A story of economic suicide in the face of resource depletion
In the past two installments (here & here) we have seen how the geology driven decline in coal production in Germany has led to an increase in natural gas consumption and black coal imports. Now, that Russian coal (50% of German imports) has been sanctioned as of August, and that a range of irresponsible policy decisions (combined with an outright attack on German infrastructure) have led to a 55% loss in gas imports, deindustrialization of Germany seems to be an almost certainty. The killer blow, though, has not arrived yet: the loss of diesel fuel supplies.
Energy is the economy. No energy — no economy. Losing of a half of industrial fuel imports (black coal and gas), will eventually lead to a similar loss of German industrial output over time. As we have seen these fuels can be replaced only in part by very expensive and rather sporadic LNG shipments and an increase in low quality domestic lignite production. This means that while the lights and heat will most probably stay on for most of German residents (at least to those who can afford to pay for them), locally produced goods requiring a lot of energy (like aluminum, glass, steel, fertilizer, paper, chemicals etc.) will have to be replaced with imports — leaving an impoverished nation suffering from high inflation behind. Whether intentionally or not, the initially rejected proposal made by the United States Secretary of the Treasury Henry Morgenthau Jr. in a 1944 seems to be slowly becoming a reality.
…click on the above link to read the rest…
