"Lights Out!"
by Bill Bonner
Paris, France - "Europe is in a tight spot. It put itself there. It shut down its economy in the Covid Panic. It kept its interest rates way too low, for way too long. It aims to rid itself of fossil fuel, upon which its economy and its living standards depend. And now, in its misbegotten proxy war with Russia, it faces General Winter – Russia’s traditional ally.
We are here in Paris… enjoying a short holiday… and just finishing a $110 breakfast. Consumer prices are almost all, to some measure, dependent on energy. And Europe’s most important source of energy is Russia. Now that the Russians have cut off, indefinitely, gas coming from the Nord Stream 1 pipeline, prices are on the rise. Consumer prices in England, for example, are expected to rise over 20%. Here’s Bloomberg: "Soaring energy bills are threatening to put six in 10 British manufacturers out of business, according to a survey that lays bare the extent of the crisis facing the next prime minister. “The current crisis is leaving businesses facing a stark choice,” the report said. “Cut production or shut up shop altogether if help does not come soon.”
And this from The Sun: "SEVEN in ten pubs could shut for good this winter because of rising energy costs, a survey reveals. Thousands of landlords already rocked by repeated lockdowns are teetering on the brink following a doubling in gas and electricity prices."
Another Curve to “Flatten”: Germany is shutting down its factories too. Its citizens are urged to turn off the lights, turn down the thermostat, and bathe in cold water. The French, meanwhile, are planning to ration electricity… but they’re also applauding this opportunity to shift to ‘green energy,’ as if it were possible to quickly replace Russian gas with windmills and solar panels.
Even level-headed Sweden, which resisted much of the Covid madness, has succumbed to anti-Russian propaganda. Aljazeera: "Prime Minister Magdalena Andersson warned that Sweden was facing the prospect of a “war winter” because of Europe’s energy crunch… Speaking to reporters on Saturday, Andersson said [financial] guarantees were aimed at giving energy groups “the breathing room that is needed.”
And now, from the Covid Panic Playbook, Ursula von der Leyen, President of the European Commission, says the EU will propose a "mandatory target for reducing electricity use at peak hours" in order to "flatten the curve."
We’ve enjoyed using power, on-demand, when we wanted it, all our lives. Forcing us to stop is like downsizing packages or printing money – another subtle form of impoverishment. But it’s for a good cause, right? The feds say that lower output of carbon dioxide will mean lower surface temperatures on Planet Earth; ‘it will be worth it,’ they say. But we don’t yet know what the price will be (wearing sweaters in the winter… or 100 million dead?)
Goldman Sachs put out a report this week, guessing about what cutting off Russian gas will do to Europe’s consumers: "In our view, the market continues to underestimate the depth, the breadth and the structural repercussions of the crisis – we believe these will be even deeper than the 1970s oil crisis. At current forward prices, we estimate that energy bills will peak early next year at c.€500/month for a typical European family, implying a c.200% increase vs. 2021. For Europe as a whole, this implies a c.€2 [trillion] surge in bills, or c.15% of GDP."
Earnest Planet Savers: While cutting off fossil fuel supplies to Europe will purge some carbon dioxide from the air, we don’t know if any particular act of purgery will make any difference at all. If we trade in our old F150 Ford truck for an electric model, will it reduce the heat of a Maryland summer by 1/100th of a degree? Or not at all? Or will we just sit in a long line waiting for a charge… like the Poles now sleeping in their cars at coal mines waiting for a sack of the dirty, old-fashioned fuel? And will our power plants end up running on coal, too, because the windmills can’t keep up?
Nor do we know what will happen if all goes ‘according to plan?’ Let’s say we all go along with Janet Yellen and rid the world of dependence on fossil fuel. And let’s say we pay the price – whatever it is… perhaps doubling the real price of food and energy… perhaps 100 million early deaths from cold or malnutrition (in areas of the world where people are already living on the edge)… and then, what a shame it would be if arriving at the water's edge… like the thousands of innocents in the ‘Children’s Crusade’ in 1212… the seas fail to part! What a shame if … despite all our sacrifices and suffering… the climate keeps changing anyway. What a pity if Planet Earth doesn’t really care what we think or what we do.
But the ‘we’ and the ‘our’ hide a great many distinctions and flimflam. Like so many Great Campaigns in history, the costs are likely to fall primarily on the poor, the weak… and the children. The price of energy could double; but the ‘deciders’ won’t have to explain to their children why they can’t afford heat. Janet Yellen… Ursula von der Leyen… Hillary Clinton – how many of the earnest Planet Savers will be forced to choose between feeding children or paying rent? Will any of them wait in long lines to recharge their electric cars… or buy a gallon of gasoline? Will their private jets be grounded? Will their café lattes become unaffordable?
And then… when the campaign to alter the world’s temperatures fails… will they own up? Will they gush tears, like Robert McNamara, finally admitting that ‘we’ had killed a million people in Vietnam for nothing? Will they admit that they didn’t know what the hell they were doing?"
Related:
“We will not supply gas, oil, coal, heating oil
- we will not supply anything,” Putin said.
"Putin Threatens to Let Europe ‘Freeze’ Over Winter,
Raising Risk of Energy Rationing"
by Holly Ellyatt
"Europe was already facing a difficult and unpredictable winter when it came to its energy supplies as it looks to phase out all Russian imports. But Russian President Vladimir Putin on Wednesday again threatened to completely stop all supplies, a move which he hinted would leave Europe to “freeze.”
Russia has already halted gas supplies to the region citing technical issues on the Nord Stream 1 pipeline, leaving the region vulnerable as it tries to replenish energy storage ahead of the colder months.
Responding to EU proposals to implement price caps on Russian energy imports, Putin told business leaders in Vladivostok that Russia could yet decide to rip up existing supply contracts. “Will there be any political decisions that contradict the contracts? Yes, we just won’t fulfill them. We will not supply anything at all if it contradicts our interests,” Putin said at the Eastern Economic Forum in Russia’s far east. “We will not supply gas, oil, coal, heating oil - we will not supply anything,” Putin said. “We would only have one thing left to do: as in the famous Russian fairy tale, we would let the wolf’s tail freeze,” he said.
Russian newspaper Pravda describes the tale as involving a cunning fox who made a stupid wolf catch fish in the frozen river by putting his tail into an ice hole. “The fox would hop around the desperate and hungry wolf saying “freeze, freeze, the wolf’s tail” until the ice hole froze trapping the wolf in the ice. Men from the village then came and beat the wolf for all the bad things that he had done to them in summer. The wolf struggled and escaped, but his tail was left in the frozen ice hole,” Pravda said.
Energy rationing: Putin’s threat to halt all supplies raises the risk of energy rationing in Europe this winter. The EU has already called upon its members to voluntarily reduce their gas consumption by 15% in the fall and winter but that might not be enough to allay the need for restrictions on gas use.
A number of European governments have announced measures to protect citizens from rocketing energy bills. In the meantime, Western nations are trying to put pressure on Russia’s energy revenues, which they say are funding the unprovoked invasion of Ukraine, by proposing price caps on Russian oil and gas.
European Commission President Ursula von der Leyen on Wednesday described the situation facing Europe as “extraordinary, because Russia is an unreliable supplier and is manipulating our energy markets.” She said the Commission would put forward immediate measures to help consumers, including a mandatory target for reducing electricity use at peak hours, a cap on revenues of companies producing electricity with low costs, and other plans to share the burden of energy price rises.
“Low carbon energy sources are making unexpected revenues, which do not reflect their production costs. It is now time for consumers to benefit from the low costs of low carbon energy sources, like renewables,” von der Leyen said in a statement, saying fossil fuel companies should also contribute to easing pressures on consumers. “Oil and gas companies have also made massive profits. We will therefore propose a solidarity contribution for fossil fuel companies. Because all energy sources must help address this crisis.”
Von der Leyen said energy utility companies must be supported to cope with the volatility of the markets and proposed a cap on Russian gas. “The objective here is very clear. We must cut Russia’s revenues which Putin uses to finance this atrocious war against Ukraine.” At the beginning of the war, she noted that the EU imported around 40% of its gas from Russia. It had reduced that level down to 9% of its gas imports, she said. EU energy ministers are set to meet on Friday to discuss the proposals outlined by the Commission."
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