Expensive oil and gas is for a long time: what is really behind the “energy transition” and the “climate agenda”?
After some decrease upon the news about the start of the technological filling of the Nord Stream 2 pipeline in early September, the stock quotes of gas futures in Europe again went to set one record after another. The contract for delivery in November at the TTF hub in the Netherlands rose to $1,360 per 1,000 cubic meters. The December futures on the ICE exchange is fixed at $1,456, and on October 6 it even rose to $1,900.
What is happening seems to have no clear explanation of savagery. The wholesale price in the European part of Russia is about $40 per MWh. In Spain, it reached $179 (an increase of 4 times in 4 months), in Britain – $390 (an increase of 3 times), in Germany – $153 (an increase of 1.3 times). In Russia, electricity is supplied to the population at $50 per MWh, in Germany – for $340.
Officially, according to the European commissioners in dusty helmets, the missing winds in the North Sea, where the main array of European wind generation is located, and, of course, our native Gazprom, are “to blame” for this. The European Commission launched an official investigation into whether what is happening is the deliberate machinations of Russia, which has specifically reduced gas supplies in order to create a shortage in Europe and profit from speculation. Berlin says that the Russians are not to blame for what is happening, but in Brussels they are not listening to this yet.
It would seem that seeing what is happening, the ruling circles of the EU themselves should “add up two plus two” and admit that the role of the scrap that destroyed the “Groningen pricing mechanism” that worked normally for decades was played by the greens, the European Energy Charter, the Third Energy Package and the unbridled populism of the idea of “shock decarbonisation of European industry”.
However, they continue to persist even in the light of a clear shortage of accumulated gas reserves just before the start of the heating season. If the EU usually pumped 100-110 billion cubic meters of gas into storage “for the season”, at the moment barely 72 billion cubic meters are stored in them. But for some reason, Nord Stream 2 still needs to be stopped, ostensibly to prevent “Russian expansion”.
Where is the logic? Has the entire European ruling class gone mad at the same time? Has he forgotten how to count? Have they lost their understanding of the scale of the destructive consequences? Is it not enough for them to stop the petrochemical enterprises that have already taken place and to receive notifications about an emergency, literally within the next couple of weeks, to stop the work of glass factories, and a little later metallurgical plants?
Are they not afraid of the risk of shutting down bakeries for baking bread and the production of pasta, also critically widely using electricity? Or do some important influencing factors still exist in what is happening, only as long as they remain in the shadows?
If you look at what is happening from the perspective of conspiracy theory, then it is worth remembering the recent bestseller “Black Swan” by mathematician and trader Nassim Taleb. In his book, the author clearly shows how only 4% of the population can radically change the world.
Especially in modern conditions, when the “ruling elite” has about such a number in the Western world, which does not feel its connection with society, and when the rest of society becomes very greedy for outright populism, like the conviction that electricity is taken “just from the outlet”, and the “invisible hand of the market” guarantees the preservation of “food abundance in stores” despite literally everything.
So, these “four percent” for a number of fundamental reasons stubbornly want to implement the so-called “green energy transition”, the implementation of which is hindered by two factors: a) the scale of inertia of the existing industrial and economic mechanism and b) too low price of primary energy carriers.
A year and a half ago, IA REGNUM published an analysis of the reasons why the declared at that time full transition of European (and, more broadly, Western) vehicles to electric traction by 2030-2035 could not take place. In addition to the unavailability of infrastructure and the lack of necessary technological progress in the development of sufficiently efficient and affordable batteries, the main obstacle is the “oil price”.
More precisely, the price of energy generated by traditional types of generation. Wind turbines and solar panels are able to compete with them only after the cost of “black gold” exceeds $300 per barrel. The aforementioned “four percent” have failed to achieve this in the past five years. The mechanism managed to resist and even force the price to return to the corridor of adequate values required by the industry. Today, BRENT crude oil is trading at $78.72. Russia and OPEC+ do not allow it to climb higher quite successfully.
But if we achieve a reduction in its share in energy generation from the current 30% (according to 2020 data) to 6-8% (according to EU plans for 2035), and even completely reset the share of coal (today providing 27%), and also, with the help of purely bureaucratic tricks and a “carbon tax”, to inflate gas prices, then…
In terms of energy equivalent, one barrel of oil (BOE) is approximately equal to 5.8 million British thermal units (MBTU). Hence, a simple calculation is obtained. The threshold price of $300 per barrel of oil is equal to $1,740 per thousand cubic meters of natural gas.
As can be seen from stock quotes, today the height of $1,456 has been “taken”, which is 83.67% of the “necessary” threshold beyond which “alternative energy” becomes independently profitable within the framework of “natural market mechanisms”.
Will this lead to the death of many industries and a drastic painful change in the current way of life of the population? So what? Why should the mentioned “four percent” care about such trifles? The economy will be rebuilt. Such a thing has happened before. Let’s recall the “enclosure” in Britain, or the Luddite riots. Well, the industry that produces horse harnesses and horse-drawn transport died, and then mass horse breeding, and who is very sad about it today?
But the “industrialists” will get a strong enough kick to expand the financing of R&D in the field of electricity storage. And the implementation of the practical results of this work will be possible without mandatory budgetary subsidised support.
And then… the era of global mass industrial restructuring of the entire world economy will come. Not only that, it is a huge amount of money, estimated in trillions. The main thing is different. These scales of industrialisation will last for a very long time, thanks to which they will become a new long-term source of very fat profits. Against the background of this the suffering of the population “during the transition period” is of no interest to these “four percent”. Read what Marx said about capital, which was promised 100% profit.
By the way, the Telegram channel “Russian Demiurge” wrote about such a scheme of development of the situation with the “climate agenda” in early August:
“It is necessary to understand what Biden is talking about when promoting the ‘climate agenda’, and why Putin agreed with it and supported this ‘topic’. In fact, we are talking about the fact that the new ecological world, well, in order to be environmentally friendly and ‘energetically transitional’, requires very expensive energy. Do you understand everything now?
Therefore, Anatoly Chubais was appointed to this ‘topic’; he understands perfectly well what volumes of ‘work’ are being discussed here, and will not allow Russia’s interests to be cheapened, since his wage and, most importantly, ‘premium’ is directly tied to the amount of profit that Russia will receive from the ‘energy transition’.
If anyone thinks otherwise, I’ll just ask you to recall a) Bloomberg’s very recent article about the current and future gas prices, and b) Crimson’s excellent analysis of the situation with American oil workers, whom the administration of ‘dementia’ Joe wants to raise neither more nor less, but by as much as 500 yards.”
And on August 20, the article “Truth and fiction about an energy transition” with approximately similar conclusions was published on the website of the RUSSTRAT Institute on the same topic.
Undoubtedly, this all looks logical only within the logic of the “conspiracy theory”. But who says it’s totally fantasy? In any case, what is happening now with the energy sector in Europe fits into such a scenario picture without any “gaps, distortions and stresses”.