How Europe Triggered An Energy Crisis, And Now Is Paying Dearly For It

Here are the elements of the energy crisis, which began in Europe:

Europe, Russia

11/30/2021 11:50:00 AM

Here are the elements of the energy crisis, which began in Europe :

At the heart of Europe 's bad bet was the belief of many gas buyers that they could do better in the spot market than they could if bound to long-term, fixed contracts, some of them take-or-pay.

So far, I am told in extensive telephone calls with traders, facilitators, lawyers, and an expert on global energy and diplomacy, that fixed contracts are holding firm. Even Gazprom, Russia’s giant energy company, needs to have some security in its gas exports.

Here are the elements of the energy crisis, which began in Europe but is buffeting the rest of the gas-dependent world.First, world economic activity bounced back from its forced hibernation as a result of Covid-19 with more vigor than expected. From Brazil to China, factories and commercial activity boomed, increasing electricity demand and concurrently natural gas demand.

Then Europe suffered a wind drought. For most of the summer and the fall, wind speeds have been at some of the lowest levels for the past 60 years.European Grid DestabilizedThis has brought the stability of the European grid, with its growing wind dependence, into question and has been particularly damaging in the United Kingdom. There, where it was an act of faith that its offshore wind farms were dependable. But starting in April, the wind gave out, even in the North Sea — its gales transformed into zephyrs. headtopics.com

Goldman, Google and Just About Every NYC Employer Will Soon Have to Disclose Pay Secrets

All this pointed up that the UK’s energy policy has been in chaos for decades. New nuclear has been delayed, and there was never much natural gas storage built in the UK, partly due to confidence in the spot market and the reliability of wind power. “They were caught at the end of the Russian pipeline,” one London trader told me.

At the other end of the scale, Malta (population about 540,000) in the Mediterranean has been an example of how a liquefied natural gas (LNG)-to-power and hedging strategy can avoid chaos and price spikes.Malta doesn’t have much land for wind farms or utility-scale solar. When it decided to switch from heavy fuel oil to natural gas to fuel its power stations in 2013 (implemented in 2017), it realized that it needed to do a thorough examination of the perils of life as a gas-dependent nation.

The small island-state demanded a five-year, fixed-price for electricity and natural gas – the key was a fixed-supply contract with theState Oil Company of the Azerbaijan Republic(SOCAR), although none of the contracted gas comes from Azerbaijan. As a result, according to a source familiar with Maltese energy affairs, the island isn’t emitting 2 million tons of carbon annually at today’s price of 120 million euros a year. The source attributes this carbon emissions reduction to the 2013 set contract price for LNG.

Opinion | The Economy That Might Have Been

Dorian Ducka, Albania’s former deputy minister of energy and industry, now an international energy consultant, says that Malta is in a better position than other EU islands which haven’t switched to gas. He singled out Spain’s Canary Islands for which, he says, LNG would have been a natural conversion. At present, power generators in the Canaries are emitting substantial carbon and particulate matter into the atmosphere and have some of the highest electricity prices in Europe. headtopics.com

The wind shortage this fall has unnerved Europe. Suddenly, gas is seen as vital to the future, not as a resource on the way out the door because of its climate-change impact.Across Europe, renewables have lost ground in public acceptance as fuel bills have gone up and winter approaches. Nuclear is getting a fresh look, and France has already committed to boost it.

Last winter was particularly severe across Europe, which led to a larger drawdown in gas reserves than normal. While this winter is predicted to be less severe, already prices for gas, which are four times what they were in March, will make for a hard winter for many.

Dem Candidate Evokes Slain Journalist Daughter As His ‘Running Mate’ In Powerful Ad

U.S. Role in European CrisisThe United States has also played a role in the European energy crisis. When President Donald Trump trashed the Iran nuclear deal, signed in 2015 by the United States, Iran, China, Russia, the UK, France, and Germany, and reimposed sanctions, anticipated Iranian gas didn’t flow into Europe.

Likewise, long U.S. opposition toNord Stream 2affected certification of the Russia-to-Germany pipeline. In May, the Biden administration reversed policy and waived its objections. The pipeline is now finished and awaits German certification — now in doubt with a new, greener government in Germany. Russia may choose to force that issue. headtopics.com

China has become a voracious consumer of global gas supply and much gas that would have gone to Europe has been diverted to the Asian market. The message from the Chinese government has been than gas should be secured at any price to keep China’s industry humming.

This flood of Chinese demand hadn’t been anticipated by world gas traders. They have responded by diverting LNG to Asia — gas that would otherwise have been sold on the sport market in Europe.Spain has unexpectedly come into the LNG market because of a dispute between Algeria and Morocco, through which the Maghreb-Europe pipeline runs. That pipeline is shut down: a geopolitical event that no one expected, and one that has added to the pressure on natural gas.

Just recently, Russia increased its gas flow in some pipelines, further roiling Euro markets. The heart of Russia’s unhappiness is its desire to reduce Ukraine’s role as a gas shipment point into the rest of Europe and the delay of Nord Stream 2.

Read more: Forbes »

Audible Creators Talk the Past and Future of Audio Storytelling

As a young working actor in Scotland, Alan Cumming worked extensively in radio, performing in radio plays for Radio 4 and BBC throughout the 80s and 90s. When he came to the U.S. for acting roles, … Read more >>

The Omicron variant is spreading across Europe with at least 13 cases identified in the NetherlandsAt least 13 people who got tested at Amsterdam Schiphol airport after traveling from South Africa on Friday have tested positive for the Omicron coronavirus variant, Dutch health authorities said on Sunday. Wait, so now the COVID test says which variant you have? I’m call BS! How are they testing for this variant, I wonder 🤔

How Europe should deal with covid-19Accelerating booster shots should be a priority, because Europe is behind and vaccine hesitancy should not be a factor with those who have already been jabbed

‘I'd prefer the money never hits our account’: My in-laws live with my wife and me. They want to use their 401(k) to pay off our mortgage. What should we do?My in-laws want to pay for part of our mortgage with their 401(k). Would we have to pay taxes on that? The Moneyist weighs in:

'The Office' nods at Netflix's 'You' in a parody trailer that makes Dwight a serial killerIt's alarming how well this works. emmaking512

A New Book Claims That It Was Prince Charles Who Asked About Baby Archie’s Skin ToneIt’s been a question ever since Harry and Meghan’s big interview with Oprah.

Bella Hadid Finds Winter’s Snuggliest HatSuddenly, a simple beanie or headband never seemed so boring! SIMONE IZ ZE BEZT