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Europe’s Nightmare Scenario Comes True: Energy Bills To Rise By €2 Trillion, Will Reach 20% Of Disposable Income

Europe’s Nightmare Scenario Comes True: Energy Bills To Rise By €2 Trillion, Will Reach 20% Of Disposable Income

What is the scale of the energy challenge?

We got a very shocking sense of the staggering numbers involved in the existential, crippling European crisis earlier today when Norwegian energy giant Equinor echoed what Zoltan Pozsar said in March, warning that “European energy trading risks grinding to a halt unless governments extend liquidity to cover margin calls of at least $1.5 trillion.” As Bloomberg put it, in its best non-Zoltan imitation, “aside from inflating bills and fanning inflation, the biggest energy crisis in decades is sucking up capital to guarantee trades amid wild price swings. That’s putting pressure on European Union officials to intervene to prevent energy markets from stalling.”

“Liquidity support is going to be needed,” Helge Haugane, Equinor’s senior vice president for gas and power, said in an interview. The issue is focused on derivatives trading, while the physical market is functioning, he said, adding that the company’s estimate for $1.5 trillion to prop up so-called paper trading is “conservative.””

In other words, massive amounts of newly-printed funding (because with yields blowing up, Europe’s fiscal stimulus will be over before it started unless central banks step in and backstop the latest energy hyperinflation bailout plans) will be required to avert an energy disaster. Alas, the final number will be even more massive, because overnight Goldman’s research team published a must read note (available to pro subs), in which the bank looked at the scale of the energy bill challenge, potential European government responses and industry implications, and quantified the total damage. The numbers are staggering:

According to Goldman, Italian household energy bills could rise from ~€150 to ~€600 in 2023. Some more details:

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

Nearly One-Third Of US Households Struggle To Pay Energy Bills

31 percent of US households have struggled to afford their energy bills, according to a Wednesday report by the Energy Information Administration, which notes that Hispanics and racial minorities were hit the hardest.

According to the most recent results from EIA’s Residential Energy Consumption Survey (RECS), about one in five households reported reducing or forgoing necessities such as food and medicine to pay an energy bill, and 14% reported receiving a disconnection notice for energy service. Households may also use less energy than they would prefer; 11% of households surveyed reported keeping their home at an unhealthy or unsafe temperature. –EIA.gov

Meanwhile, 11% of households surveyed keep their home at a unsafe or unhealthy temperature, whatever that means.

“Of the 25 million households that reported forgoing food and medicine to pay energy bills, 7 million faced that decision nearly every month,” reads the report. “Of the 17 million households who reported receiving a disconnection notice, 2 million reported that they received a notice nearly every month.”

The data, from the federal agency’s most recent energy consumption survey in 2015, also showed that some seven million households (6% of the national total) reported broken heating equipment, while 6 million (5%) reported the loss of air conditioning.

EIA found only minor differences across geographic regions of the country and between urban and rural respondents. These differences suggest that the structural features of a home and demographic characteristics are more likely to be associated with a household’s ability to afford energy and maintain equipment than geography and associated climates.

For instance, households that included children, that had residents who identified with a minority racial group or as Hispanic, or that were classified as low income experienced more energy insecurity. Households experiencing energy insecurity were also more likely to live in homes built before 1990. –EIA.gov

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

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