Tag Archives: Natural gas

Russia Warns Of “Brave New World” Of Higher Gas Prices After Germany Halts NordStream 2, by Tyler Durden

Posted on February 22, 2022 | Leave a comment

Germany is imposing a sanction on Russia that will hurt Germany far more than Russia. From Tyler Durden at zerohedge.com:

Update (0900ET): Europe’s energy crisis deepened Tuesday as Germany halted the process of certifying the Nord Stream 2 natural gas pipeline. Putin’s right hand man, Dmitry Medvedev responded to German Chancellor Olaf Scholz’s comments about the certification of the controversial Russia-to-Germany natural gas pipeline that ‘can’t happen right now’ by tweeting:

German Chancellor Olaf Scholz has issued an order to halt the process of certifying the Nord Stream 2 gas pipeline. Well. Welcome to the brave new world where Europeans are very soon going to pay €2.000 for 1.000 cubic meters of natural gas!

Based on Medvedev’s tweet, translating MWh to cubic meters, it appears gas prices for Europe could be headed back to crisis levels not seen since late 2021.

Europe is heavily reliant on Russia for its gas needs, and to block the Nord Stream 2’s certification will only create havoc in European energy markets.

Europe’s ultra-low gas storage levels for this time of year will keep the market very tight even beyond the winter season.

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Putin Has The Power To Intensify Europe’s Energy Crisis, by Haley Zaremba

Posted on January 28, 2022 | 1 comment

Putin is not without options should the U.S. and Europe levy sanctions against Russia. In fact, it looks like he can hurt Europe far worse than they can hurt Russia. From Haley Zaremba at oilprice.com:

  • Europe’s energy crisis has already cost governments tens of billions of dollars and a looming confrontation with Russia would only make that worse.
  • European households are already set to see a 54% increase in the cost of gas and electricity despite the best efforts by governments to keep prices down
  • Russia provides about 40% of Europe’s natural gas, and if Russia does invade Ukraine and European governments respond with sanctions, there is a chance that supply could be cut off

Europe’s energy crunch is intensifying even as governments across the continent struggle to stop the crisis through stop-gap policy measures and subsidies. The past year has seen a stunning 330% surge in gas prices across European markets, hitting consumers extremely hard at the same time that the global economy is attempting to recover from and adapt to the ongoing novel coronavirus pandemic. To date, European governments have been largely helpless to stop skyrocketing inflation. The forces they are up against – economic, health, and political – far outgun the abilities of the European Union.

So far European leaders “have spent tens of billions of euros trying to shield consumers from record-high energy prices, and themselves from voters’ wrath” according to reporting and analysis by Reuters, but the efforts are going to fall far, far short of the economic fallout continuing to batter European consumers. “BofA analysts estimate the average western European households spent around 1,200 euros ($1,370) a year on gas and electricity in 2020,” Reuters writes. “Based on current wholesale prices, they estimate this will rise by 54% to 1,850 euros.”

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No SWIFT, No Gas: Russia Responds To Western Threats As US Tries To Orchestrate Workaround, by Tyler Durden

Posted on January 27, 2022 | Leave a comment

Russia is not without economic weapons of its own, particularly if the U.S. and Europe should try to bar it from SWIFT, the international banking network. From Tyler Durden at zerohedge.com:

While the situation along the Ukrainian border appears to be deescalating – aside from US/UK’s panic coalition, a top Russian official says that if the West follows through on a threat to cut the Kremlin off from the SWIFT payment system, Europe won’t receive Russian oil, gas, or metals.

Vladimir Putin signs a natural gas pipeline in the Russian Far East city of Vladivostok on September 8, 2011. (DMITRY ASTAKHOV/AFP/Getty Images)

On Tuesday, British Prime Minister Boris Johnson said he was in discussions to ban Russia from the Swift global payments system with the United States, calling it a “very potent weapon.”

“I’m afraid it can only really be deployed with the assistance of the United States though. We are in discussions about that,” he added.

Nikolay Zhuravlev, Vice Speaker of the Federation Council, responded to Johnson’s threat – telling Russia’s state-owned TASS that Europe would suffer the consequences of such a move.

“SWIFT is a settlement system, it is a service. Therefore, if Russia is disconnected from SWIFT, then we will not receive [foreign] currency, but buyers, European countries in the first place, will not receive our goods – oil, gas, metals and other important components of their imports. Do they need it? I am not sure,” said Zhuravlev – who noted that while SWIFT is convenient and fast – it’s not the only game in town when it comes to financial transactions.

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Germany “Imperils” Power Grid By Pulling Plug On 3 Nuclear Plants, by Tyler Durden

Posted on January 3, 2022 | Leave a comment

Apparently Germany will be committing suicide by freezing this winter. From Tyler Durden at zerohedge.com:

As nat gas prices surge in Europe, Germany is kicking off the new year by moving ahead with plans to shutter three of its six remaining nuclear power plants, making good on a commitment made in the aftermath of Japan’s disastrous meltdown at the Fukushima Daiichi plant.

The decision was championed especially vigorously by the Greens, who are now helping to rule as part of Germany’s new “stop sign” ruling coalition. But soaring natural gas prices across Europe mean this concession to the environmental lobby couldn’t come at a worse time.

Above: One of the shuttered plants, located in Gundremmingen. Source: Reuters

It’s a decision that could have consequences for the US. As we have complained before, the AOC-backed “Green New Deal” mostly excluded nuclear, by far the most efficient and useful alternative to fossil fuels, instead choosing to rely solely on inadequate “renewables”. And as Reuters adds in its report, Germany’s decision to pull the plug represent an “irreversible” pivot away from an energy source deemed “clean and cheap by some.”

Here’s more from Reuters:

Germany has pulled the plug on three of its last six nuclear power stations as it moves towards completing its withdrawal from nuclear power as it turns its focus to renewables.

The government decided to speed up the phasing out of nuclear power following Japan’s Fukushima reactor meltdown in 2011 when an earthquake and tsunami destroyed the coastal plant in the world’s worst nuclear disaster since Chernobyl in 1986.

The reactors of Brokdorf, Grohnde and Gundremmingen C, run by utilities E.ON and RWE shut down late on Friday after three and half decades in operation.

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Here’s How the Energy Crisis Turns Into Hunger and Then… War? By Chris MacIntosh

Posted on December 28, 2021 | Leave a comment

Most people don’t realize that petroleum prices feed into food prices. From Chris MacIntosh at internationalman.com:

Energy

We have previously warned about a whopping food crisis and supply problems in the fertilizer market. Well, now is worse because that was BEFORE we had the natural gas crisis. Why is that important?

Natural gas is THE critical input into making fertilizer. Urea is essentially ammonia in solid state, the process of which entails reacting ammonia with CO2. And we all now know — thanks to the climate nazis — that CO2 is currently the devil. The problem of course is that with no natural gas there is no urea, and with no urea there is no fertilizer. And with no fertilizer… well, we will eat each other.

Here are the spot urea prices.

Something else that we had noted some time back (in Korea) but which now seems like a larger problem.

Here is an article about an Australian farmer who warns the urea supply crisis could halt normal life within weeks.

Here’s what he says:

‘Not only will we not be able to grow cattle and we will not be able to grow food and we will not be able to grow grain or anything like that, but even if we could, we can’t move it, because we can’t turn a wheel in a truck because we have no Adblue,’ [AdBlue is needed for diesel vehicles — half of all trucks on Australian roads run on diesel

As of February we might not have a truck on the road in Australia, we might not have a train on the tracks.

‘So quite literally the whole country comes to a standstill as of February.’

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Frozen Deutschland, by Pepe Escobar

Posted on November 18, 2021 | 2 comments

Germany has made and is continuing to make choices that almost guarantee energy shortages this winter. From Pepe Escobar at strategic-culture.org:

A “perfect storm of Russian aggression during the coming winter months” is all but inevitable. Watch it on your screens while you properly freeze.

As much as with “brain dead” NATO (copyright Emmanuel Macron) no one ever lost precious assets betting on the incompetence, narrow-mindedness and cowardice of political “leaders” across the Atlanticist EU.

There are two main reasons for the latest German legalese gambit of suspending the certification of the Nord Stream 2 pipeline.

  1. Retaliation, directly against Belarus and Russia, “guilty” of the disgraceful refugee drama at the Poland-Belarus border.
  2. Politicking by the German Greens.

A high-ranking European energy executive told me, “this a game where Germany does not hold a winning hand. Gazprom is very professional. But imagine if Gazprom decided to deliberately slow down their deliveries of natural gas. It could go up tenfold, collapsing the entire EU. Russia has China. But Germany does not have a workable contingency plan.”

This ties up with a proposal that is sitting at a crucial desk in Moscow for approval for two years now, as I reported at the time: an offer by a reputable Western energy firm of $700 billion for Russia to divert their oil and gas exports to China and other Asian customers, away from the EU.

This proposal was actually the key reason for Berlin to resolutely counteract the U.S. drive to stop Nord Stream 2. Yet the torture never stops. Russia now faces an additional hurdle: a carbon tax on exports to the EU which include steel, cement and electricity. That may well be extended to oil and natural gas.

Every sentient being across the EU knows that Nord Stream 2 is the easiest path to lower natural gas prices across Europe, and not the EU’s blind neoliberal bet of buying short term in the spot market.

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The Harsh Truth Behind Europe’s Energy Crisis, by Cyril Widdershoven

Posted on September 27, 2021 | 1 comment

It’s perhaps not wise to throw out your existing hydrocarbon sources of energy until the new, green sources of energy are up to the job of replacing them. Especially when of your prime sources of hydrocarbons—Russia—doesn’t always have your best interests at heart. From Cyril Widdershoven at oilprice.com:

Europe’s energy crunch is continuing, as gas storage volumes have shrunk to 10-year lows. A possible harsh winter could lead to severe energy shortages and possible shutdowns of large parts of the economy.

While the main discussion is currently focused on the potential role of Russia in the energy crisis, a new narrative could soon make the headlines. In a surprise move, the Dutch government has indicated that in a severe supply crunch situation, the Groningen gas field, Europe’s largest onshore gas field, could partially and temporarily be reopened. It seems that the term Dutch Disease could get a new meaning, from being the paradox of a rentier state suffering from plentiful resources to a show of Europe’s lack of realism when it comes to energy transition risks and current market powers.   Dutch Minister Stef Blok has indicated that he is considering the potential reopening of the Groningen field, in particular five wells, especially the one at Slochteren, as indicated by Johan Attema, director of the Nederlandse Aardolie Maatschappij (NAM), the operator of the Groningen field. The reopening of the field, even in the case of an emergency or an energy crisis, is politically controversial.

Until recently, the plan was that Groningen would be closed completely by 2023, ending the large-scale gas production and export by the Netherlands with a bang.

The Dutch media is speculating that minister Blok will be asking for a possible reopening of the Groningen field, a decision that must be made before October 1. If the Minister decides to change the current shutdown plans, the whole Groningen debacle, as some see it, will be prolonged. It is clear, looking at the current deplorable situation of the European energy sector, that Groningen is still needed. The ongoing energy crunch could have grave consequences for the economies and wellbeing of EU member states, changing the narratives in Brussels and the respective European capitals.

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Furious Europeans Protest Electricity Hyperinflation: Lagarde Are You Watching, Tyler Durden

Posted on September 9, 2021 | Leave a comment

How about that! When the European Central Bank shovels fiat debt liquidity into the system prices go up, just like in the US when the Fed does the same. From Tyler Durden at zerohedge.com:

While a faint glimpse of reality did sneak through into the ECB’s latest set of economic projections, with the central bank now projecting that for the first time in over a decade, Europe’s 2021 inflation will surpass the ECB’s stated target of 2.0%, rising to 2.2% from the June projection of 1.9%, the balance of the outlook remained troubling, with the ECB now predicting inflation drops to 1.7% in 2022 and then again to 1.5% in 2023.

As Bloomberg’s Ven Ram put it, “the key number in all of ECB President Christine Lagarde’s projections is the HICP inflation number of 1.5%, which shows a modest revision that was expected by the markets. In other words, there’s still no sight of 2% inflation over the medium term.   So after all these years of negative rates, APP and PEPP, there will be no end to yet-more accommodation and the ECB is saying its inflation target is still very much work-in-progress. And that against a backdrop where the ECB’s own estimates show growth this year and next will be better than it has been in a long, long time. Little wonder that BTPs and bunds are bid.”

Meanwhile, as Lagarde stakes the ECB’s reputation on the current burst of inflation once again being merely “transitory”, the reality on the ground is far uglier, and as the NYT writes overnight, soaring natural gas prices threaten to become a drag on the economies of Europe and elsewhere. Wholesale prices for the fuel are at their highest in years — nearly five times where they were at this time in 2019, before people started falling ill with the virus.

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Wind Power Is a Disaster in Texas, No Matter What Paul Krugman Says, by Robert P. Murphy

Posted on March 11, 2021 | 1 comment

Texas was producing a lot more natural gas power than usual and a lot less wind power than usual during the recent freeze. From Robert P. Murphy at mises.org:

In the wake of February’s tragic power outages in Texas, during which 4.5 million households suffered service interruptions, partisans on both sides have been quick to interpret the events as confirmation of their preferred energy policies. With news images of helicopters deicing frozen turbines, conservatives lambasted Texas’s increasing reliance on wind power as the villain in the story.

Trying to temper this knee-jerk reaction, Reason.com columnist Ron Bailey argued that “[m]ost of the shortfall in electric power generation during the current cold snap is the result of natural gas and coal powered plants going offline.” And Paul Krugman for his part declared that it was a “malicious falsehood” to blame wind and solar power for what happened in Texas, as it was primarily a failure of natural gas.

In this article I’ll lay out the basic facts of which power sources stepped up to the plate during the crisis. Contrary to what you would have known from reading Ron Bailey (let alone Paul Krugman), when the Texas freeze hit, electricity from natural gas skyrocketed while wind output fell off a cliff. The people arguing that wind wasn’t to blame mean it in the same way Jimmy Olson wasn’t to blame when General Zod took over: wind is so useless nobody serious ever thought it might help in a crisis.

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Cascend: Data Shows Wind-Power Was Chief Culprit Of Texas Grid Collapse, by Tyler Durden

Posted on February 21, 2021 | Leave a comment

Most of Texas’s substantial wind power went off-line and natural gas couldn’t pick up the slack. From Tyler Durden at zerohedge.com:

With the worst of the Texas power crisis now behind us, the blame and fingerpointing begins, and while the jury is still out whose actions (or lack thereof) may have led to the deadly and widespread blackouts that shocked Texas this week, Cascend Strategy writes that “in case there was any doubt why the Texas grid collapsed, the data is clear”

  • Wind failed as “Ice storms knocked out nearly half the wind-power generating capacity of Texas on Sunday as a massive deep freeze across the state locked up wind turbine generators, creating an electricity generation crisis.”
  • Natural gas made up the difference for a while
  • But then everything else followed down

Some more detail from Cascend which lays out the events of this week in sequence:

  • A massive cold snap drove demand for electricity well beyond normal levels
  • Wind power failed to deliver it’s expected power – almost 40% of expected power – in part due to lack of winterized wind turbines

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