Recently, we have read of energy shortfalls in Germany, the UK and even China. The Chinese energy problems may be contributing to the supply chain issues. What all these stories have in common, with the possible exception of China, is the “Green Agenda.”
Germany’s problems were predicted. The country decided to shut down nuclear power and rely on wind and solar. Relying on solar in Germany’s climate was ludicrous.
Germany’s Energiewende, or energy transition to renewables, is leading to an insecure supply of energy and is affecting the nation’s economy. Germany plans on phasing out all its nuclear plants by 2022 and its coal plants by 2038 in favor of renewable energy, primarily intermittent wind and solar power, which is causing electricity prices to spike and its electric grid to falter. If Germany continues to phase out both coal and nuclear, it will lose the equivalent of 43 percent of 2018 secured output. German electricity prices are already 45 percent above the European average (and 3 times U.S. average residential prices) with green taxes now accounting for 54 percent of household electricity prices.
The Greens are taking down the German economy.Russia and the new pipeline for natural gas cannot supply enough power.
Radical changes are required to remedy the electricity system, including building transmission lines eight times faster than they are currently being built, building new back-up power plants, and installing instruments to control electricity demand, all of which would drive electricity prices even higher.
Britain has similar problems. There, the problem seems more one of cost.
LONDON — Britain’s energy industry could be headed for a significant shake-up, industry insiders have warned, as countries all over Europe grapple with an unprecedented crisis in the power sector.
Wholesale gas prices have spiked across the region, with the U.K. being hit particularly hard.
The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, gained on Monday to trade at 73.150 euros ($85.69) per megawatt-hour, hovering close to the record high seen last week.
Since January, the contract has risen more than 250%.
With China, the problems seem somewhat different. China has an ongoing dispute with Australia that has caused China to boycott Australian coal until this week. The Australian greens oppose the use of coal but allowed export to China in spite of brownouts in South Australia Last summer. However, the Australian greens have imposed a number of restrictions on coal that have contributed to the Chinese problem.
There are many small reasons for the global energy squeeze, and one big one: Investment in hydrocarbons has collapsed under pressure from the Green agenda adopted by international consensus.
Energy investment in the United States has dwindled as large institutional investors boycott fossil fuel investments. China’s critical electricity shortage is the result of draconian regulation of coal mining, exacerbated by Beijing’s punitive ban on Australian coal imports.
China has ended the ban on Australian coal but the Australian greens are still interfering with exports.
The political pressure of the Green agenda has virtually wiped out investment in the US oil and gas industry. Capital expenditures for US exploration and development companies during 2021 (and projected for 2022) are only a fifth of the 2015 peak of $150 billion.
Meanwhile, oil and gas companies are sitting on mountains of cash.
A change in administration could revive energy production but that is unlikely before 2025. Even a GOP Congress would be limited until the current regime is removed.
Read the whole thing. The charts are particularly interesting.
At some point, the Fed’s game is going to come to an end. The magical thinking of a green agenda financed by endless amounts of printing-press money will be followed by a nasty hangover. Rates will rise and the asset bubble will pop.
Exactly when that will happen is beyond anyone’s capacity to forecast, but the unpleasant September in US equity markets was a foretaste of what we can expect.