Climatist Insurrection Enters New Phase

Previously the insurrection by climate anti-fossil fuel acitvists took the form of sabotaging oil and gas infrastructure, led notably by the “valve turners”, who were arrested and mostly let off the hook in a series of high profile trials.  This phase broke down after numerous states enacted serious penalties for attacks on energy projects and infrastructure. Also, with the Biden administration climatists hoped for swift federal action to shut down oil and gas production and supply. See Securing Pipelines Against Disrupters

Disappointed with lack of progress on their “leave it in the ground” agenda, activists are now attempting to occupy federal buildings to intimidate public officials into action.  This could be a precursor of more insurrection events far more serious than anything happening on Jan.6, 2021.

Michael Austin reports at The Western Journal  ‘Insurrection’? Climate Change Protesters Attempt to Storm Interior Department Building.  H/T John Ray.  Excerpts in italics with my bolds.

The Jan. 6 Capitol incursion was not an insurrection, as many left-wing politicians and pundits have claimed.  Sure, some of those present during the incursion were rioters who broke the law. They should be punished accordingly.

 On Thursday, Oct. 14,  a large group of climate change protesters tried to enter the Department of the Interior, according to Ellie Silverman, a reporter for The Washington Post.

“Climate protesters are now rallying outside the Department of the Interior. They’re trying to get inside but police are blocking the entrance. I can see a few Indigenous women through the doorway who are sitting on the floor inside the building and linking arms,” Silverman tweeted.

She further noted that “protesters are remaining on the steps and won’t move out of the doorway where several police are blocking passage into the building.”

If these activists happened to be conservatives protesting against vaccine mandates or Bidenflation, the media would be covering it ad nauseam.

Panicky headlines declaring the return of the Jan. 6 “insurrectionists” would spread like wildfire across social media.

But instead, since the protesters happen to be supporting a cause backed by the establishment elite, the media has remained largely silent.

P.S. I don’t think of these protesters or those at the capital 6/1/21 as “insurrectionists.” But if that is the term used to imprison 6/1/21 participants and remove their civil rights, then it should also be applied here. We do not know whether these disturbances will evolve into riots like those in Portland where the Federal Courthouse was vandalized by insurrectionists, never held accountable.

Glasgow COP Has Fleet of Teslas To Be Diesel-Charged

Tyler Durden reports at zerohedge  UN Climate Change Conference Reportedly Using Diesel Generators To Charge Teslas Being Used As Shuttles. Excerpts in italics with my bolds.

We’re not sure we can think of a better analogue for the lunacy behind the climate change hysteria that what is reportedly going on in Glasgow.

As many people know, the Conference of the Parties (COP) Climate Change Conference, hosted by the UK in partnership with Italy, is taking place in Glasgow from October 31 to November 12.

One blogger from Brighton wrote this week that attendees from the conference will be staying at Gleneagles Hotel.

He wrote that there’s 20 Teslas at the hotel to shuttle people back and forth to and from the convention, which is about 75km.

Then, the kicker. Since the hotel only has one Tesla charging station, diesel generators were contracted to help recharge the Teslas overnight.

The stated purpose of the conference is, among other things, “to review the implementation of the Convention, the Kyoto Protocol and the Paris Agreement.”

The climate change conferences now count themselves, according to the UNFCCC’s website, as “among the largest international meetings in the world.”

“The intergovernmental negotiations have likewise become increasingly complex and involve an ever-increasing number of officials from governments all over the world, at all levels, as well as huge numbers of representatives from civil society and the global news media,” the conference’s website says.

Maybe since we’re gathered to talk about the negative effect on the climate, we could at least start by finding a carbon neutral way to shuttle yourself back and forth to the event.

It’s almost like these meetings aren’t really about climate change after all…

 

David Hay Explains “Greenflation”

A two part series at Evergreen financial advisers analyses the market effects of the intensified push for “green” energy.  Excerpts in italics with my bolds.  The two posts are:

Green energy: A bubble in unrealistic expectations?
David Hay / October 8, 2021
As I have written in past EVAs, it amazes me how little of the intense inflation debate in 2021 centered on the inflationary implications of the Green Energy transition. Perhaps it is because there is a built-in assumption that using more renewables should lower energy costs since the sun and the wind provide “free power”.

Green Energy: A Bubble in Unrealistic Expectations, Part II
David Hay / October 15, 2021
This is part two of our discourse regarding green energy and its profound – and somewhat misunderstood – impact on the global economy. In this issue, we specifically home in on China and how that country’s immense power needs are affecting the energy ecosystem at large.

Part I Green Bubble Summary:
  • BlackRock’s CEO recently admitted that, despite what many are opining, the green energy transition is nearly certain to be inflationary.
  • Even though it’s early in the year, energy prices are already experiencing unprecedented spikes in Europe and Asia, but most Americans are unaware of the severity.
  • To that point, many British residents being faced with the fact that they may need to ration heat and could be faced with the chilling reality that lives could be lost if this winter is as cold as forecasters are predicting.
  • Because of the huge increase in energy prices, inflation in the eurozone recently hit a 13-year high, heavily driven by natural gas prices on the Continent that are the equivalent of $200 oil.
  • It used to be that the cure for extreme prices was extreme prices, but these days I’m not so sure. Oil and gas producers are very wary of making long-term investments to develop new resources given the hostility to their industry and shareholder pressure to minimize outlays.
  • I expect global supply to peak sometime next year and a major supply deficit looks inevitable as global demand returns to normal.
  • In Norway, almost 2/3 of all new vehicle sales are of the electric variety (EVs) – a huge increase in just over a decade. Meanwhile, in the US, it’s only about 2%. Still, given Norway’s penchant for the plug-in auto, the demand for oil has not declined.
  • China, despite being the largest market by far for electric vehicles, is still projected to consume an enormous and rising amount of oil in the future.

In fact, despite oil prices pushing toward $80, total US crude output now projected to actually decline this year. This is an unprecedented development. However, as the very pro-renewables Financial Times (the UK’s equivalent of the Wall Street Journal) explained in an August 11th, 2021, article: “Energy companies are in a bind. The old solution would be to invest more in raising gas production. But with most developed countries adopting plans to be ‘net zero’ on carbon emissions by 2050 or earlier, the appetite for throwing billions at long-term gas projects is diminished.”

Thus, if he’s right about rising demand, as I believe he is, there is quite a collision looming between that reality and the high probability of long-term constrained supplies. One of the most relevant and fascinating Wall Street research reports I read as I was researching the topic of what I have been referring to as “Greenflation” is from Morgan Stanley. Its title asked the provocative question: “With 64% of New Cars Now Electric, Why is Norway Still Using so Much Oil?”

Coincidentally, that’s been the experience of the overall developed world over the past 10 years, as well; petroleum consumption has largely flatlined. Where demand hasn’t gone horizontal is in the developing world which includes China. As you can see from the following Cornerstone Analytics chart, China’s oil demand has vaulted by about 6 million barrels per day (bpd) since 2010 while its domestic crude output has, if anything, slightly contracted.

Here’s a similar factoid that I ran in our December 4th EVA, “Totally Toxic”, in which I made a strong bullish case for energy stocks (the main energy ETF is up 35% from then, by the way): “(There was) a study by the UN and the US government based on the Model for the Assessment of Greenhouse Gasses Induced Climate Change (MAGICC). The model predicted that ‘the complete elimination of all fossil fuels in the US immediately would only restrict any increase in world temperature by less than one tenth of one degree Celsius by 2050, and by less than one fifth of one degree Celsius by 2100.’ Say again? If the world’s biggest carbon emitter on a per capita basis causes minimal improvement by going cold turkey on fossil fuels, are we making the right moves by allocating tens of trillions of dollars that we don’t have toward the currently in-vogue green energy solutions?”

Part II Green Bubble Summary:
  • About 70% of China’s electricity is generated by coal, which has major environmental ramifications in regards to electric vehicles.
  • Because of enormous energy demand in China this year, coal prices have experienced a massive boom. Its usage was up 15% in the first half of this year, and the Chinese government has instructed power providers to obtain all baseload energy sources, regardless of cost.
  • The massive migration to electric vehicles – and the fact that they use six times the amount of critical minerals as their gasoline-powered counterparts –means demand for these precious resources is expected to skyrocket.
  • This extreme need for rare minerals, combined with rapid demand growth, is a recipe for a major spike in prices.
  • Massively expanding the US electrical grid has several daunting challenges– chief among them the fact that the American public is extremely reluctant to have new transmission lines installed in their area.
  • The state of California continues to blaze the trail for green energy in terms of both scope and speed. How the rest of the country responds to their aggressive take on renewables remains to be seen.
  • It appears we are entering a very odd reality: governments are expending resources they do not have on weakly concentrated energy. And the result may be very detrimental for today’s modern economy.
  • If the trend in energy continues, what looks nearly certain to be the Third Energy crisis of the last half-century may linger for years.

Lest you think I’m being hyperbolic, please be aware the IEA (International Energy Agency) has estimated it will cost the planet $5 trillion per year to achieve Net Zero emissions. This is compared to global GDP of roughly $85 trillion. According to BloombergNEF, the price tag over 30 years, could be as high as $173 trillion. Frankly, based on the history of gigantic cost overruns on most government-sponsored major infrastructure projects, I’m inclined to take the over—way over—on these estimates.

Moreover, energy consulting firm T2 and Associates, has guesstimated electrifying just the US to the extent necessary to eliminate the direct consumption of fuel (i.e., gasoline, natural gas, coal, etc.) would cost between $18 trillion and $29 trillion. Again, taking into account how these ambitious efforts have played out in the past, I suspect $29 trillion is light. Regardless, even $18 trillion is a stunner, despite the reality we have all gotten numb to numbers with trillions attached to them. For perspective, the total, already terrifying, level of US federal debt is $28 trillion.

Regardless, as noted last week, the probabilities of the Great Green Energy Transition happening are extremely high. Relatedly, I believe the likelihood of the Great Greenflation is right up there with them.

Further, one of my other big fears is that the West is engaging in unilateral energy disarmament. Russia and China are likely the major beneficiaries of this dangerous scenario. Per my earlier comment about a stealth combatant in the war on fossil fuels, it may surprise you that a past NATO Secretary General* has accused Russian intelligence of avidly supporting the anti-fracking movements in Western Europe. Russian TV has railed against fracking for years, even comparing it to pedophilia (certainly, a most bizarre analogy!).

Solutions include fast-tracking small modular nuclear plants; encouraging the further switch from burning coal to natural gas (a trend that is, unfortunately, going the other way now, as noted above); utilizing and enhancing carbon and methane capture at the point of emission (including improving tail pipe effluent-reduction technology); enhancing pipeline integrity to inhibit methane leaks; among many other mitigation techniques that recognize the reality the global economy will be reliant on fossil fuels for many years, if not decades, to come.

If the climate change movement fails to recognize the essential nature of fossil fuels, it will almost certainly trigger a backlash that will undermine the positive change it is trying to bring about. This is similar to what it did via its relentless assault on nuclear power which produced a frenzy of coal plant construction in the 1980s and 1990s. On this point, it’s interesting to see how quickly Europe is re-embracing coal power to alleviate the energy poverty and rationing occurring over there right now—even before winter sets in.

When the choice is between supporting climate change initiatives on one hand and being able to heat your home and provide for your family on the other, is there really any doubt about which option the majority of voters will select?

 

Killing the Golden Energy Goose in 2021

Lubos Motl provides an insightul article by Alexander Tomský Where the policy of decarbonising the economy is taking us at his blog Reference Frame. Excerpts below in italics with my bolds.

We now know that the total, often disguised, cost of renewable energy is prohibitive, the zero carbon ideal mere wishful thinking. Only the brave will say it fully; Western democracy no longer professes freedom of speech, and careers depend on agreement with the ruling ideology as they did under the communists.

How could it be that fossil fuel prices, with such huge (known) world reserves – oil enough for 200 years, coal and gas enough for at least 1000 years (International Energy Agency) – have suddenly risen so rapidly and the world is facing an economic crisis?

The first thing that springs to mind is the inflated volume of cheap money that governments are pumping into the economy for dear life and the post-Covid demand. The broken global supply chains are responding badly, not to mention the shortage of people in transport and elsewhere who have found better jobs during the pandemic. After the winter season, things will calm down a bit and fuel will get a bit cheaper. But the bottom line will not change; the fossil fuel extraction and industry has been vilified for at least a decade. Many investors have left because of bad conscience, others want to make as much money as they can before immoral extraction is banned by governments altogether. An industry that used to spend two-thirds of its annual profits on maintenance and investment is not going to invest without a secure future. The international oil cartel OPEC + Russia have refused to increase production (October 4) and this time US producers are also waiting. Annual investment by oil producers has fallen from $750 billion since 2014 to an estimated $350 billion by the end of this year (Trafigura) and half of the major projects have been abandoned by entrepreneurs.

The decline in investment will inevitably drive the fossil fuel-dependent world into recession.

In vain do the greens rejoice that this will give a relative boost to the price of renewable energy, which, too, is soaring, as are battery prices, with demand artificially driven up by the scarcity of precious metals and copper for windmill masts, By the end of September, the average price of electricity in Europe had risen by 40 per cent.

A paradoxical consequence of the crisis unleashed by Western policies is the situation in China, which is opening one coal-fired power plant after another due to the rising cost of fuel and is estimated to build twice as many (120) next year. It is not worried about global warming and will not let its heavy industry be destroyed. It is strange that the zero-emission advocates do not criticize the Chinese dictator.

The ideology of total decarbonisation of the world is totally unrealistic, it is the science fiction of a sick mind, even the Western advanced economy is not capable of completely replacing fossil fuels at today’s technical level, unless – and this is an incomprehensible question – we return to building nuclear power stations, which ideological unreason forbids.

Poverty, power cuts, social and political disintegration and perhaps even a world economic crisis await us.

Affordable, reliable FF Energy is the Golden Goose of Modern Society

Footnote:  Aesop’s Fable of The Man and the Golden Eggs

A man had a hen that laid a golden egg for him each and every day. The man was not satisfied with this daily profit, and instead he foolishly grasped for more. Expecting to find a treasure inside, the man slaughtered the hen. When he found that the hen did not have a treasure inside her after all, he remarked to himself, ‘While chasing after hopes of a treasure, I lost the profit I held in my hands!’

The Moral: People often grasp for more than they need and thus lose the little they have.

See also: Killing the Energy Goose

Winter Fuel Short Due to CO2 Hysteria

 

Scottish High Court Dismisses Greenpeace “End-Use Emissions” Argument

The Guardian reports on the ruling in its article Greenpeace loses North Sea Vorlich field legal challenge.  H/T Tallbloke’s Talkshop  Excerpts in my bolds.

Permission to drill the Vorlich site off Aberdeen was given to BP in 2018.

Greenpeace argued in Scotland’s highest civil court there had been “a myriad of failures in the public consultation” and the permit did not consider the climate impacts of burning fossil fuel.

The Court of Session ruling means operations will continue at the field. Greenpeace plans to appeal.

Production from the development started in November after BP was granted approval by the Oil and Gas Authority (OGA) in 2018.

The UK government welcomed the outcome.

The text of the ruling is Opinion of the Court Greenpeace Ltd. vs. BP Ltd.  

The procedural complaints were dismissed as being without merit.  The excerpts below (in italics with my bolds) address the activist theory of disallowing oil production and transportation based upon CO2 emissions of the end users consuming the energy products.

[38] The indirect emissions challenge was res judicata. Permission to proceed had been refused by the High Court. In any event, the challenge was without merit. The Directive was concerned with the effect of the individual project, not the use of material extracted in the course of a project. The focus was on the particular “project”. The definitions provided no support for the contention that the end use of raw materials, after further processes such as refinement to create a different product, was a relevant consideration (R (Finch) v Surrey County Council, at paras [101]-[102] and [109-112]).

[39] Direct emissions from the end use of oil and gas in the UK were considered and taken into account in the UK’s Annual Statement of Emissions. These were matters for political judgment (R (Plan B Earth) v Secretary of State for Transport [2021] PTSR 1901 at paras [2] and [281]), which were not challengeable in an appeal under regulation 16. The determination of a carbon budget for the UK was a complex, high-level strategic decision.  Indigenous oil and gas development was an important part of the transition to a low carbon economy. This was all part of the existing framework, which sought to manage the UK’s progressive decarbonisation up to the year 2050 (cf R (Packham) v Secretary of State for Transport [2021] Env LR 10 at paras 83 and 87).

[40] The production of oil from the Vorlich field did not increase the use of oil. The appellants’ position, that as a matter of principle there should be no new oil, conflated and confused different questions. The scope of an EIA was a matter of judgment, so long as the information in it was accurate.

The environmental effects of the consumption of oil and gas

Merits

[63] The relevant considerations which require to be taken into account in an environmental impact assessment, notably when the applicant is preparing his Environmental Statement, are set out in regulation 3A. So far as is relevant to the current appeal, the applicant is required to assess the direct and indirect significant effects of the project on, amongst other elements, the climate and the operational effects of the relevant project. In this area, regulation 3A(2) mirrors the terms of the Directive (Art 3.1). Again, there is no issue concerning any lack of adequate transposition.

[64] The question is whether the consumption of oil and gas by the end user, once the oil and gas have been extracted from the wells, transported, refined and sold to consumers, and then used by them are “direct or indirect significant effects of the relevant project”. The answer is that it is not. The exercise which the applicant had to carry out, and the Secretary of State had to assess, was a determination of the significant effects of drilling the two wells and removing the oil and gas. That involved considering the effects of depositing and operating an exploration rig or rigs on site. The ultimate use of a finished product is not a direct or indirect significant effect of the project. It is that effect alone which, in terms of the Regulations, must be assessed.

[65] The court agrees with the reasoning in R (Finch) v Surrey County Council [2021] PTSR 1160 in which Holgate J reached the same conclusion in relation to what is a direct or indirect effect of a “development”; in that case the drilling of new oil and gas wells on land.  As Holgate J stated (at para 101):

“The extraction of a mineral from a site may have environmental consequences remote from that development but which are nevertheless inevitable. …[T]he true legal test is whether an effect on the environment is an effect of the development for which planning permission is sought. An inevitable consequence may occur after a raw material extracted on the relevant site has passed through one or more developments elsewhere which are not the subject of the application… and which do not form part of the same ‘project’.”

However broad and purposive an interpretation of the Regulations or the Directive might be attempted, the clearly expressed wording of the legislation cannot be disregarded (ibid at paras 103-104). It is the effect of the project, and its operation, that is to be considered and not that of the consumption of any retailed product ultimately emerging as a result of a refinement of the raw material.

[68] It would not be practicable, in an assessment of the environmental effects of a project for the extraction of fossil fuels, for the decision maker to conduct a wide ranging examination into the effects, local or global, of the use of that fuel by the final consumer.  Although the appellants’ aspiration is for such extraction to cease, it does not appear to be contended that the UK economy is not still reliant in a number of different ways on the consumption of oil and gas. At present, a shortage of oil and gas supplies is a matter of public concern. The argument is, in any event, an academic one. It is not maintained that the exploitation of the Vorlich field would increase, or even maintain, the current level of consumption. Unless it did so, it is difficult to argue that it would have any material effect on climate change; even if it is possible to arrive at a figure for its contribution by arithmetical calculation relative to the production of oil and gas overall. The Secretary of State’s submission that these are matters for decision at a relatively high level of Government, rather than either by the court or in relation to one oilfield project, is correct. The issue is essentially a political and not a legal one.

My Comment

Recent years have seen an huge increase in legal attacks funded by woke wealthy people with deep pockets against the supply of fossil fuels.  At the same time governments have loaded up regulatory regimes that impede or prevent additional development of FF energy resources. Instead of appreciating how essential are these fuels to modern societies, policy makers, and in many cases judges, are motivated by the slogan “keep it in the ground.”  As in the opinion above, shortages in fossil fuels supply are a public concern, and especially worrisome as we approach winter. Despite this, the activist strategy is to cut off supply of affordable, reliable energy even when alternatives like renewables will not replace them, and let the people do without.

At least in this ruling the judiciary got it right.

 

 

Winter Fuel Short Due to CO2 Hysteria

David Blackmon writes at Forbes Winter Is Coming: Can Energy Catastrophe Be Averted? Excerpts in italics with my bolds and added images.

Bank of America said in a note on Friday that the price for crude oil could exceed $100 per barrel over the winter and precipitate a global economic crisis, as reported by BNN Bloomberg. In its note, BofA cites the possibility of an unusually cold winter, higher aviation demand and potential gas-to-oil switching in power generation as factors that could create a further run-up in oil prices, which have already risen by almost 60% since January.

For Japan, Korea and much of Europe, natural gas prices have already climbed to levels that are considerably higher than the price for crude on a per barrel equivalent basis. Further increases could support switching from gas to fuel oil in power generation, but only where such switching is still available. Many western nations have forced the elimination of that ability due to environmental considerations as governments and companies have responded to pressures from the green lobby and the ESG investor community.

That is of course just one more example of the kinds of premature and frankly irrational energy choices governments – including the U.S. – have been making in the past few years to try to hasten this “energy transition,” forcing the replacement of reliable, high-density energy sources like fossil fuels and nuclear with low-density energy sources like wind, solar and electric vehicles powered by lithium-ion batteries.

Several MEPs (mainly Greens) hold up anti-nuclear posters at the debate.

The energy crisis in Western Europe this summer has been brought on by premature retirements of hundreds of coal and natural gas power plants in favor of massive over-reliance on wind power and, to a lesser extent, solar. Ironically, this crisis is taking place just as House Speaker Nancy Pelosi and congressional Democrats attempt to ram through their massive $3.5 “budget reconciliation” bill that is in large part designed to recreate the European model in the United States.

As Allysia Finley reported in the Wall Street Journal last week, In the past decade the U.K. and Europe have shut down hundreds of coal plants, and Britain has only two remaining. Spain shut down half of its coal plants last summer. European countries have spent trillions of dollars subsidizing renewables, which last year for the first time exceeded fossil fuels as a share of electricity production. The problem with this strategy this year has been the fact that the wind has pretty much stopped blowing in Europe, causing governments that spent the last decade retiring coal and natural gas plants to scramble to re-activate them.  European officials resorted to cleaner-burning natural gas first, and the resulting added demand for natural gas has led to record U.S. exports of LNG to Europe, which in turn has caused a spike in global LNG prices.

Thus we see the consequence of a mass decision by European governments to attempt to violate the laws of physics by trying to replace high-density energy sources with low-density energy sources now resulting in their colliding with the laws of supply and demand.

It is in the face of this looming energy crisis in Europe largely precipitated by these policy decisions that the Biden administration and congressional Democrats have spent the past week attempting to move their “budget reconciliation” bill, which is mainly a social welfare and Green New Deal funding bill. This massive piece of legislation is loaded up with hundreds of billions of dollars in new subsidies, mandates and incentives for these very same intermittent, low-density energy sources, along with new taxes and draconian regulatory actions designed to drive up the cost of fossil fuels in power generation and transportation.

It would be one thing for leaders in Washington, DC to engage in this exercise if the needed battery storage technology for those low-density energy sources existed on a wide scale. But, as I’ve documented here this year, while progress in research has been made, no such technology currently exists on a meaningful, scalable basis. Making matters even more tenuous, the producers of the array of critical minerals needed for the existing lithium-ion technology currently in limited use for power generation and essential for EVs are scrambling to figure out how they are going to meet new demand that is projected to rise by as much as 4,000 percent by 2040 for their products, according to the International Energy Agency (IEA).

Of course the “clean energy transition policies” bear some responsibility for this run-up in energy prices. Every new regulation, no matter how noble-minded, has a cost, and the “energy transition” has already demanded wave after wave of new regulation on fossil fuels. Claiming these actions bear no cost or consequence is simply absurd.

Plus, it’s not just the policies of the transition at play here. The ESG-related demands of the investor community, which have limited access to capital for fossil fuel producers and demanded that they shift big portions of their capital budgets over to “green” energy initiatives, have also played a significant role in driving up fossil fuel prices. This is not even arguable:

In fact, it’s a key part of the “green” strategy to raise the cost of fossil fuels so that these other “green” energy sources become more competitive in the marketplace.

While the news about the energy crisis focuses in on Europe right now, the truth is that this is rapidly becoming a global crisis impacting global markets. Officials like Birol and the commissioners at FERC may not want to admit it, but the truth is that just 9 months ago, crude oil was cheap, gasoline and diesel at the pump were cheap, natural gas was cheap and all were in seemingly plentiful supply. Today, just 270 days later, oil is $80 and projected to move to triple digits, gasoline at the pump costs $1 per gallon more in the U.S. than it did in January, natural gas prices have doubled in the U.S. and more than quadrupled in parts of Asia and European governments are scrambling to figure out where their supplies for the winter will be sourced.

The stark reality is that there will be no quick fixes from here, for the simple fact that none are available. The senseless policy decisions that helped create this crisis took a decade to fully implement, and will take at least that long to reverse if policymakers should decide to come to their senses. As demand for oil and natural gas rise to new global heights, both Wood MacKenzie and Rystad Energy have issued recent reports showing that the last half-decade has seen an under-investment in the finding of new reserves that runs into the hundreds of billions of dollars. That is not something that can be remedied overnight.

At the end of the day, despite all the prevailing narratives flying around, the world’s energy future will be governed as it always has: By the laws of physics, supply and demand. It is becoming fearfully evident right now that the policy decisions made by governments in Europe, the U.S. and other parts of the world during the last decade have violated all three of those immutable laws.

As a result, winter is coming, and potential energy disaster is coming with it.

 

 

 

 

 

Climate Tyranny By Way of Criminal Law

Dr. Lucas Bergkamp writes at Real Clear Energy The Legal Doctrine of “Carbon Crimes”—Torturing Law and Reason to Rid the Planet of Climate Change Deniers.  Excerpts in italics with my bolds and added images.

Abstract

The climate movement has discovered criminal law as a tool for conducting climate politics. To complement civil lawsuits against states and corporations, the movement’s activists intend to invoke torture and a newly proposed crime of “ecocide” to target corporate executives, politicians, and others who stand in the way of their preferred policies. In pushing their agenda, these activists receive assistance from the judiciary—specifically, the European Court of Human Rights.

The use of criminal law to pursue climate politics is a further step in the radicalization of the climate movement and poses a threat to economic and political freedoms, the rule of law, and democracy.

If the movement is able to realize its plans, all those who do not support ambitious climate policies would have to fear prosecution and imprisonment. Conversely, threatening criminal sanctions against politicians and corporate executives will create powerful incentives to adopt ambitious climate policies and the dominant pro-climate narrative.

Lucas Bergkamp explains how criminal law, in the climate movement’s vision, should supplement civil and administrative law to eliminate any and all opposition to its plans for the realization of a climate utopia.

European government of judges

Over several decades, the European Court of Human Rights (ECHR) has evolved into a European government in itself. Based on doctrines designed to enable it to expand its powers at its discretion, the Court has enacted a series of mandates for new laws and policies for Europe. There is little democratic control over the Court’s role in advancing progressive politics. Once the Court has spoken, national parliaments are unable to undo its pontification because a human right trumps national law; national judiciaries are compelled to execute the Court’s judgments, even if their own national law provides otherwise.

While imposing its high moral demands on executive governments, the Court believes itself to be quite exempt from any moral or legal constraints. In a previous contribution, I discussed how climate change litigation before the Court has undermined the rule of law, the separation of powers, and democracy. In this article, I focus on the Court’s role in criminalizing the climate debate. Its reckless disregard of judicial impartiality, the right to a fair trial, and judicial restraint is another manifestation of the Court’s support for the progressive movement.

The rationale supporting criminalization

The argument for criminalizing “climate denial” typically boils down to the following argument articulated by Jeremy Williams:

Given what we know and have known for decades about climate change, to deny the science, deceive the public, and willfully obstruct any serious response to the climate catastrophe is to allow entire countries and cultures to disappear. It is to rob … the poorest and most vulnerable on the planet of their land, their homes, their livelihoods, even their lives—and their children’s lives, and their children’s children’s lives. For profit. And for power…. These are crimes. They are crimes against the earth, and they are crimes against humanity.

This emotional outcry is not only an impenetrable amalgamation of factual and moral reasoning but also assumes what must be proved. To prevent disaster, rationality needs to be brought back into the analysis. Unfortunately, as the ECHR demonstrates, we cannot rely on the judiciary to do so.

“Climate emergency”

The European Court of Human Rights, to which its president refers as the “European Climate Change Court,” has used the opportunity presented by the climate litigation that it invited to take the lead in criminalizing the climate debate. It has done so in a number of ways. First, the Court’s president and one of its vice presidents have declared publicly that “we are facing a dire emergency that requires concerted action by all of humanity” and that “we will face the collapse of everything that gives us our security.” Thus, the Court’s leaders have openly and unreservedly endorsed the climate movement’s alarmist rhetoric. They have done so not based on science but on alarmist declarations by Sir David Attenborough, a well-known biologist and climate activist.

Second, to prevent any argument on the facts, the judges added: “No one can legitimately call into question that we are facing a dire emergency that requires concerted action by all of humanity.” They also committed the Court to the cause: “For its part, the European Court of Human Rights will play its role within the boundaries of its competences as a court of law, forever mindful that Convention guarantees must be effective and real, not illusory.”

No right to a fair trial for deniers

By issuing these warnings, the Court effectively closed down any debate on climate change and climate science before any trial has even begun. In doing so, it deprived defendant states of an important argument to defend themselves against allegations that their climate policies are inadequate to fight the alleged climate crisis. Before they could present the relevant scientific evidence showing that there is no such thing as climate emergency or climate crisis, the Court’s leading judges told the defendant states that they should not dare to deny.

By labeling any argument that there is no climate crisis “illegitimate,” these leading European judges, who should serve as examples of judicial impartiality, have endorsed the climate movement’s climate-denier rhetoric. This rhetoric is an inappropriate, unethical play on Holocaust denial. Simultaneously, and directly relevant to this contribution’s subject, the Court’s “illegitimacy” label also raises the specter of criminal prosecution.

There is no climate crisis

It is hard to think of any judicial conduct that shows greater partisanship and disregard for the principle of judicial impartiality than the conduct of these European human rights judges. The right to a fair trial, guaranteed by article 6 of the European Convention on Human Rights, has effectively been set aside for climate deniers. The question should be asked whether, given the opinions expressed by its leaders, the ECHR can legitimately rule in any climate case.

The Court’s denial of justice is all the more shocking in light of the science, which does not support the proposition that there is a climate crisis. The European Commission has stated: “The term ‘climate emergency’ expresses the political will to fulfil the obligations under the Paris Agreement.” In almost 4,000 pages, the recent Intergovernmental Panel on Climate Change (IPCC) AR6 report does not once employ the terms “climate crisis” or “climate emergency” because these terms do not belong to the scientific terminology (they occur only in a descriptive section on communication). Rather, they are political slogans, as the Commission suggested. To the point, the undefined “climate emergency” is an invention by activists.

Judicial threats

Corporate executives of companies deemed to be responsible for greenhouse gas emissions, politicians that do not support ambitious climate policies, and everyone else who advocates against the climate movement’s agenda would be exposed to criminal prosecution and imprisonment of up to 30 years. This is not a far-fetched interpretation of the relevant law but, as explained below, a fairly straightforward application. Obviously, the ECHR was well aware of what it was doing by slipping in “torture,” but it nevertheless felt comfortable proceeding in this manner.

Needless to say, the threat of life imprisonment is a very powerful disincentive. As an academic author for UNESCO put it:

Criminal sanctions are the most potent tools we have to mark out conduct that lies beyond all limits of toleration. Criminal conduct violates basic rights and destroys human security. We reserve the hard treatment of punishment for conduct that damages the things we hold most fundamentally valuable. Climate change is causing precisely such damage.

This seems to be exactly what the judges on the ECHR believe. Corporate executives will have to think twice about corporate climate policies and will be inclined to cave in to activists’ demands. Likewise, politicians skeptical of the current climate policies may feel compelled to give up their resistance. All other dissenters may also be inclined to choose personal security over honesty.

Economic freedom, political freedom, and freedom of speech would be obliterated.

Is this what the Court’s president means when he says that the European Convention guarantees must be “effective and real, not illusory”? The Court’s inexplicable decision to add torture to the charges in the first climate case only adds to the concern that human rights protect only those who endorse progressive causes, not those who have other political preferences.Ecocide

By invoking the crime of torture in the climate debate, the ECHR may also have intended to assist the efforts to get ecocide recognized as a crime. “Ecocide” refers to the “devastation and destruction of the environment,” but no official legal definition yet exists. For decades, greens have been trying to get ecocide recognized as an international crime—but so far, to no avail. In the last two years, however, due to the rise of the climate crisis narrative, they have made significant progress. There now is much activity aimed at persuading international organizations to legislate on ecocide.

In June 2021, an expert panel convened by the Stop Ecocide Foundation published a definition of “ecocide” intended to serve as the basis for an amendment to the Rome Statute of the ICC. Once the Rome Statute is amended to include ecocide, individuals suspected of having committed ecocide can be tried before the ICC.

Moreover, the Rome Statute applies equally to all persons, without any distinction based on official capacity; specifically, elected representatives and government officials are not exempt from criminal responsibility.

Thus, politicians, corporate executives, thought leaders, and anyone else can be subject to criminal prosecution if they express an opinion or pursue a policy deemed to be “anti-climate” that therefore may result in ecocide. In the fight against climate denial, this tool would be of incalculable value.

European Union “leadership”

The European Parliament has referred to ecocide in two recent reports and expressed the wish to recognize ecocide under EU law and diplomacy. To prepare the adoption of an EU directive on ecocide, the European Law Institute launched a project on ecocide. Taking advantage of the momentum, even before this project is finished, the ecocide movement is now pushing to get ecocide included in the EU Environmental Crimes Directive, which is currently being revised.

EU member states control a significant portion of the votes necessary for an amendment of the Rome Statute and can provide incentives to secure the additional votes necessary to get the crime of ecocide adopted. The consequences of such an amendment could be enormous if the ICC follows the example of the ECHR and jumps onto the climate activists’ bandwagon.

Climate change is ecocide

Make no mistake: while the definition of ecocide is broad and vague, the primary target of the ecocide movement is climate change. Civil liability law and human rights law give climate activists the tools to force governments and companies to comply with their demands, but this kind of litigation is expensive and takes time. The new crime of ecocide would give them a powerful instrument to shortcut the process by threatening criminal sanctions against corporate directors and officers, as well as reluctant politicians and opinion leaders, and to force them to change their ways.

Climate activists also believe that the term “ecocide” will have an emotive and stigmatizing effect that “causing climate change” does not have. As one author puts it:

The term “ecocide” sounds dramatic. It is more emotive than “contributing to pollution” or “increasing greenhouse gas emissions” or “investing in fossil fuels.” It communicates the gravity and urgency of the irreversible destruction being inflicted on the environment. It unambiguously casts major polluters as “villains,” perpetrators of a crime (emphasis added).

No protection

National laws do not protect the suspects. Under the proposed definition of the international panel, ecocide means “unlawful or wanton acts committed with knowledge that there is a substantial likelihood of severe and either widespread or long-term damage to the environment being caused by those acts.” Note that “unlawful,” which is broader than “illegal,” is the gateway to disregarding permits for emissions and compliance of activities and products with national laws.

The main trick is that this definition does not require any actual damage; knowledge of likely damage in the future is enough—which is a given, in light of the “settled science” set forth in the IPCC reports. Fundamental principles of criminal law are merely an afterthought, if they are on the radar screen at all.

Torturing human rights and criminal law

Needless to say, the ECHR’s suggestion that governments “torture” their citizens by implementing “inadequate climate policy” is both insulting to torture victims and unlawful. The inclusion of torture in a climate-policy lawsuit is the culmination of the Court’s progressive move away from a human rights adjudicator to a social policymaking institution. This activism has not only harmed the Court’s reputation as an impartial court of law but has also created serious problems for national legislatures faced with the often unhinged policy mandates imposed by the Court.

To be sure, we do have a torture problem, but it is not the European climate policymakers who are doing the torturing. Rather, the Court itself has tortured the law to fit its own ideology.

The Court tortured the European Convention on Human Rights until it confessed that it is a program for progressive politics. It tortured the right to life and several other human rights until they agreed to include within their scope a whole series of so-called positive obligations, which only the Court gets to define. Perhaps most egregious, the Court tortured the Convention until it gave the Court the right to waive essential requirements imposed by the Convention to eliminate any limits on its jurisdiction, which then allowed the Court to move forward with the first climate change case, which it so desperately wanted.The crime of climate change

The use of criminal law to pursue climate politics is a new chapter in the climate-litigation saga. Climate activists have discovered criminal law as a tremendously effective tool for climate politics. Governments and corporations can be subordinated through civil and human rights law, but to put pressure on corporate executives and politicians, criminal law is much more effective. Criminal law is the crowbar that pries open the doors to the boardrooms and the chambers where policy decisions are made.

What is remarkable is that the activists include not only the nongovernmental organizations that claim to “fight for the climate” but also Europe’s highest judges at the European Court of Human Rights. Are the limits on its authority really lifted by the self-declared crisis?

Lock them up!

In totalitarian states, political dissidents are controlled in three ways: they are removed from public life as a “danger to public order”; they are placed in psychiatric hospitals, since they suffer from mental illness; or they are imprisoned because they have committed crimes. The climate movement’s latest move pursues this third route of “delegitimization” and “denormalization” of its political opponents and those who disagree with the movement.

According to the climate movement, the alleged climate crisis would require urgent action to avert the impending catastrophe and save the planet and humanity. In its view, this requires that democracy, fundamental principles of law, and the limits of judicial power are set aside. In this struggle for survival, the climate movement has concluded that greenhouse gas emissions must be criminalized so that climate deniers can be locked up. Unfortunately, the ECHR has fallen victim to the emotional appeal of the movement’s rhetoric.

Threats to freedom

The climate movement’s strategy is clear: torture and ecocide must be part of its toolbox so that the sinners can be converted, deniers can be punished, and climate utopia can be realized. Inevitably, however, “climatism” results in the suppression of freedom and opens the path to climate totalitarianism. Ironically, the ECHR, which was created in the aftermath of the destruction of the Nazi totalitarian regime to act as a legal bulwark safeguarding individual liberty, has placed itself as the judicial enabler of this process.

See also Q&A Why So Many Climate Skeptics

 

 

Beware the Green Bubble Popping

David P. Goldman writes at Asia Times Green bubbles threaten to pop stock markets.  Excerpts in italics with my bolds.

Magical US thinking of a Green agenda financed by endless amounts of printing-press money will only end in tears

Prices for all energy commodities jumped during the past month, some by record margins, as a global energy shortage set off a scramble for gas, coal and oil. Brent crude has doubled in the past year, Newcastle coal has quadrupled, and Netherlands natural has risen seven-fold.  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.

The idea is fanciful that the world can re-direct US$100 trillion in capital investment during the next 30 years to reduce carbon emissions to zero by 2050, as the International Energy Agency has proposed. . . To put in context what this number implies, the entire free cash flow of the world’s private corporations would barely make up a third of the Global Reset investment budget.

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. The free cash flow of the oil and gas industry will rise to $50 billion next year, the highest on record. In 2015 the oil and gas industry showed negative free cash flow because it borrowed to expand production.

Now oil and gas companies are paying down debt and returning cash to shareholders rather than take hydrocarbons out of the ground.

Virtually the whole of the world’s political elite has signed on to the carbon neutrality agenda, including the government of China, which appears to believe that support for carbon neutrality (which China has pledged by 2060) will mitigate hostility to China in the West.

But the energy market suggests that the hard reality of supply constraints will overwhelm the Green agenda before it gets started.

The cost of shelter, which comprises about two-fifths of the US Consumer Price Index, continues to rise at a record pace in the United States. This hasn’t turned up in the official data, because it takes time for old rental leases to expire and new leases to be written.

But several additional percentage points of inflation are now programmed into US inflation for the next two years.

As the Fed forced down the “real” interest rate, by reducing its overnight rate to zero and by purchasing hundreds of billions of dollars in TIPS, investors were forced into stocks.

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.

A worker installs polycrystalline silicon solar panels as terrestrial photovoltaic power project starts on November 17, 2015 in Yantai, China. Photo: Getty

Updated Sept. 28 Europe Energy Stress Test Under Way

Update Sept. 28  Additional commentary in Footnote at end

Europeans are going to get a strong dose of energy cuts Greta has long called for since starting her Fridays for the Future.  Shortages of fossil fuels are in the outlook and already reflected in skyrocketing prices. Tyler Durden explains at zerohedge All Hell Is Breaking Loose In Energy Markets.  Excerpts in italics with my bolds.

By now readers are well aware that Europe is suffering from a historic gas crisis, one which according to Rabobank is now even more extreme than the US oil price shock.

And unfortunately for Europe’s population, with every passing day – and to a lesser extent hedge funds such as Statar Capital which suffered a big loss in the past few days – it’s only getting worse. As Bloomberg’s Javier Blas notes today, both UK NBP and Dutch TTF natural gas benchmarks have closed the day at their highest ever settlement level, up ~11% on the day (to a closing price equal to more than $26 per mBtu).

Natural gas prices in Europe have surged past $25 per million British thermal unit, more than 400% higher than the 2010-2020 average, and significantly higher than in the U.S., where the commodity trades at around $5 per million Btu. In Asia, liquefied natural gas has recently changed hands at around $27 per million Btu, a seasonal record high, as China has also been hit by a widespread energy crisis (see “Millions Of Chinese Residents Lose Power After Widespread, “Unexpected” Blackouts; Power Company Warns This Is “New Normal””). Also, for those who haven’t read it yet, please check out Rabobank’s extensive recap of Europe’s energy crisis which we posted over the weekend.

Europe’s energy crisis is not contained to nat gas, and as we discussed over the weekend in another flashback to the 1970s US, UK gas station pumps are running dry in British cities on Monday with vendors rationing sales as a shortage of truckers strained supply chains to breaking point. Pumps across British cities were either closed or had signs saying fuel was unavailable on Monday, Reuters reporters said, with some limiting the amount of fuel each customer could buy.

The Petrol Retailers Association (PRA), which represents independent fuel retailers accounting for 65% of all the 8,380 UK forecourts, said members had reported that 50% to 90% of pumps were dry in some areas.

A post-Brexit shortage of truck drivers as the COVID-19 pandemic eases has sown chaos through British supply chains in everything from food to fuel, raising the specter of disruptions and price rises in the run-up to Christmas. Drivers lined up for hours to fill their cars at petrol stations that were still selling fuel, albeit often rationed. There were also calls for National Health Service (NHS) staff and other emergency workers to be given priority.

Hauliers, gas stations and retailers said there were no quick fixes as the shortfall of truck drivers – estimated to be around 100,000 – was so acute, and because transporting fuel demands additional training and licensing. “We need some calm,” Gordon Balmer, executive director of the PRA, told Reuters. “Please don’t panic buy: if people drain the network then it becomes a self-fulfilling prophecy.”

Shifting from gasoline and nat gas to oil, the near-term outlook is looking even more grim. According to Trafigura, one of the world’s largest commodity trading houses, the world faces higher oil and gas prices this winter and beyond as supply struggles to catch up with fast-rising demand.

“We’re going to see higher oil prices,” Ben Luckock, Trafigura’s co-head of oil trading said in an interview with Bloomberg.

Luckock said the market was mispricing forward oil contracts for the next couple of years because traders hadn’t yet woken up to the fact the supply-demand balance will remain tight for some time. Translation: even higher prices are coming with no easing in sight.

“I struggle to see anything but higher prices going forward in the next two years,” he said, one day after Goldman hiked its price target, now predicting that Brent would hit $90 some time in December. On Monday, Brent crude for immediate delivery surged toward $80 a barrel, setting its highest price in nearly three years.

On natural gas, he said prices could shoot up even more this winter if cold weather forces demand higher in Europe and Asia.

The bullish outlook comes as oil demand fast recovers toward its pre-pandemic level, with most traders expecting that consumption will reach the 2019 by early-to-mid 2022. As demand rebounds, supply has struggled to keep up: U.S. shale companies have kept a lid on spending, preferring to pay dividends to shareholders. With U.S. shale reacting slowly to higher prices, the OPEC+ oil cartel has been able to keep control of the market.

The U.S. shale industry is showing very strong discipline. Oil prices are roughly double what they were a year ago and despite that we’re not seeing a huge increase in drilling,” Luckock said.

Luckock said that it was difficult to see lower natural gas prices this winter in Europe, despite the commodity trading at a record high already: “If it’s a cold winter in Europe or Asia, we have a big problem,” he said. “If it’s cold, and on top, it isn’t windy, then we have a much bigger problem. We will face shortages.”

Notably, Luckock said he was skeptical that Russia, the biggest gas supplier to Europe, was intentionally tightening the market for political gain, suggesting that Moscow was already pumping as much gas as it could right now.

“It’s easy to say that’s politically motivated, but I think it’s simpler than that: Russia is facing maintenance in many gas fields, very low domestic inventories, substantially increased flows to Turkey, and Gazprom is struggling to increase production,” he said.

Footnote: Commentary from Bloomberg Green and National Review

Ewa Krukowska at Bloomberg Green Energy Crisis Puts World’s Most Ambitious Climate Plan to Test.  Excerpts in italics with my bolds.

  • Soaring power and gas prices shoot up EU political agenda
  • Governments across EU fear backlash over costs of green shift

Natural gas and power prices are surging to all-time highs in the 27-nation region, as the bloc’s economies rebound from the Covid-19 pandemic. The surge in demand comes amid limited gas imports from Norway and Russia, with some countries accusing Moscow of manipulating supplies. At the same time, the EU strategy to accelerate emissions cuts in every sector from transport to manufacturing and agriculture boosted demand for carbon permits, with prices more than doubling over the past two years to new records.

The green package unveiled in July aims to align the economy with a 2030 stricter binding goal of reducing emissions by at least 55% from 1990 levels. The laws need to be approved by the European Parliament and member states in the Council of the EU, with each institution entitled to amending the plan, in a process likely to take around two years.

But for Europe’s lower-income countries — as well for the continent’s energy-intensive industries — the pain of any transition will be significant, and the EU will be under pressure to help cushion the blow from the current price jump.

But European governments are limited in what they can do to tackle the power crunch — without making their climate goals even harder to reach.

“It feels unlikely that politicians will reverse track and go back to coal generation or make changes to the approach to carbon,” said John Musk, an analyst at RBC Europe Ltd. “It is hard to see what measures can be adopted to alleviate near term supply-demand constraints on gas and power. There are likely be a couple of difficult years to navigate in terms of consumer prices and there may have to be some measures to help consumers here and there.”

Andres Stuttaford adds an essay at National Review The Gathering Storm (But with Not Enough Wind): Europe’s Energy Mess Gets Worse — a Lesson the U.S. Looks Set to Ignore.  Excerpts in italics with my bolds.

Instead of looking at these alternative approaches, the EU, the U.K., and, soon enough, the U.S., seem set on what is looking more and more like a headlong rush into disaster.

To understand why this might be, it is important to understand that for many climate warriors a “bloody hard” transition is a feature, not a bug.

I wrote about this a week or so back:

Concentrating on resilience and adaptation do not follow the millenarian narrative that is an unmistakable subtext of the message now being sent out by many climate warriors, whether inside government, linked to government, or outside it. Underpinned by the expectation of apocalypse, this narrative, which has repeatedly demonstrated its dangerously persuasive power over the centuries, is based on the thought that a wicked humanity faces punishment and must, with the assistance of a morally superior, enlightened vanguard, be made to change its dreadful (often self-indulgent) behavior. Adaptation and resilience, by contrast, offer the prospect that our species will muddle on through, living pretty much as it has been doing, except even better, and without donning the hairshirt integral to so many climate warriors’ faith. Theirs has the characteristics of a religion, and there is little that is original about it. Pointless asceticism comes with the territory.

Questioning whether those setting the climate agenda are going about things the right way is not a matter of climate “denial,” but simple common sense. It is not, however, a conversation that the climate establishment wants to have. Fundamentalists are like that.

They may not want to have that conversation, but, as winter approaches, the growing crisis in Europe suggests that it is a conversation that may be difficult to avoid.

 

 

 

Europe Energy Stress Test Under Way

Update Sept. 28  Additional commentary in Footnote at end

Europeans are going to get a strong dose of energy cuts Greta has long called for since starting her Fridays for the Future.  Shortages of fossil fuels are in the outlook and already reflected in skyrocketing prices. Tyler Durden explains at zerohedge All Hell Is Breaking Loose In Energy Markets.  Excerpts in italics with my bolds.

By now readers are well aware that Europe is suffering from a historic gas crisis, one which according to Rabobank is now even more extreme than the US oil price shock.

And unfortunately for Europe’s population, with every passing day – and to a lesser extent hedge funds such as Statar Capital which suffered a big loss in the past few days – it’s only getting worse. As Bloomberg’s Javier Blas notes today, both UK NBP and Dutch TTF natural gas benchmarks have closed the day at their highest ever settlement level, up ~11% on the day (to a closing price equal to more than $26 per mBtu).

Natural gas prices in Europe have surged past $25 per million British thermal unit, more than 400% higher than the 2010-2020 average, and significantly higher than in the U.S., where the commodity trades at around $5 per million Btu. In Asia, liquefied natural gas has recently changed hands at around $27 per million Btu, a seasonal record high, as China has also been hit by a widespread energy crisis (see “Millions Of Chinese Residents Lose Power After Widespread, “Unexpected” Blackouts; Power Company Warns This Is “New Normal””). Also, for those who haven’t read it yet, please check out Rabobank’s extensive recap of Europe’s energy crisis which we posted over the weekend.

Europe’s energy crisis is not contained to nat gas, and as we discussed over the weekend in another flashback to the 1970s US, UK gas station pumps are running dry in British cities on Monday with vendors rationing sales as a shortage of truckers strained supply chains to breaking point. Pumps across British cities were either closed or had signs saying fuel was unavailable on Monday, Reuters reporters said, with some limiting the amount of fuel each customer could buy.

The Petrol Retailers Association (PRA), which represents independent fuel retailers accounting for 65% of all the 8,380 UK forecourts, said members had reported that 50% to 90% of pumps were dry in some areas.

A post-Brexit shortage of truck drivers as the COVID-19 pandemic eases has sown chaos through British supply chains in everything from food to fuel, raising the specter of disruptions and price rises in the run-up to Christmas. Drivers lined up for hours to fill their cars at petrol stations that were still selling fuel, albeit often rationed. There were also calls for National Health Service (NHS) staff and other emergency workers to be given priority.

Hauliers, gas stations and retailers said there were no quick fixes as the shortfall of truck drivers – estimated to be around 100,000 – was so acute, and because transporting fuel demands additional training and licensing. “We need some calm,” Gordon Balmer, executive director of the PRA, told Reuters. “Please don’t panic buy: if people drain the network then it becomes a self-fulfilling prophecy.”

Shifting from gasoline and nat gas to oil, the near-term outlook is looking even more grim. According to Trafigura, one of the world’s largest commodity trading houses, the world faces higher oil and gas prices this winter and beyond as supply struggles to catch up with fast-rising demand.

“We’re going to see higher oil prices,” Ben Luckock, Trafigura’s co-head of oil trading said in an interview with Bloomberg.

Luckock said the market was mispricing forward oil contracts for the next couple of years because traders hadn’t yet woken up to the fact the supply-demand balance will remain tight for some time. Translation: even higher prices are coming with no easing in sight.

“I struggle to see anything but higher prices going forward in the next two years,” he said, one day after Goldman hiked its price target, now predicting that Brent would hit $90 some time in December. On Monday, Brent crude for immediate delivery surged toward $80 a barrel, setting its highest price in nearly three years.

On natural gas, he said prices could shoot up even more this winter if cold weather forces demand higher in Europe and Asia.

The bullish outlook comes as oil demand fast recovers toward its pre-pandemic level, with most traders expecting that consumption will reach the 2019 by early-to-mid 2022. As demand rebounds, supply has struggled to keep up: U.S. shale companies have kept a lid on spending, preferring to pay dividends to shareholders. With U.S. shale reacting slowly to higher prices, the OPEC+ oil cartel has been able to keep control of the market.

The U.S. shale industry is showing very strong discipline. Oil prices are roughly double what they were a year ago and despite that we’re not seeing a huge increase in drilling,” Luckock said.

Luckock said that it was difficult to see lower natural gas prices this winter in Europe, despite the commodity trading at a record high already: “If it’s a cold winter in Europe or Asia, we have a big problem,” he said. “If it’s cold, and on top, it isn’t windy, then we have a much bigger problem. We will face shortages.”

Notably, Luckock said he was skeptical that Russia, the biggest gas supplier to Europe, was intentionally tightening the market for political gain, suggesting that Moscow was already pumping as much gas as it could right now.

“It’s easy to say that’s politically motivated, but I think it’s simpler than that: Russia is facing maintenance in many gas fields, very low domestic inventories, substantially increased flows to Turkey, and Gazprom is struggling to increase production,” he said.

Footnote: Commentary from Bloomberg Green and National Review

Ewa Krukowska at Bloomberg Green Energy Crisis Puts World’s Most Ambitious Climate Plan to Test.  Excerpts in italics with my bolds.

  • Soaring power and gas prices shoot up EU political agenda
  • Governments across EU fear backlash over costs of green shift

Natural gas and power prices are surging to all-time highs in the 27-nation region, as the bloc’s economies rebound from the Covid-19 pandemic. The surge in demand comes amid limited gas imports from Norway and Russia, with some countries accusing Moscow of manipulating supplies. At the same time, the EU strategy to accelerate emissions cuts in every sector from transport to manufacturing and agriculture boosted demand for carbon permits, with prices more than doubling over the past two years to new records.

The green package unveiled in July aims to align the economy with a 2030 stricter binding goal of reducing emissions by at least 55% from 1990 levels. The laws need to be approved by the European Parliament and member states in the Council of the EU, with each institution entitled to amending the plan, in a process likely to take around two years.

But for Europe’s lower-income countries — as well for the continent’s energy-intensive industries — the pain of any transition will be significant, and the EU will be under pressure to help cushion the blow from the current price jump.

But European governments are limited in what they can do to tackle the power crunch — without making their climate goals even harder to reach.

“It feels unlikely that politicians will reverse track and go back to coal generation or make changes to the approach to carbon,” said John Musk, an analyst at RBC Europe Ltd. “It is hard to see what measures can be adopted to alleviate near term supply-demand constraints on gas and power. There are likely be a couple of difficult years to navigate in terms of consumer prices and there may have to be some measures to help consumers here and there.”

Andres Stuttaford adds an essay at National Review The Gathering Storm (But with Not Enough Wind): Europe’s Energy Mess Gets Worse — a Lesson the U.S. Looks Set to Ignore.  Excerpts in italics with my bolds.

Instead of looking at these alternative approaches, the EU, the U.K., and, soon enough, the U.S., seem set on what is looking more and more like a headlong rush into disaster.

To understand why this might be, it is important to understand that for many climate warriors a “bloody hard” transition is a feature, not a bug.

I wrote about this a week or so back:

Concentrating on resilience and adaptation do not follow the millenarian narrative that is an unmistakable subtext of the message now being sent out by many climate warriors, whether inside government, linked to government, or outside it. Underpinned by the expectation of apocalypse, this narrative, which has repeatedly demonstrated its dangerously persuasive power over the centuries, is based on the thought that a wicked humanity faces punishment and must, with the assistance of a morally superior, enlightened vanguard, be made to change its dreadful (often self-indulgent) behavior. Adaptation and resilience, by contrast, offer the prospect that our species will muddle on through, living pretty much as it has been doing, except even better, and without donning the hairshirt integral to so many climate warriors’ faith. Theirs has the characteristics of a religion, and there is little that is original about it. Pointless asceticism comes with the territory.

Questioning whether those setting the climate agenda are going about things the right way is not a matter of climate “denial,” but simple common sense. It is not, however, a conversation that the climate establishment wants to have. Fundamentalists are like that.

They may not want to have that conversation, but, as winter approaches, the growing crisis in Europe suggests that it is a conversation that may be difficult to avoid.