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Germany’s Energy Crisis About To Get Even Worse As Rhine Water Levels Plummet

Germany’s Energy Crisis About To Get Even Worse As Rhine Water Levels Plummet

What has already been a year from hell for Germany, which is suffering energy hyperinflation as a result of Europe’s sanctions on Russia, and which is “facing the biggest crisis the country has every had” according to the president of the German employers association, is about to get even worse as the declining water level of the Rhine river, which has historically been a key infrastructure transit artery across Germany, continues to fall and as it does, the flow of commodities to inland Europe is starting to buckle threatening to make an already historic crisis even worse.

The alarming lack of water is contributing to oil product supply problems in Switzerland and preventing at least two power plants in Germany from getting all the coal they need, and what’s more, the continent’s sizzling summer temperatures are forecast to climb even higher in the coming week, leading to even lower water levels.

The 800-mile (1,288-kilometer) Rhine river runs from Switzerland all the way to the North Sea and is used to transport tens of millions of tons of commodities through inland Europe. But with water levels at their lowest for the time of year in 15 years, there is a limit how much fuel, coal and other vital cargo that barges can carry up and down the river.

Low water levels on the Rhine River mean that barges hauling middle distillate-type oil products – typically gasoil/diesel – past Kaub in Germany, are limited to loading about 30% of capacity, according to maritime brokerage services firm Riverlake.

A barge loading in the energy hub of Amsterdam-Rotterdam-Antwerp (or ARA), which can haul 2.5k tons when fully laden, is restricted to taking on about 800 tons if sailing to destinations beyond Kaub…

…click on the above link to read the rest of the article…

European Power Prices Spike As Heat Dome Strains Grid 

European Power Prices Spike As Heat Dome Strains Grid 

European day-ahead power prices continue to soar for the third day due to an early-season heat wave driving up cooling demand, lack of renewable energy generation, declining nuclear power, and soaring natural gas costs.

Large swaths of Europe over the weekend experienced temperatures above 100 degrees Fahrenheit (38 Celsius). The hottest temperatures were from Spain to Germany to France.

Bloomberg notes power grids were under stress as wind generation in Germany and Italy plunged, forcing the need to increase the capacity of fossil fuel power generators to make up for the lost power. This placed a bid under electricity prices as the cost to generate power soars because of tightening supplies due to declining Russian flows.

“Already high gas prices, combined with low wind output will require less efficient, higher cost gas plants to fire up, pushing up prices,” BloombergNEF’s Andreas Gandolfo said. 

Day-ahead power prices in France traded at 383.14 euros ($404.08) a megawatt-hour, up more than 64% from last week.

Besides tight fossil fuel supplies and a lack of renewable power from Germany and Italy, half of France’s 56 nuclear reactors are offline. France was the biggest net exporter of power last year, supplying many European countries.

French nuclear power is needed when renewable energy is lacking. Also, Brussels’ drive for net-zero carbon emissions and weening off Russian fossil fuels has made the energy crisis on the continent worse.

To avert a more profound crisis, German Vice-Chancellor and Economy Minister Robert Habeck said Sunday that the country is increasing coal generation to increase power output.

The decision comes just days after Russian gas company Gazprom announced that it was reducing supplies through the Nord Stream 1 pipeline for “technical reasons.”

…click on the above link to read the rest of the article…

Oops! U.S. oil and gas exports fuel domestic price rise

Oops! U.S. oil and gas exports fuel domestic price rise

The U.S. oil and natural gas industry long fought for and in the last decade finally won release from federal restrictions that limited exports. The ostensible reason was that because of the so-called “shale revolution” in the country’s oil and gas fields, the United States would have plenty of oil and gas to spare for export.

The real reason behind the push was that the oil and gas industry wanted what almost every other industry in American already had: The right to sell their products to the highest bidders no matter where they lived on the globe.

This made it almost certain that as U.S. prices rose to match world prices, U.S. consumers would feel the pain. And, since energy prices affect everyone who votes, they are always politically consequential.

So, it is unsurprising that with U.S. regular gasoline prices over $5 per gallon President Joe Biden lashed out at U.S. oil companies—which are having one of their best years ever—saying they need to increase production of refined oil products. The companies have responded that their refineries are running at close to maximum capacity and so there is not much they can do in the short run.

What is left unsaid is that it has long been the policy of the United States to allow the export of refined (as opposed to crude) petroleum products such as gasoline, diesel and heating oil. The country has refinery capacity significantly in excess of domestic needs and so exports a considerable volume of refined products including about 1 million barrels per day (mbpd) of gasoline and 1.4 mbpd of diesel and heating oil (for the week ending June 10)…

…click on the above link to read the rest of the article…

Pitchforks soon in Europe?

Pitchforks soon in Europe?

Dear Europeans

For your own children´s sake — on my knees and with my saddened eyes humbly looking downwards — I beg of you to please stop the current self-destructive nonsense dead in its tracks by immediately demanding from your political class to import the bloody Russian oil normally once again as Europe had been doing for dozens of years. The impact that the ban on Russian oil has upon your daily lives now and for years yonder is such that at the very least a Referendum should have been held. But it was not, and without consultation, the EU leadership acted on their own.

Please be advised that the EU un-elected brass simply does not represent you or your needs. They were all voted amongst themselves into their positions like members of a committee in a private country club. If left unchecked, EU politicians will now continue misrepresenting you and, on your behalf — with your hard-earned assets and livelihoods – will keep on picking a most unnecessary and prolonged armed conflict with Russia, eventually forcing upon you a total war scenario where chances play out all very strongly against you, with Russia probably resulting unscathed.

C:\Users\Win7_64\Desktop\55 - copia.jpg

their war

European leaders crave for their war, so they can´t think of a better way to provoke it than by applying ever larger and ´meaner´ sanctions on Russia as if (a) sanctions were effective and (b) as if Europe could win such war (not).

Accordingly, we now have yet another set of spanking new EU “sanctions” in package No. 6 that will eventually backfire flat on Europe´s face – like all the others — such as banning the insurance and financing of oil tankers that carry Russian oil. Accordingly, the EU is now trying its very best to

(1) bankrupt the successful Western oil tanker insurance business by reducing the number of participants…

…click on the above link to read the rest of the article…

Crazy Pills

Crazy Pills

It’s not denial. I’m just selective about the reality I accept.” – Bill Watterson

In the brilliantly funny 2001 film Zoolander, Ben Stiller plays a past-his-prime male model named Derek Zoolander. As the plot unfolds, Zoolander is unknowingly groomed and brainwashed by evil fashion designer Jacobim Mugatu (played by Will Ferrell) to assassinate the newly elected prime minister of Malaysia. The prime minister campaigned on a platform of raising the country’s minimum wage and ending child labor – thereby threatening the profitability of the fashion industry – and must be eliminated. Mugatu judges Zoolander to be just dim-witted enough for the task.

The movie is absurd and yet so well executed that it works. The sheer number of derivative memes you can find on Reddit and in the Twitterverse pay tribute to its many memorable scenes. One meme stands out from the rest and serves as an apt expression of the spectacle we’re scratching our feathers over today. Zoolander proclaims to have developed three signature looks: “Ferrari,” “Blue Steel,” and “Le Tigre.” GQ astutely describes them as being completely identical, with “a raised brow, pursed lips and the misguided confidence that everyone knows the difference between them.” After observing the crowd’s adoring reaction to Zoolander’s latest flash of Blue Steel on the runway an exacerbated Mugatu explodes, “They’re all the same face! Doesn’t anyone notice this?! I feel like I’m taking crazy pills!!!

We sympathize with Mugatu’s lament, observing our political class translate its deep misunderstanding of energy into an equally haphazard set of economic sanctions levied against Russia, totally unaware that they are expressing the same ridiculous face at every opportunity. Before proceeding, we should note that pointing out the flaws in the West’s war response is not “pro-Putin,” nor is it “unpatriotic” as some propagandists on Twitter would have you believe…

…click on the above link to read the rest of the article…

Putin: Oil Sanctions Will Be Europe’s “Economic Suicide” On Orders From “American Overlords”

Putin: Oil Sanctions Will Be Europe’s “Economic Suicide” On Orders From “American Overlords”

Russian President Vladimir Putin announced that EU countries are committing “economic suicide” by refusing Russian energy resources amid a push to impose an oil embargo, but which has been thus far blocked by Russian energy-dependent Hungary and a handful of others.

As quoted in RIA Novosti, Putin described that the oil sector is busy undergoing a “tectonic shift” which will only be made worse by “ill-thought-out” sanctions by the West. The address was given virtually to an energy conference of the country’s industry heads.

“Changes in the oil market are tectonic in nature and doing business as usual, according to the old model, seems unlikely,” he said. “In the new conditions, it is important not only to extract oil, but also to build the entire vertical chain leading to the final consumer.”

Putin signs a pipeline in 2011. AFP via Getty

He called out the current EU-US trajectory of seeking to inflict maximum punishment on Moscow as a strategy ensuring higher energy prices and higher inflation. That’s when he observed:

“Of course, such an economic suicide is a domestic affair of the European countries,” based on the AFP translation.

At the same time, Putin additionally pointed out, Europe’s “chaotic actions” would eventually serve to boost oil and gas revenues for Moscow, also as Russia diverts energy supplies to “friendly” countries. He urged Russian industry authorities to be more proactive in leveraging the situation for the nation’s benefit.

Putin described a scenario of Europe feeling the brunt of the crisis worst, according to state media:

…click on the above link to read the rest of the article…

The Real Reason Behind the EU’s Drive to Embargo Russian Oil

The Real Reason Behind the EU’s Drive to Embargo Russian Oil

This week the European Union is expected to announce a complete import ban on Russian oil. Hungary, in its first real act of defiance, is threatening to veto this; Germany, after some hemming and hawing, has finally decided it can survive such a ban.

Assuming Hungary’s objections are eventually overcome, at first blush this looks like yet another energy “own goal” by the people obsessed with soccer. The U.S. has already issued this ban.

Because European industry is heavily dependent on Russian oil and gas, the conventional wisdom is that the EU Commission is just petulant and incompetent.

Are they petulant? Yes. Incompetent? Possibly? But only if you think in conventional terms of doing the right thing for their people. What is clear to any serious observer of EU politics is that they are not interested in what their people have to say or want.

Theirs is an agenda which will brook no opposition, even if it means destroying its own economy to bring a rival to its knees.

That said, I sincerely doubt there will be a “buyers embargo” on natural gas because there is no viable substitute for it.

Hungary is using the need for unanimous consent within the European Council to block any ‘gas ban’ in any new economic sanctions package. There are at least three other countries which are happy Hungary is willing to suffer Brussels’ wrath.

But banning Russian oil, on the other hand, is different.

So, it is interesting that Hungary would do this, given they import no oil from Russia. {Ed. this is wrong, Hungary imports 65% of its oil through the Druzhba pipeline} This veto was predicted by me the morning after the Hungarians overwhelmingly rejected George Soros’s anti-Viktor Orban coalition and handed it an ignominious defeat.

…click on the above link to read the rest of the article…

Europe May Face LNG Crisis This Winter

Europe May Face LNG Crisis This Winter

  • Rush to wean off Russian gas has made European consumers highly vulnerable to LNG price shocks.
  • Global LNG demand outstrips supply in 2022.
  • New LNG projects are unlikely to provide relief until 2024.

A liquified natural gas (LNG) crisis is brewing for European countries dealing with energy insecurity in the wake of Russia’s invasion of Ukraine, as demand will outstrip supply by the end of this year, Rystad Energy research shows. Although soaring demand has spurred the greatest rush of new LNG projects worldwide in more than a decade, construction timelines mean material relief is unlikely only after 2024. Global LNG demand is expected to hit 436 million tonnes in 2022, outpacing the available supply of just 410 million tonnes. A perfect winter storm may be forming for Europe as the continent seeks to limit Russian gas flows. The supply imbalance and high prices will set the scene for the most bullish environment for LNG projects in more than a decade, although supply from these projects will only arrive and provide relief from after 2024

The European Union’s REPowerEU plan has set an ambitious target to reduce dependence on Russian gas by 66% within this year – an aim that will clash with the EU’s goal of replenishing gas storage to 80% of capacity by 1 November. By shunning Russian gas, Europe has destabilized the entire global LNG market that began the year with a precarious balance after a tumultuous 2021. The decision to sharply reduce reliance on Russian gas and LNG from current levels of between 30-40% will transform the global LNG market, resulting in a steep increase in energy-security based European LNG demand that current and under-development projects will not be able to supply.

…click on the above link to read the rest of the article…

An Economic ‘Atomic Bomb’: Hungary Threatens EU’s Latest Sanctions Against Russia, Including Oil Embargo

An Economic ‘Atomic Bomb’: Hungary Threatens EU’s Latest Sanctions Against Russia, Including Oil Embargo

KEY FACTS

Orban, an ally to Putin who was reelected for a fourth term as prime minister in April, told Hungarian state radio on Friday that Hungary could not support proposed EU sanctions against Russia in their current form, according to multiple news reports.

Plans to ban Russian oil are far too costly and would amount to an “atomic bomb” being dropped on the Hungarian economy, he said.

Hungary would need at least five years and massive investment on infrastructure in order to manage without Russian oil, Orban said.

He said he is willing to negotiate a sanctions proposal that meets Hungary’s interests and is waiting on a new proposal from the European Commission.

While Orban’s objections are not surprising—Hungary is heavily dependent on Russian oil and has consistently shot down proposed energy sanctions against Moscow since it invaded Ukraine in February—they are a major obstacle for finalizing the bloc’s latest round of sanctions, which require unanimity from all 27 member states.

KEY BACKGROUND

Current plans would see most of the EU phase out Russian oil imports within six months, alongside disconnecting some of Russia’s largest banks from the SWIFT international finance system and banning Russian broadcasters from the region. When outlining the sanctions package on Wednesday, European Commission President Ursula Von der Leyen said ending the bloc’s “dependency on Russian oil…

…click on the above link to read the rest of the article…

Will We Have Food Shortages In America?

Will We Have Food Shortages In America?

Green milling tractor.
Aerial shot of a milling tractor (Tom Fisk/Pexels).

Higher Food Prices And Shortages?

Our system has been betting on higher food prices since earlier this year, and of course the war in Ukraine has put upward pressure on food an energy. But now one of our Twitter correspondents warns we may have food shortages in America as well. Let’s start with the case for higher prices, then consider his warning of shortages and what to do about them.

Betting On Higher Food And Energy Prices

A month before Russia’s invasion of Ukraine, our system’s top names had shifted to an energy and food focus, as we noted in a post here at the time (Why Civilizations Collapse).

In that post, we noted we had two oil E&P stocks (Laredo Petroleum (LPI) and Antero Resources (AR)), two oil ETFs (ProShares Ultra Bloomberg Crude Oil (UCO) and VanEck Vectors Oil Services (OIH)), and a coffee ETN (iPath Series B Bloomberg Subindex Total Return (JO)) and a corn ETF (Teucrium Corn Fund (CORN)) in our top ten names.

Screen capture via the Portfolio Armor on 1/28/2022.

Since then, the energy and corn names have ripped higher (though coffee has cooled off a bit).

Of course, Russia’s invasion of Ukraine has played a role here. In addition to being one of the world’s top exporters of wheat (along with Ukraine), Russia is also one of the top exporters of agricultural inputs such as oil, natural gas, and fertilizer. The war, plus the sanctions regime in response to it, have raised food and energy prices and raised the prospect of food shortages in countries such as Egypt, which are dependent on wheat imports. America, as an agricultural superpower, seemed less likely to suffer food shortages.

…click on the above link to read the rest of the article…

NATO Sanctions and the Coming Global Diesel Fuel Disaster

NATO Sanctions and the Coming Global Diesel Fuel Disaster

Amid the ongoing global inflation crisis, NATO heads of state and mainstream media repeat a mantra that high energy prices are a direct result of Putin’s actions in Ukraine since end of February. The reality is that it is the western sanctions that are responsible. Those sanctions including cutting SWIFT interbank access for key Russian banks and some of the most severe sanctions ever imposed, are hardly having an impact on the military actions in Ukraine. What many overlook is the fact that they are increasingly impacting the economies of the West, especially the EU and USA. A closer look at the state of the global supply of diesel fuel is alarming. But Western sanctions planners at the US Treasury and the EU know fully well what they are doing. And it bodes ill for the world economy.

While most of us rarely think about diesel fuel as anything other than a pollutant, in fact it is essential to the entire world economy in a way few energy sources are. The director general of Fuels Europe, part of the European Petroleum Refiners Association, stated recently, “… there is a clear link between diesel and GDP, because almost everything that goes into and out of a factory goes using diesel.”

At the end of the first week of Russia’s military action in Ukraine, with no sanctions yet specific to Russia’s diesel fuel exports, the European diesel price was already at athirty-year high. It had nothing to do with war. It had to do with the draconian global covid lockdowns since March 2020 and the simultaneous dis-investment by Wall Street and global financial firms in oil and gas companies, so-called Green Agenda or ESG…

…click on the above link to read the rest of the article…

Europe To Cap Potash Imports As Planting Season Begins

Europe To Cap Potash Imports As Planting Season Begins

The EU is expected to deliver another shock to its agricultural sector by capping Russian imports of potash, a crucial ingredient for growing food, according to Bloomberg, citing a Dow Jones report.

The European Commission is expected to imminently unveil broad new sanctions on Russia. Much of the fertilizer is purchased from Belarus; the landlocked country in Eastern Europe could also be slapped with new sanctions for its involvement in Russia’s invasion of Ukraine.

Potash is a key ingredient for agricultural fertilizers. Europe produces only a negligible amount of the fertilizer, and to potentially cap imports from Russia and or Belarus (top producers) seems idiotic for Europe as the spring planting season is only beginning.

Even if Europe were to rework its supply chains to import potash elsewhere, only a few other countries would export it. The impact of capping imports will send prices even higher and create fertilizer shortages for crops. This can dramatically affect crop harvests at the end of the growing season.

A handful of North American fertilizer stocks jumped on the report, including CF Industries +3% and Intrepid Potash 2%.

About 90% of potash is used as fertilizer in Europe; the rest is used to produce table salt, help slow the aging of wine, preserve canned food, and give chocolate its aroma.

Global spot prices for potash show prices continue to accelerate to the upside. This may discourage farmers from purchasing or even spread less of it during the planting season.

Even before the invasion of Ukraine, all fertilizer production in the West was declining (read: here) due to high natural gas prices. The shortage of fertilizers, not just potash, but also nitrogen and phosphates, on global markets, is inevitable. What Europe is doing to potentially cap potash imports from Russia and Belarus is idiotic and can spark a food crisis.

…click on the above link to read the rest of the article…

EU Pushes To Break “Energy Taboo” With Proposed Ban On Russian Coal Imports

EU Pushes To Break “Energy Taboo” With Proposed Ban On Russian Coal Imports

Update (0825ET): As EU ambassadors meet on Tuesday to discuss another proposal on Russian sanctions, German Foreign Minister Annalena Baerbock insisted that the EU would “completely end” its fossil fuel dependence on Russia, starting with coal.

Of course, as we noted below, Germany is among the most dependent EU economies on Russian energy. Weaning its economy off Russian energy without triggering a major domestic crisis and “total collapse.”

US equity futures tumbled on the news as investors braced for more international fallout from increasing tensions between Europe and the Russians, which could lead to even higher energy prices.

* * *

Not to be outdone by tiny Lithuania (which claims to have officially weaned itself off Russian gas imports by building an LNG terminal), the European Commission has devised a controversial proposal to ban imports of Russian coal, along with a host of other measures comprising a new sanctions package to be introduced on Tuesday, according to reports from WSJ, Reuters and a host of other media outlets.

Along with banning imports of Russian coal, the package also calls for an import ban on rubber, chemicals and other products from Russia worth up to €9 billion a year.

If passed, the proposal would mark the first energy sanctions on Russia since the start of the conflict in Ukraine. Although it wouldn’t touch oil and gas, such a ban would break the so-called “energy taboo”, according to Bloomberg’s Javier Blas.

While thermal coal isn’t nearly as critical as oil and gas, it’s still a “big deal,” Blas pointed out.

Coal-fired power plants are still being used across the EU, though most member states expect to completely phase them out by 2030. Russia has the second-largest coal reserves in the world. In 2020, it mined 328 million metric tons, making it the sixth-largest producer globally…

…click on the above link to read the rest of the article…

The Dollar Dethroned: We Have Reached The End Of Monetary Policy As We All Once Knew It

The Dollar Dethroned: We Have Reached The End Of Monetary Policy As We All Once Knew It

And the world hasn’t even noticed yet.

People who speak out openly with concern about the potential death of the U.S. dollar have been written off as conspiracy theorists for the better part of the last few decades.

But looking back, unfortunately, I’m sure history is going to be kind to these people and their prognostications. They will have been the ones who sounded the alarm in a relatively short amount of time before ultimately being proven right.

I don’t say this to brag or boast in advance in any way, I say it because I truly believe we are at the “beginning of the end” of the Keynesian economic experiment.


Less than two weeks ago, I wrote an article proclaiming that Russia would back the ruble with gold as a way to fight back against Western economic sanctions. I also made similar predictions about the new digital Chinese currency last summer when I first started Fringe Finance.

To me, since I began piecing together my understanding of macroeconomics and the global economy about a decade ago, it had become painfully obvious that the fiat system the U.S. plays by, which hinges on the dollar being the global reserve currency, had its days numbered.

The catalyst that is helping hurl us toward our monetary rude awakening faster than ever has been the war in Ukraine. Actually, it hasn’t been the war so much as it has been the West’s reaction to the war. As only blindly arrogant believers in the Keynesian dog-and-pony show could do, we rushed to cut Russia off the SWIFT system, limited investing in Russia companies and sanctioned the country’s oligarchs.

To which Russia basically replied, “OK. We still have the oil.”

…click on the above link to read the rest of the article…

“Fertilizer Is Out Of Control” – US Farmers Ditch Corn For Soy To Save On Costs 

“Fertilizer Is Out Of Control” – US Farmers Ditch Corn For Soy To Save On Costs 

Fertilizer prices are at record highs following Russia’s invasion of Ukraine puts massive pressure on American farmers to transition to crops that need less fertilizer.

Bloomberg survey found that farmers will plant 2 million more acres of soybeans and about 2 million fewer of corn. That’s because soybeans require very little fertilizer versus corn.

Farmer Tim Gregerson of Omaha, Nebraska, said he’ll plant more soybeans this year because “fertilizer is out of control.” He said fertilizer prices spiked even before the Russian invasion, and it was then he decided to reduce the corn-to-soy ratio to about 50-50 this upcoming growing season.

On top of soaring fertilizer prices, he told Bloomberg, diesel, tractors, machine parts, feed for livestock, herbicide, and seed costs, and just about everything to do with farming are astronomically higher this year.

Farmer John Gilbert near Iowa Falls, Iowa, said his decision was made in January when fertilizer prices spiked.

A gauge of prices for US Gulf Coast Urea, US Cornbelt Potash, and NOLA Barge DAP, called the Green Markets North American Fertilizer Price Index, is up 43% since the Russian invasion and up 233% to $1,270 per ton since the start of the 2021 growing season.

The rising cost of natural gas, the primary input for most nitrogen fertilizer, has been one reason for rising fertilizer prices. Also, global supplies are expected to tighten as Russia will limit fertilizer exports to ‘unfriendly‘ countries. Russia is one of the biggest exporters globally — the US just so happens to be a large importer of nitrogen and potash from Russia.

Gregerson said due to global disruptions, “getting fertilizer is going to be more and more of a problem for the world in general.” In return, farmers will transition to crops that use less fertilizer — and it will be done globally.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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