Europe has made it through the winter largely without incident: there were no major blackouts or power outages, and fears of large-scale civil unrest did not come to pass. What’s more, the price of natural gas – which in August was more than 18 times higher than its recent historical average – is now a mere 2.5 times higher.
That’s the good news.
Here’s the bad. We didn’t avoid catastrophe thanks to wise and far-sighted choices on the part of our leaders. We basically got lucky. The winter of 2022/23 was one of the warmest in recorded history, dramatically reducing the demand for natural gas. Had the temperature been normal, things could have gotten fairly dicey.
There’s more bad news. Keeping the lights on and the gas burning didn’t come cheap. As of September last year, European countries had earmarked €768 billion for energy subsidies. OECD countries (of which Europe comprises the lion’s share) spent about 18% of GDP on energy in 2022, compared to only 10% the year before.
As an apocryphal quote has it, “A billion here, a billion there, and pretty soon you’re talking about real money.” Just how much is €768 billion?
One potential yardstick is the cost of reconstruction for Ukraine, which in December was estimated at €500 billion and may now be as high as €600 or €700 billion. To be clear: this isn’t some estimate of the ‘total cost of the war’ – which would be far, far higher. It’s just the cost of reconstruction.
Nonetheless, it implies that the amount European countries have earmarked for energy subsidies would be enough to repair all the damage to Ukraine’s buildings and infrastructure that’s been sustained since the start of the war – a war that has seen whole towns reduced to rubble.
As the analyst Ralph Schoellhammer notes, European countries imported more LNG last year than Japan, South Korea and China combined. Yet this is set to change as China’s economy comes roaring back after the lockdown hiatus.
While the creeping global recession may temper demand for LNG, rising industrial activity in China will have the opposite effect. Keeping a lid on European gas price thus requires ongoing ‘demand destruction’ – a fancy way of saying that factories will have to make do with less. (As of December, industrial gas demand is about 25% below the 2013–2019 average.)
Europe’s energy crisis still isn’t over. But we’re admittedly in a better position that I’d thought we’d be – owing mainly to warmer weather.
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€768 billion for energy subsidies divided by 500 million people is just over €1,500 per person.
For a family of 4 that’s €6,000.
One way or another we’re paying for it. If we paid it directly through our consumption, it would all go to the cost of the energy. But if it’s done through subsidies, by governments, then there is all layers of bureaucracy to pay for, plus the corruption along the way.
And then people have the balls to say that free market capitalism is failing. It isn’t failing, it’s’ being sabotaged and destroyed.
There has not been a “free market” in energy for some time. Once we signed the Climate Change Act in 2008 (Miliband), government started to interfere in energy. We started to build and subsidise wind and sun and put environmental regulations on coal and gas so as to make those fossil fuels more expensive. They picked winners and losers. The wind and the sun were the winners and coal and gas were the losers. As a result energy prices were rising 10-15% year on year. So long before the Ukraine situation we were seeing prices rising year after year and the Ukraine war has actually let government off the hook, because people seem to have forgotten all that pretend to save the planet stuff that went on before the Ukraine war and they mostly only can see the current situation where the war is deemed to be responsible for all of it. We used to have a Department of Energy. But after 2008 it became the Department of Energy and Climate Change, where energy policy was to be dictated by what is assumed to be true about, or more to the point what governments pronounced was true about climate. “Official Science” rather than “Science”
I can’t see any good news tbh. Better to have an acute crisis now to expose the folly and evil of our energy policies.
Where are you getting gas prices from?
Looking at https://tradingeconomics.com/commodity/natural-gas and elsewhere it’s clear that prices right now are well below averages over the past 10 years.
Yes, those are local natural gas prices in the US. Natural gas prices vary greatly around the world, because unless there’s a pipeline it’s an awkward and expensive commodity to transport.
Ah yes, pipelines.
That’s US natural gas prices. EU natural gas prices are here. But you don’t have to take my word for it. Writing in Bloomberg today, Javier Blas notes that “gas prices are down from their peak, but still elevated” and “European companies face a long-term loss of competitiveness”.
“Net Zero” demands that their competitiveness be destroyed.
I’m a gas trader and April TTF is at 42 EUR./MWh… that is 2-3 times higher than over the past 10 years.
Don’t you just love the insane Net Zero.
“As of December, industrial gas demand is about 25% below the 2013–2019 average.”
That’s a lot of people out of work.
To think we have all that natural gas, coal and oil beneath our feet and under the sea around us and we aren’t using it; all the while we’re impoverishing ourselves. It’s akin to a wealthy old man locking himself up in his home and starving himself to death. Or rather being locked up in our homes by a moronic, inhumane regime, gripped by an idée fixe. Hmm… where have I seen that happen lately?!
Correct——–Anti Human, Anti Capitalist policies from the school of No human impact on the planet whatsoever.
I thought Britain had one of its coldest Winters? But it does illustrate the point, there is no ‘The Earth’s Climate’ there are numerous zones which vary across the Planet’s surface.
The claim of ‘climate change’ that all climate zones will change in the same way on the same day is bogus… ditto ‘The Earth’s Temperature’.
The earth ofcourse does not have a temperature. All temperature is local. You can record a temperature anywhere you put a thermometer. But this idea that you can add all these temperatures up to conjure up some number that we call “global average temperature” is FALSE. There is no such thing as a global temperature. And in the world of climate change that is not what they do anyway. They use anomalies by comparing temperatures to a 30 year period and how temperatures deviate from that . Ofcourse if you chose a different 30 year period then your result would be entirely different.
By the way the European spending frenzy bid up prices to the extent that poor countries (eg Pakistan) could not afford LNG. In other words printing euros or pounds simply meant the crisis was palmed off onto poor brown people… guess they are used to being poor, so that’s ok. Meanwhile, let’s talk about equity and “fairness”…
And STILL the Eco Nutters in the Establishment/Government refuse to exploit our oil, gas and coal reserves.
I wonder when “our” Government will tell us WE have a duty to pay for Ukraine to be reconstructed?
“The winter of 2022/23 was one of the warmest in recorded history, dramatically reducing the demand for natural gas. Had the temperature been normal, things could have gotten fairly dicey.”————-This is a very dodgy statement. —The difference between the alleged “warmest year in recorded history” and “normal” is only a matter of hundredths of a degree. This statement implies that people with gas central heating were able to detect the undetectable and as a result turned down their thermostats. That is absurd. People were well aware of the rising price of gas before the winter of 22/23 even started and had already been discussing how they could save money by turning things off or down and how they would wear extra jumpers etc. They did not turn their heating down because they felt warmer than in some previous years by a faction of a degree.