Posted on 03/07/2022 9:22:15 AM PST by blam
European natural gas futures soared Monday after reports the Biden administration was considering curbs on Russian crude imports sent shock waves across commodity markets.
Brent surged to $137/bbl and quickly pared gains to trade near $125/bbl around 0630 ET. The focus is European natgas futures, Dutch gas, which jumped as high as 64% to 335 euros a megawatt-hour — the equivalent of around $600 a barrel of oil.
Chaotic energy markets came after the US Secretary of State Antony Blinken told NBC this past weekend that the Biden administration is in “very active discussions” with European leaders to restrict Russian oil imports.
Ole Hansen, head of commodity strategy at Saxo Bank A/S, told Bloomberg he’s at a “lost for words” for the latest price action of natgas. “Margin calls and very illiquid and uncertain markets driving this move,” he said.
Bloomberg notes that EU GDP could be slashed by as much as 1% or 2.2% annually should Russia’s natgas flows drop to zero. Even in today’s high price environment, the continent is expected to take a 0.6% hit. To ensure energy security, EU leaders have accelerated renewable energy projects and are also talking with other energy exporters, such as the US, Qatar, Norway, Egypt, Algeria, and Azerbaijan, to meet their natgas needs.
Even though spring is less than two weeks away, heating demand is still elevated, and energy inflation is crushing the pocketbooks of households across the continent. Also, one energy provider ceased to provide heating oil to the parliament building of Bosnia and Herzegovina in Sarajevo because of soaring prices, newspaper Faktor reported, which means the facilities are currently without heat.
As the Russian invasion threatens to reduce or cut off Russian natgas supplies—either in the form of sanctions or Moscow’s retaliation to sanctions—Wood McKenzie detailed last week that Europe can survive the next winter without Russian gas. However, prices would remain extraordinarily high and would be anything but wealth-destroying for households and businesses.
“From record lows at the start of winter, storage levels have now re-enter[ed] their five-year range, albeit on the lower side, and are on track to be in a more comfortable position by the end of March,” Kateryna Filippenko, principal analyst, Europe gas research, at WoodMac, said.
“It is our current assessment that the EU can get through this winter safely,” Filippenko. But what about next? Natgas supplies on the continent are at low levels, and natgas injections begin at the end of March and early April to resupply stockpiles.
If Russian natgas flows remain low and the West bans Russian energy imports, the EU better find new suppliers quickly, or energy inflation will continue to wreak havoc.
I’m sooo glad I made my house all-electric a year ago.
More windmills! More solar plants! More Green New Deal! It’s the way to the future!
Ha ha.
They made their bed.
Their all precious European Onion can save them.
You dont think your electric rates wont go up?
Wind and solar are way down the list, though they tend to work well in specific geographical areas under certain conditions. Palm Springs, California is the poster child for wind power; New Mexico for solar power. Both due to specific geographical and climatic conditions not prevalent everywhere.
Think of it as me wanting my family to be more energy independent like Trump had American energy independent. About the only way the Dims hurt our budget with energy policies now is through higher gas prices.
Golly. If only there was some way to harness domestic supplies and sell the excess.
Then these morons should fire up their mothballed nuke plants like Elon said. Makes sense to me.
Help me out here. The solar panels were free? Free installation and hookup as well? If not, shouldn't their costs be included into your monthly energy expenses?
Their Leaders(LOL) will be like Biden and try to buy someplace else
Their leaders would rather get “likes” on twitter than serve their own population.
Unfortunately, your electricity is probably generated by nat gas... heating water... turning turbines....
If “free” it might be some kind of lease where a lean is issued against the property until the system is paid off. They probably take their cut of the energy savings.
Sort of like a second loan against the property. Could make selling the home interesting.
I am not an expert but that might be the way some folks into it “free” or cheaply. Remember: nothing is free.
The timing is fortunate. Europeans know how to make sacrifices, and this would be a minor one. However, absent a long term solution, the same thing will happen next fall. I don’t see a long term solution while the smartest advisor in the room is little girl Greta. They need to realize that they were fooled by Russian FUD on nuclear energy and try to spin up those plants back up right away.
A the wages of sin. Fight the Great Hunter Biden war and pay higher gas prices, or let the forces of autocracy roll over the forces of corruption. Choices, choices....
You really believe that, don't you?
Let's say power rates and natural gas rates go up only an understandable 3% inflation rate. If so, in about a year to a year and a half the HELOC + power bill will be about the $300/month I was paying before (no more pulling from the HELOC to keep the energy portion of my budget a steady $300). Also, the overall system will be paid off near the end of the 10th year, possibly halfway through the 11th year. That includes paying interest on the HELOC and also a slight degradation in my system's throughput on my batteries (19 year warranty guaranteed to operate 50% as well on the last year) and solar panels (25 year warranty still going 70% strong at the end).
Obviously, if the energy rates keep skyrocketing like the Dims every now and then tell us they'll make happen, it'll pay for itself sooner.
On the months that my HELOC + power bill is less than $300 (hello, spring) I put the excess into a small investment account (why not, with the interest rate on the HELOC so low?). So far that's not much, but it ought to make the payoff time happen sooner (when the investment balance is as much as the HELOC balance I'll pay off the HELOC, doing it a lot sooner than if those months I had excess was going to pay extra on the HELOC).
True that. Obama made my power company shut down at least one coal plant and replace it with a natural gas one -- a process that cost a beeelyuuun dollars and is put into the power bill as a rider per kWh -- spread out across many years. That also means Brandon's hiking of natural gas prices impacts power rates (technically, it increases a rider put into the power bill so the "official" rate isn't increased, but our overall charge per kWh is). That's one of the main reasons I went with solar and converted my two natural gas appliances to electric.
If I could drill my own natural gas I would -- it's a very efficient fuel. But I can't. The only energy I can control myself is solar. So that's my instrument to free my budget from Dim control-freaks, at least as much as I can. Particularly as I head into retirement soon and want a hedge against at least some of the runaway inflation that's hurting seniors.
Germany seems to possibly be waking up some. They are talking about new LNG facilities and maintaining the three remaining nuclear plants in operation. Meantime they will be burning a lot of coal, greenies be dammed.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.