europe is not going to achieve a competitive energy transition with the current interventionist policies. Europe does not depend on Russian gas due to a coincidence, but because of a chain of mistaken policies. Banning nuclear in Germany, prohibiting the development of domestic natural gas resources throughout the European Union, added to a massive and expensive renewable roll-out without building a reliable back-up.
Solar and wind do not reduce dependency on Russian natural gas. They are necessary but volatile and intermittent. They need back-up for security of supply from nuclear, hydro, and natural gas. Dependency rises in periods of low wind and little sun, just when prices are highest.
“Solar goes to zero for twelve hours a day, and that is guaranteed. The wind blows sometimes, and sometimes it does not, also guaranteed. They both depend on weather, which is 100% out of human control. They are on their best day a supplement” wrote a Navy pilot follower.
Batteries are not an option either. It is impossible to build an industrial-size network of enormous batteries, the cost would be prohibitive and the dependency on China build them (lithium etc.) would be even more of a problem. At current prices, a battery storage system of Europe’s size would cost more than $2.5 trillion, according to an MIT Technology Review paper. Massively more expensive than any other alternative.
Just the added cost of a battery grid plus the distribution and transmission network would make household bills soar even further.
Inflation was already out of control in Europe before the invasion of Ukraine was even a risk. CPI in Spain was 7.6%, in Portugal it was 4.2% and in Germany, 5.1%. Euro area CPI was 5.8%.
Anything that raises the price of oil and natural gas benefits Russia, and green energy policies are doing just that. From Michael Shellenberger at bariweiss.substack.com:
While we banned plastic straws, Russia drilled and doubled nuclear energy production.
How has Vladimir Putin—a man ruling a country with an economy smaller than that of Texas, with an average life expectancy 10 years lower than that of France—managed to launch an unprovoked full-scale assault on Ukraine?
There is a deep psychological, political and almost civilizational answer to that question: He wants Ukraine to be part of Russia more than the West wants it to be free. He is willing to risk tremendous loss of life and treasure to get it. There are serious limits to how much the U.S. and Europe are willing to do militarily. And Putin knows it.
Missing from that explanation, though, is a story about material reality and basic economics—two things that Putin seems to understand far better than his counterparts in the free world and especially in Europe.
Putin knows that Europe produces 3.6 million barrels of oil a day but uses 15 million barrels of oil a day. Putin knows that Europe produces 230 billion cubic meters of natural gas a year but uses 560 billion cubic meters. He knows that Europe uses 950 million tons of coal a year but produces half that.
The former KGB agent knows Russia produces 11 million barrels of oil per day but only uses 3.4 million. He knows Russia now produces over 700 billion cubic meters of gas a year but only uses around 400 billion. Russia mines 800 million tons of coal each year but uses 300.
That’s how Russia ends up supplying about 20 percent of Europe’s oil, 40 percent of its gas, and 20 percent of its coal.
There are probably more than a few Europeans questioning policy makers devotion to renewable energy. From Alex Berenson at alexberenson.substack.com:
How the European obsession with decarbonization has driven energy and electricity prices through the roof and helped give Vladimir Putin license to do whatever he likes
Once again, Western political and media elites find themselves in the unfortunate position of denying reality obvious to anyone with eyes, or a wallet.
This time, they are lying about the economic and now political crises their “green” energy policies are causing, particularly in Europe. These lies may damage them even more than their Covid fantasies did, because they are even more obvious to people outside their bubble.
Anyone who drives is aware of the recent spike in oil prices, now nearly $100 a barrel – a rise due in part to Democratic efforts to discourage American oil production.
But Americans may not know about the catastrophe in Europe’s electricity and natural gas markets. That crisis is even more directly linked to broader efforts to “sustainable” fuels that so far have proven distinctly unsustainable.
Unlike the United States, Europe doesn’t have much oil or natural gas. For generations, it has used a mix of fuels – coal, nuclear, imported natural gas and a little oil, and renewables – to power its electric plants. That mix worked just fine.
But even before World Minister for Energy Policy Greta Thunberg banged her shoe against a desk at the United Nations in 2019, the Europeans were getting very worried about carbon dioxide.
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