No Minister

Posts Tagged ‘Fossil Fuels

OIL REACHES USD118.60 PB

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Up 5.02% in the last 24 hours. Thanx a bitch Mr Putin.

Reports from a myriad of sources predict growth to stall and inflation to increase on the back of this. And if anyone thinks NZL at the bottom of the world is immune from this they need their head read.

Written by The Veteran

March 3, 2022 at 9:27 pm

Powerless Europe

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No, not powerless in the face of Putin over the Ukraine, although there is a link between the topic of this post and that.

Powerless in terms of energy, although there is both bad and good news.

The Bad News.

Electricity for delivery next year surged as much as 6.4 per cent to an all-time high in Germany, Europe’s biggest power market. France, which usually exports power, will need to suck up supplies from neighboring countries to keep the lights on as severe nuclear outages curb generation in the coldest months of the year.

The crunch is so severe that it’s forcing factories to curb output or shut down altogether. Aluminium Dunkerque Industries France has curbed production in the past two weeks due to high power prices, while Trafigura’s Nyrstar will pause production at its zinc smelter in France in the first week of January. Romanian fertilizer producer Azomures temporarily halted output.

That was in December when 10% of France’s nuclear was taken offline for various minor reasons, with 30% expected later in the winter. As a result French power was already trading at 1,000 euros a megawatt-hour for the month of February.

All of this has been a long time coming, driven mainly by Germany’s mania to appease the Global Warming Gods:

Germany continues its “disastrous” Energiewende transition to a low-carbon or net-zero future by shutting down reliable, resilient, and affordable natural gas, coal, and nuclear plants. In early 2021 German federal government auditors found the “country would need to spend over $600 billion between 2020 to 2025 to maintain grid reliability.” This is on top of the $580 billion already spent by the Germans on Energiewende while closing the Brokdorf, Grohnde, and Gundremmingen zero-carbon nuclear reactors on December 31, 2021.

That last was an especially stupid decision in light of the desire for a zero-carbon future – but it clashed with German politicians living in a 1970’s/80’s anti-nuclear past:

It was only 10 years ago that nuclear power made up almost a quarter of the electricity generated in the country. Following the impact of the 2011 Fukushima Daiichi nuclear meltdown – German Chancellor Angela Merkel took the decision that same year to phase out the country’s nuclear power stations by 2022.

It’s not surprising that France and Germany also ban fracking, as do several smaller western European countries, including Ireland. Britain has also joined the insanity:

Despite the ongoing energy crisis in Europe, the British Oil & Gas Authority (the same government department that banned fracking in 2019) has ordered resource company Cuadrilla to “permanently seal the two shale gas wells drilled at the Lancashire shale exploration site, with the result that the 37.6 trillion cubic metres of gas located in the northern Bowland Shale gas formation will continue to sit unused.”

British politics site Guido Fawkes points out that this self-sabotage is utterly insane since “just 10 percent of this volume could meet U.K. gas needs for 50 years [and] U.K. imports of Natural Gas are expected to skyrocket to over 80 percent by 2050.”

Moreover the emissions from all that imported gas will be greater than for domestically produced gas. To make things even worse the current British Conservative government has decided to follow in the German footsteps on renewable energy, with a goal of Net Zero-Carbon by 2050, with no detail on how CO2 emissions might be absorbed, leaving it all to a 100% production decrease by going all electric with renewable energy. In Britain (not the sunniest of places) that means wind farms – lots and lots of windfarms. How impractical is this?

Renewables just can’t carry this load, as is seen around the world, with this example from Alberta:

At the same time, Alberta’s entire fleet of 13 grid-connected solar facilities, rated at 736 megawatts, was contributing 58 megawatts to the grid. The 26 wind farms, with a combined rated capacity of 2,269 megawatts, was feeding the grid 18 megawatts.

The biggest joke of all of this is that the wind and solar (The Unreliables) result in nations like Germany having to burn more coal and import more gas to run the old parallel energy system, making them dirtier than nuclear-powered France.

But it gets even worse. Modern, industrialised countries that refuse to produce sufficient energy will not survive as independent countries and in the case of Europe it’s produced a geopolitical nightmare:

Gazprom [a Russian state-run energy company] supplied almost a third of all gas consumed in Europe in 2020 and will likely become an even more important source in the short term as the continent shrinks domestic production. Some of the biggest economies are among the most exposed, with Germany importing 90% of its needs.

Which is why Germany has been so keen on working with Russia to build the Nord Stream II gas pipeline (764 miles under the Baltic Sea and costing $11 billion). More Russian energy to the rescue! That pipeline will double the volume of gas pumped by Russian-controlled gas giant Gazprom directly to Germany. And Germany’s largest supplier of coal? Russia, of course.

No wonder Putin felt he could invade Ukraine, that seeming energy stranglehold on the dominant Western European power must have seemed like a trump card.

The Good News

The Ukrainian invasion has done to the Germans what Trump could not do: convince them of their strategic folly.

In a landmark speech on Sunday, Chancellor Olaf Scholz spelled out a more radical path to ensure Germany will be able to meet rising energy supply and diversify away from Russian gas, which accounts for half of Germany’s energy needs: “We must change course to overcome our dependence on imports from individual energy suppliers,”

This will include building two liquefied natural gas (LNG) terminals, one in Brunsbuettel and one in Wilhelmshaven, and raising its natural gas reserves… Germany has 24 bcm of underground caverns of gas storage, which are currently around 30% full, according to industry group Gas Infrastructure Europe data.

That’s great news, especially since the USA’s fracking revolution has unlocked vast reserves of gas in the last fifteen years. So much that it crushed LNG prices, resulting in a massive shift from coal to gas for electricity generation, enabling it to beat its Kyoto Treaty targets (a treaty it never signed anyway) and most of the rest of the developed world for CO2 emission reduction. It also caused the USA to convert numerous LNG coastal terminals from import to export capability – just in time to send huge LNG carriers across the Atlantic to Europe.

The Germans have also halted the Nord Stream II project.

But it’s not just gas, as the country’s economy minister Robert Habeck, a member of the Greens, said,

“There are no taboos on deliberations“.

Germany is also weighing whether to extend the life-span of its remaining nuclear power plants as a way to secure the country’s energy supply, the country’s economy minister Robert Habeck, a member of the Greens, said.

Habeck also said letting coal-fired power plants to run longer than planned was an option, throwing into doubt Germany’s ambitious exit from coal, which is planned for 2030.

A GREEN said that! Jesus! Talk about a Road To Damascus conversion. Amazing how war can do that. And it’s not just the Germans:

Italy will increase the domestic production of gas and may reopen coal-fired power stations under plans to ensure energy security, Prime Minister Mario Draghi said on Friday.

The news gets even better:

Soaring energy prices and a geopolitical crisis over Russia’s invasion of Ukraine are looming over the European Union’s attempts to agree a raft of tougher climate change laws, raising concerns that some could be delayed or scaled back.

That passive voice is just to make Global Warmist readers not feel too downhearted, but when you look at the impact even before the Russian invasion of Ukraine you can place a sure bet on “delayed or scaled back” – and not just “some” either:

A UN-backed green investment fund is on the brink of failure three months after its launch during the Glasgow climate summit because institutions including big banks never delivered expected seed funding.

Chuckle. Even the dark clouds of Vlad The Impaler have silver linings.

Written by Tom Hunter

March 3, 2022 at 6:00 am

I wish I could celebrate the payout increase

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They’ll be lots more dopey coverage of the recent surge in dairy prices, like this one from Radio New Zealand (RNZ as they style themselves now, Radio Aotearoa being a step too far for the moment).

Dairy prices up 3.7 percent as commodity prices reach record high

That article talks of global milk supply being constrained, but for those of us who dig deeper – and farmers have a great incentive to find out what’s going on – the terrible truth is that it’s simply another symptom of a global surge in inflation. Even that article hints at it by pointing out that every other commodity is surging in price also.

I don’t think there’s any question that this comes about because of governments printing money and stuffing it into economies that were only in recession because of lockdowns. Unlike the GFC era, when inflation worries abounded, the economies are not on their knees because of market problems. Back then the credit creation was filling real gaps, which is why inflation did not appear despite all those created trillions of dollars.

This time all that was needed was for government to take its Covid-infected foot off the throat and the economies would have roared back to life, as they were doing very well up to early 2020. Stuffing more money into a system whose production is still being held down may have sounded like classic Keynesian stimulus but was wrong for this scenario.

But aside from that general problem, the lead here is energy costs and that really is a supply constraint – as the Greens are gagging for. A few years ago I attended a Rabobank seminar on the global dairy industry and the guy giving it finished his discussion by pointing out a strange correlation for which no causal link had been established: oil and milk match eachother’s price rises and falls.

If that’s the case then this news is a double-edged sword:

Crude oil is up 65% this year to $83 per barrel. Gasoline, above $3 per gallon in most of the country, is more costly than any time since 2014, with inventories at the lowest level in five years.

Meanwhile natural gas, which provides more than 30% of all U.S. electricity and a lot of wintertime heating, has more than doubled this year to $5 per million Btu.

Even coal is exploding, with China and India mining as fast as possible. The price of U.S. coal is up 400% this year to $270 per ton.

The sword is a scimitar, as the drooling root vegetable known as “President” Biden is discovering.

That plea from Biden happened a couple of months ago and OPEC told Biden to go screw himself. Amazing to think that in January 2020 the USA was a net exporter of oil.

As that article points out, this is actually going to get worse in the Northern hemisphere winter:

Put it all together, as the weather gets colder,  energy costs will rise even faster. The increase in energy cost will raise the prices of goods produced from companies the use energy in the production and distribution of their products which will be passed along to the consumers.

As every farmer knows, we often get the benefit of being first in line for inflation, via commodity prices. But sooner or later those other cost increases, on fuel, fertiliser, power and machinery, arrive with a rush. Talk to any old farmer who remembers the First Oil Crisis of ’73 and then the crunch of ’74.

It’s arrived in New Zealand too, and the effects are already being seen, if not felt:

“The latest quarterly Labour Market Statistics show that on average wages went up by 2.4 per cent over the past 12 months. Unfortunately, inflation over that same period was more than double that figure, running at 4.9 percent, the highest rate in 25 years.

Fasten your seatbelts – and tighten them too.

Good grief, even the NYT has figured it out – and who’s to blame:

You can draw a direct line from a specific policy decision that Biden and congressional Democrats made this past winter to some of the inflation happening now.

In designing the stimulus that Congress passed in March, Biden’s administration went big, with $1.9 trillion in pandemic relief — on top of a separate $900 billion package that passed three months earlier. Put the two together, and $2.8 trillion in federal money has been coursing through the economy this year while economic activity has trended only a few hundred billion dollars a year short of what mainstream analysts would consider full health.

The dementia-riddled “President” must really be hurting the Democrats if even the NYT is throwing him under the bus.

Written by Tom Hunter

November 19, 2021 at 9:40 am