As we approach Autumn, the anxiety in Europe rises along side its energy costs. With long lines, protests, talks of rationing, and bailouts, Winter looks grim for the Western bloc.
September 5, 2022
By: Bobby Casey, Managing Director GWP
Early September is around the time basic chicks are getting ready to usher in Autumn. Hues of earth tones, excitement over Halloween, the end of a hot unrelenting summer, and of course, Pumpkin Spice everything.
By the end of the month cooler temperatures will set in, and the Fall will arrive.
It just so happens we might be using “The Fall” season interchangeably with “The Fall” of the global economy this year!
We talked about Dutch Farmers protesting the new Green policies on fertilizer.
Polish are waiting in lines for days for coal before the winter comes.
Last week we mentioned the Polish wait lines for coal in advance of the winter. Poland instituted an embargo on Russian imported coal. Russia was using the same rails and trains for military transport.
While coal consumption in Poland has not gone up, coal output has tapered due to the high costs of mining at deeper levels. This led to increased importation of coal.
“In 2021, Poland imported 12 million tonnes of coal, of which 8 million tonnes came from Russia and used by households and small heating plants.
“In July, Poland ordered two state-controlled companies to import several million tons of the fuel from other sources including Indonesia, Colombia and Africa, and introduced subsidies for homeowners facing a doubling or tripling of coal prices from last winter.
“‘As much as 60% of those that use coal for heating may be affected by energy poverty,’ Lukasz Horbacz, head of the Polish Coal Merchant Chamber of Commerce, said.”
England’s Outrageous Energy Bills
Politicians have a difficult time relating to the struggles of their constituents. Boris Johnson is no exception. Americans might remember when fuel costs were high under Barrack Obama, and he so righteously told them to make sure their tires are properly inflated. That landed like lead ball.
Well, Borris Johnson did something similar telling the English to get a new (possibly more energy efficient) tea kettle and save a few quid off electricity bills that have nearly quadrupled in some cases:
“If you have an old kettle which takes ages to boil, it may cost you £20 to replace it – but if you get a new one, you’ll save £10 a year every year on your electricity bill,” Johnson said.
Now is not the time for penny-pinching advice from politicians that created and perpetuated the economic shambles their constituents are enduring. Arguably there was an opportunity for Ukraine and Russia to come to a ceasefire agreement, and both Joe Biden and Boris Johnson intervened and put a stop to it.
So the UK continues down this path of skyrocketing energy costs:
“[E]nergy regulator Ofgem increased the cap on power bills to a record £3,549 ($4,189) beginning Oct. 1 from £1,971 ($2,330) at present. That cap is expected to rise to £5,439 ($6,427) by January and £7,272 ($8,594) by spring — all due to elevated wholesale NatGas and electricity prices caused by declining Russian energy supplies to Europe, made worse by Western sanctions that have backfired.
The caps currently only apply to individuals and private residents. It does not apply to businesses. Just as the barely there businesses emerge from the COVID lock-downs and economic restrictions to finally rebuild, in comes the oppressive energy costs from sanctions on Russia:
The Federation of Small Businesses has warned of the impact on everything from fish-and-chip shops to launderettes. The group estimated that electricity bills for small businesses had risen nearly 350 percent since February 2021, and gas bills more than 400 percent.
Some businesses have already closed, including a small radio station, cafes and shops. Others, including a food bank and hospices, have expressed grave concern about how they will afford rising bills.
Germany’s high energy costs could bring down the bloc!
Zerohedge buried the lead with this: “Germany could fall into recession this winter, bringing the rest of the bloc down with it.”
ArcelorMittal, the largest steel producer in the world, is partially shutting down two plants in Germany and idling one plant in Spain. Their CEO Reiner Blaschek explained that electricity prices jumping 10x in the span of a few months, they cannot remain competitive.
According to OilPrice.com:
In Germany, one of every six industrial companies feels forced to reduce production due to high energy prices, a survey by the Association of German Chambers of Industry and Commerce, DIHK, showed at the end of July. Nearly a quarter of the companies forced to reduce production had already done so by end-July, and another one-quarter are in the process of scaling back production due to sky-high energy prices, according to the survey of 3,500 companies from all sectors and regions in Germany.
The energy-intensive industries and firms are particularly hit, as 32 percent of the companies plan to or have already started to reduce production and even halt entire production lines, the DIHK survey showed.
With an oil leak detected in Nord Stream 1, NatGas nervously waits with no ETA on when supplies will resume to Europe from Russia. Higher energy costs inevitably mean lower industrial production.
Denmark and Sweden bracing themselves for rationing and outages
Scandinavian countries are looking at the very real prospect of being set back 50 years to 1970s style energy crisis type living. Regular blackouts and rationing are expected, with no other solutions in place. The “let’s all do our part” and “we’re in this together” rhetoric will not resonate well while people freeze in the winter months.
Summit News captured a few choice quotes from the two countries:
“There is an increased risk of a lack of power this winter,” Klaus Winther, deputy director at Energinet, the Danish national transmission system operator for electricity and natural gas, told TV2.
Winther says the crisis will herald a new era of energy consumption predicated on rationing to prevent blackouts.
Although insisting that “power cuts are the absolutely last tool we have in the drawer,” Winther warned that individual distribution companies may be forced to shut off electricity supplies for hours at a time to avoid longer blackouts.
Meanwhile, in neighboring Sweden, the prospect of sustained power outages has been increased from “low” to “real,” with the more populated areas most at risk.
“This winter, at its coldest, there is a real risk that we will have to interrupt electricity consumption in parts of southern Sweden,” strategic operations manager for Swedish power grid operator Svenska Kraftnät, Erik Ek, said in a press release.
Germany, Finland, Sweden and Austria’s Energy company bailouts
Countries across Europe are already bailing out their major electric companies in advance of the winter months:
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Austria announced it will offer a 2 billion Euro loan bailout to its main energy supplier, Wien Energie.
Chancellor Karl Nehammer said the loan to Wien Energie was an “extraordinary rescue measure” to ensure its two million customers – mainly Vienna households – continue to receive electricity. It will run until next April.
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Sweden announced it too will provide “emergency liquidity support” in the form of hundreds of billions of kroner to electricity producers.
Erik Thedéen, head of Sweden’s Financial Supervisory Authority, said power prices in Sweden had risen 11-fold in the past year, leading to a jump in collateral demands. He added that without liquidity support electricity producers could face bankruptcies and large losses that could lead to the collapse of the clearing house.
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Germany bailed out its largest utility providers, Uniper, with over 15 billion Euro, in exchange for 30% state equity in the company. Uniper’s majority shareholder is Finnish energy group Fortum, which also asked Helsinki for help.
Czech protesters rushing the capitol demanding neutrality in the UN proxy war in Ukraine.
It turns out, picking sides in proxy wars isn’t very economical. It’s a luxury excluded parties have on many issues, until the costs come down. Then suddenly, it’s not as principled a matter as you originally thought.
Green Agenda matters, culture wars, all that fringe stuff that makes the virtue signal beacon shine nice and bright, are all made possible and comfortable by of fossil fuels, natural gas, and coal.
The Czech Republic isn’t willing to pay exorbitant premiums on energy to show their support of Ukraine or Green energy agendas:
More than 70,000 Czechs are protesting in Prague, the capital, demanding the ruling coalition take a neutral stance on the Ukraine war to ensure energy supplies from Russia aren’t cut off ahead of winter. Protesters are outraged at the European Union for sanctions against Russia that have sparked soaring electricity bills and triggered a cost-of-living crisis.
This is what endless wars and centrally planned Green policies get you. When economy meets ecology you get more green technology. But to force ecology without regard for economy, you will get disaster.
Energy independence comes first, then figure out how to be more ecological where you can.
Winter is coming, and Europe is in for a world of hurt
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