Natural Gas Futures in Europe Plunge 44% from Peak

Storage above target, floating LNG import terminals going into service.

By Wolf Richter for WOLF STREET.

The prices of natural gas futures in Europe, after increasing 20-fold since March 2021, have plunged amid falling demand, above-target gas-storage increases, a growing list of floating LNG import terminals, and surging imports of LNG from the US and other parts of the world.

The front-month October TTF contract in the Netherlands – a benchmark for northwest Europe – plunged by 8% on Monday from Friday, and by 44% from the peak on August 26, to €191.02 per megawatt-hour (MWh) at the close today (data via Investing.com).

The spike in futures prices was driven by speculation following Russia’s threats to cut, and then by its actual cuts, of gas deliveries to Europe. But those sky-high prices caused large shifts, not only lowering demand but also lining up new supply. And with this type of huge spike, and then plunge, there may well be some big energy speculators and assorted hedge funds that ended up on the wrong side with massively leveraged positions.

Efforts to ramp up supply via LNG imports.

On Thursday, two floating liquefied natural gas (LNG) import and storage terminals entered operations in the port of Eemshaven in the Netherlands, when they received their commissioning shipment of LNG from the US. The EemsEnergyTerminal, as the two vessels are called, will receive its first commercial shipment this week.

These floating storage and regasification units (FSRU) receive the LNG, store it, re-gasify it, and then send the natural gas via pipeline into the land-based distribution network in the Netherlands, from where it can also be distributed to other countries.

The capacity of an FSRU is much smaller than that of a large land-based import terminal, but it’s a start. The terminal at Eemshaven is expected to receive about 18 LNG cargoes by December 31, according to Bloomberg.

Germany, which had become recklessly dependent on cheap natural gas from Russia and had failed to build a single LNG import terminal as alternative, is now getting the drift. It takes years to build a large LNG import terminal, so that won’t resolve today’s crisis. But the German government has chartered five FSRUs, three of which will start operating this winter. Private entities will charter an additional two FSRUs.

Efforts to cut consumption.

Germany has embarked on drastic efforts to cut natural gas consumption by 20%, which includes just about anything, from asking people to forgo showers altogether, or take cold showers, to closing indoor heated pools, to production cuts by industrial users. Europe overall is aiming for a 15% cut in natural gas consumption.

Gas storage facilities are filling.

In Germany, gas storage facilities have been filling at record pace and are 87.9% full, according to data from Gas Infrastructure Europe. For the EU overall, storage facilities are 83.6% full, well above the 80% target set out by the European Union.

Longer term...

Analysts have cited various reasons for the plunge in futures prices, including the success over the past 10 days of the counteroffensive by the Ukrainian military, which has already liberated significant parts of Ukraine from Russian occupation. In terms of natural gas, the hope may be that this war will soon be over, with Russia kicked out of Ukraine, and that the energy relationship between Russia and Europe could then be normalized again.

But I doubt that Germany will just return to the old normal. Germany’s vulnerability due to its natural gas dependence on Russia, which dates back to the Cold War, has shaken up the country. Germany has figured this out finally, and it has finally embarked on diversifying its natural gas supplies by building LNG import terminals.

However this turns out, the consequence will be that Germany’s consumers and industrial users will face natural gas prices that are much higher than they were two years ago, as high-cost LNG will be forming a much larger part of the mix, and low-cost pipeline natural gas from Russia a much smaller part of the mix.

As a side note: Russia cannot sell at all the natural gas that it didn’t sell to Europe because the pipeline system cannot be moved overnight, and there are no LNG export facilities linked to the production sites. So Russia has to cut production at these sites, and it loses the revenues from that production.

 

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  161 comments for “Natural Gas Futures in Europe Plunge 44% from Peak

  1. Depth Charge says:

    “The spike in futures prices were driven by speculation following Russia’s threats to cut, and then by its actual cuts, of gas deliveries to Europe.”

    Speculators are filth. Speculation in the necessities of life needs to be put to permanent rest. It has deeply negative consequences for the majority of people.

    • 2banana says:

      It used to be most speculators lost their shirts and went bankrupt.

      Now, they get bailouts for a wrong trade.

      You get more of what you reward.

      • Flea says:

        The more hedge funds, that go broke the better . A good place for these derivatives driven gambling is debtors prison ,that would end this crazy speculation

      • Ed7 says:

        Indeed you do.

        A recent case involved the London Metals Exchange, which intervened this year to save a single casino whale who had shorted nickel from his massive losses.

        These become one-way bets, then, for the well-connected or giant bettors. It is decidedly unfair to the rest of us who end up subsidizing the big bettors and should expect to subsidize them more and more as time goes on, unless institutions like the Fed and LME change their attitude.

      • TT says:

        Yep, you can thank Bill Clinton for that when he bailed out Long Term Capital. Ever since that, Wall Street has also backed the Dems.

    • Jimbo says:

      Good analysis here…..natural gas prices “plunge 44% from highs” to a level that is 700% higher than just a year and a half ago.

      • JD says:

        Lol fair point

      • Mark Stoneweapon says:

        This 44% plunge came at a large cost to the yen, pound and euro.

        Data taken from June 13th (52 week high close in the commodity index) to Sept 9th close indicates:

        The dollar commodity index shed 11.04%, but the US dollar index is up 4.65% and the 10yr US bond yield is down 4 bps.

        The euro commodity index shed 7.69%, while the currency has lost 3.10% and the 10yr German bond yield is up 8 bps.

        The pound is a disaster. The pound sterling commodity index only lost 6.3% from its high, meanwhile the currency caved 4.51% and the UK 10yr bond yield is up 60 bps (23.19% increase!) and the yen alike, is racing the pound to the bottom of the barrel.

        It looks to me like the Fed has Europe’s currency complex trapped in an inflationary feedback loop.

      • Wolf Richter says:

        Jimbo,

        “natural gas prices “plunge 44% from highs” to a level that is 700% higher than just a year and a half ago.”

        If after spiking by 100000000%, they plunge by only 100%, they’re at zero.

        You need to understand percentages.

        • Mark Stoneweapon says:

          Lol…….% is funny thing.

          The Dutch TTF will need two more 44% plunges from this level to get back to prewar rates and four 44% plunges to get back to spring 2021 rates.

        • robert says:

          Approximate prices based on the chart except Sep 2022 @191.
          May 2021 (a year and a half ago) looks like ~22 Euro on the chart.
          Aug 2022 high looks like about 340 Euro.
          Sep 2022 = 191, a 44% drop from the 340 high.
          Sep 2022, 191. Compare May 2021, ~22 = ~850% = ~750% increase in a year and a half.

        • joe2 says:

          So you like your $4.50 gas up from $3.00 because it came down from $5.50. I understand percentages and statistics usually used, even correctly, to confuse the unwary.

          Still means you may have to close your business unless you can raise your prices 700%.

      • joe2 says:

        Yep. That’s the way manipulation is done. Create a crisis or catastrophe that scares the poop out of everyone and then back off a little and claim you solved the horrible problem. People are so stupid.

        Wonder if the plan is to reduce everyone’s quality of life and numbers to save the planet for themselves as they keep saying.

        Couldn’t be. If that was their plan they would stop drilling in the US, increase inflation, sanction countries with oil and gas like Venezuela, Russia, and Iran.

        Probably just the US wanted the European market at higher prices.

    • JR Hill says:

      How can this happen with free and open markets? I absolutely agree with you but it doesn’t end with NG. It goes on and on and on. Where is the stop button to be pressed? On what commodity? On something that affects your investments? Oh, not you, not me. The other guy.

      • SpencerG says:

        What gives you the idea that Petroleum markets are free and open? OPEC is a cartel for heaven’s sake… they are trying to push prices up year-in-and-year-out. Conservation efforts and competition are the only two things pushing the prices down. That Europe is trying to engage in both is a good thing for all concerned.

    • GringoGreg says:

      Nat gas and oil are finite resources. So, any nat gas that is locked in due to less sales to europe is $$$ in the bank. Nat gas and oil are finite resources. Nat gas in North america has spiked circa 400% higher due to large volumes being exported to Europe. N.A. consumers are paying huge amounts due to Russian sanctions on Europe!

    • Top-GUN says:

      Speculators provide much needed arbitrage…

      • cb says:

        assuming arbitrage is much needed ……………..

        why is arbitrage needed?

        • robert says:

          Actually, liquidity. For every long there’s a short and vice versa. Some specs are eating big losses if they took the wrong side.
          Hedgers, i.e. utilities/distributors locked in their price and price users accordingly – until the contracts mature.

    • Cytotoxic says:

      Speculators aid price discovery which sends vital information to markets that keep them functioning. Speculators are heroes.

      • Sams says:

        Price discovery is greatly improved by speculators running “pump and dump”, “short and distort” and “hold and squezee” schemes…

    • Wisdom Seeker says:

      Disagree: If the prices hadn’t spiked, Europe wouldn’t have gotten off it’s collective behind and gotten the floating LNG economic lifeboats. There’d be a lot more people taking cold baths in a deep economic recession.

      The speculators making a profit are the price the others are paying for their foolish complacency. It’s basically another form of “market tuition”.

      “For a successful economy, reality must take precedence over public relations, because nature cannot be fooled.” – adaptation of a quote that should be more famous

      • Flea says:

        As a kid on the farm took whore baths daily,full bath on Saturday night for Sunday church

    • fajensen says:

      All functioning systems have parasites.

      The alternative to speculators is cash-only “African markets” where all farmers can sell their produce right at the same time to that guy with all the money for almost nothing – or watch it rot.

      The best we can do is to cull the speculators by not bailing them out, and we could raise interest rates so they don’t have infinite funding.

      • gponym says:

        Yes, only the threat of large losses can keep speculation in line: the tax and regulatory and now “Fed put” systems have all failed to do so.

        Adding my own “speculation” to what you said: convince average citizens that economic health translates into smaller firms getting breaks not enjoyed by the huge ones, instead of the reverse. The point would be to create fewer of the so-called “too big to fail” Frankestein monstrosities. From average citizen perspective, those monsters are like black holes, sucking up capital while the rest of us shiver in the dark.

    • William Ripskull says:

      There is nothing wrong with speculators as long as they’re not manipulating markets. Every time you buy or sell stock, precious metal, a Babe Ruth card, etc., you’re a speculator. Every person who accumulates wealth and used it to start a business is a speculator. Speculation is part of free markets, and free markets benefit the most people the most. I agree though, speculators should NEVER be bailed out. If you take the risk, you should share in the profits, but also take the losses on the chin.

    • eatdessertfirst says:

      Speculators are a useful part of many systems, though often not allowed in wartime situations, which this is. Thus, the fault is with the govts for not declaring this a wartime situation and banning any other than user buyers, ie, no speculators.

      • eatdessertfirst says:

        In ‘real’ war situations, the free mkt disappears for many essentials. So govt would buy gas, oil, imported food etc, and distribute according to priorities of the moment….candy companies don’t get fuel if armament mfrs need it, etc. Food is often rationed, so everyone gets a fair share vs apportioned by price.
        And many civil rights are suspended, thus in Ukraine, men between ages x and y aren’t allowed to leave the country.
        The ‘free market distribution of essential goods becomes ‘the black market’, which, in that it undermines what the state is attempting to do ( and thus the state’s possible survival ), is illegal, and participants are considered criminals.
        When a country is fighting for it’s very survival, that’s what happens. In Europe’s case, massive civil unrest and economic chaos may happen ….thus govts are very much involved, though less than total war situation.

  2. Gattopardo says:

    DC, I am not sure how you can separate a futures market for hedging from the speculative side. Every hedge takes someone willing to bear the risk on the other side. Imagine the wild variations in price without any means to hedge.

    • Augustus Frost says:

      It’s probably not possible. The closest option I know is limiting short positions to producers only but not sure how that would work in practice.

      What is possible is to end the moral hazard that motivates this recklessness to begin with, by allowing those who take the wrong side of the trade to eat the losses they deserve.

      This behavior wasn’t as big of a problem or a problem at all when market participants knew they could lose their proverbial shirts for being wrong.

    • JR Hill says:

      Yup. Absolutely. At the same time I hate it.

  3. Gattopardo says:

    And agreed, no way Germany goes back to the “old normal”.

    “the hope may be that this war will soon be over, with Russia kicked out of Ukraine, and that then the energy relationship between Russia and Europe could then be normalized again”…. That’s a lot of hope. It could also be (likely is, IMO) that Russia is setting Ukraine up here, and we’ll soon see an escalation of the war, not a resolution. Sadly. And I expect that will really roil markets.

    • Trucker Guy says:

      I highly doubt it. Russia has been getting massacred by the US backed Ukrainians. A quick look at the Wikipedia timeline shows the initial push in Feb. got practically nowhere and the Russian lines have been getting beaten back ever since.

      This isn’t WWI where we don’t truly know what is behind enemy lines. US intelligence is being fed directly to Ukraine and our information network has tabs on everything, everywhere. Russian doesn’t have some stealth trap of 100,000 men laying in wait to encircle the Ukrainian advance when they’re rolling in freight trains with civilian vehicles to use for military purposes and morale is abysmally low. And the US isn’t going to tell Ukrainian forces to attack unless the time is right.

      Russia is screwed on this big time. Putin wanted a legacy, he’ll damn sure get one but it won’t be the Soviet hero he wishes. I don’t think this war will be over before winter but the end result is already decided. Russia has spent the last 20-30 years screwing around lackadaisically with Chechen insurgents using pre-cold war tech and strategies while having a country built on raw resources and mafia kleptocracy. Ukraine is basically just a proxy of the US military industrial complex now. I suspect once the dust has settled, US and Ukraine relations will have a lot of similarities with Israel and Japan. And that sure seems like a good thing to me.

      • Apple says:

        You’ll know Russia has lost when Tucker abandons Putin.

      • Shiloh1 says:

        Thanks for the Ukraine-Russia update. Good thing I escaped from Chicago area to Hicksville, Indiana!

      • Sams says:

        “Ukraine is basically just a proxy of the US military industrial complex now.” Russia may loose, but to let the US military industrial complex win in Ukraine may not be an option…

      • ru82 says:

        Let’s say the conflict becomes a stalemate.

        I wonder how much it will cost the U.S. to help Rebuild Ukraine. We have already spent a nice chunk of money via aid.

        You can’t give a country arms and then not help rebuild?

        I read it may take $1 trillion too rebuild. I am guessing we will roll out at least $3/4 trillion in rebuilding aid money. Hopefully the rest of NATO countries will cover the rest.

        • Happy1 says:

          Consider the cost of a Russian win in the Ukraine, namely subsequent invasion of Baltic states and Poland. Saving Ukraine is definitely in the interest of the US and EU. Plus Russia is a pure bully in this and supporting Ukraine is clearly the morally correct course.

        • Who Cares says:

          The US has already suggested to take the $300 billion in Russian assets (as in the country not the oligarchs) currently held by other countries to defray the costs.

      • MiTurn says:

        “A quick look at the Wikipedia timeline…”

        Wikipedia is not a site to be cited. When I taught high school and community college and assigned research projects Wikipedia was forbidden as a reference to be cited.

        Garbage.

    • Mark Stoneweapon says:

      Agreed, that’s what I call a pipe dream. It’s more likely Ukraine will be land locked after this war is over.

      • Augustus Frost says:

        My prediction too.

        • Mike Smith says:

          Once the taste of revenge gets in your craw it’s hard to spit out. Don’t think Russia will want to pony up a trillion dollars plus for destroyed properties.

      • Happy1 says:

        Sure doesn’t look this way now. Russian troops are mostly jail bait and conscripts who have no moral reason to be there, Ukrainians are fighting for their lives.

  4. Rosarito Dave says:

    In these crazy, volatile times, I read a story like this, that at first glance seems to indicate that, for now, the worst seems to be behind us over there. But then I realize that there are SO many possible black swan events (Russia going into a more scorched earth policy, a real bad winter, some other weather disturbances, sabotage, etc and I think there’s a reasonable chance we have not seen the highs of LNG yet… it just seems like it’s always something….

  5. 2banana says:

    Just how is that gonna happen?

    The obvious answer is through negotiations. If the underlying issues for the war are unresolved, there is no going back to “normal.” And that means compromise by both sides which, by rhetoric of a Russian unconditional surrender, will never happen.

    “In terms of natural gas, the hope may be that this war will soon be over, with Russia kicked out of Ukraine, and that then the energy relationship between Russia and Europe could then be normalized again.”

  6. Elaine Munro says:

    Why would Russia not already have LNG export facilities proximate to production sites? An error in planning for pipe transport only?

    • Wolf Richter says:

      For the same reasons Germany never built any LNG import terminals. Neither side thought they would ever need them. Both have been proven very wrong.

      • Prince Gbanga says:

        Also LNG production mainly makes sense for wells with Helium-rich deposits, like the US great plains.

        You have to liquify the raw gas in order to separate out the Helium (at a certain temperature it’s the only thing left that isn’t liquid). Selling the Helium [more than] pays for the extraordinary cost of cryoliquification.

    • Prof. Emeritus says:

      The main Russian oil and gas fields are located deep inland in Siberia and at the foothills of the Ural mountains. The rivers are not really navigable by LNG vessels and even on the Arctic ocean you have the problem of ice seasonality.
      Besides, the Russians are kind of pipeline-professionals: that’s what they’re good at, with decades of experience they can build and operate their pipelines at rock bottom prices. LNG for them is a kind of a stupid technology that doesn’t makes much sense – you know the myth: the Americans developed the Fisher space pen for millions of dollars to be able to write in space, while the Soviets simply used a pencil. It’s not true, but gives you the idea of why they prefer pipelines over marine transportation.

      • Shawn says:

        Precisely, why build LNG terminals when you can build a pipeline. It’s a lot cheaper to transport.

  7. Djreef says:

    Putin.

    What a failure.

    • Jbaptista says:

      He has 1/4 of Ukraine, now that is failure for sure.

      • Jonathan Vause says:

        no he doesn’t. not even close

      • Happy1 says:

        He’s lost 80K troops to death and injury, failed to topple Kiev, and is manifestly losing the war to sn undermanned country, and is showing the whole world that his military is a farce with poor leadership and crummy weaponry. If he had stayed out of Ukraine, he would be raking in petrodollars. He’s a clown and will likely be deposed.

    • nick kelly says:

      In the last 72 hrs over 10 Russian local officials have called for Putin to be impeached. So far none have fallen out of a window. A number of well known Russian military analysts are describing the Russian ‘withdrawal’ as a disorganized disaster, with huge amounts of equipment left behind. It also looks like the officers have beaten the men to the vehicles, and the latter are escaping on foot. Official Russian news calls the situation ‘serious’.

      The Russian Army has had 8 generals killed in combat, I’m pretty sure a number exceeding that of any participants in WWII until the very end when a number of Axis generals committed suicide. The Russian Army and Russian business are very unhappy.
      The former can do something about it.

      • Bellerian says:

        Disregarding the scale of operations and technology advancement, the number doesn’t seem that high.

        US had 4 generals KIA in WW2, discounting those killed in airplane crashes, and US army involvement didn’t relevant until 43.

        Nazi Germany lost 136 generals in the whole war, circa 22/year, tough most died in the eastern front. Culture and operational doctrine are huge factors.

      • Harrold says:

        Plenty of new opportunities for advancement into senior positions :)

      • Jbaptista says:

        Ok, I get it and you, like a lot of other people are happy that the Ukrainian army finally has a successful offensive in taking Izyum. It was a strategic withdraw that the Pentagon knows about. But what about the main offensive in Kherson? An offensive that has taken months of planning. Can you comment on that? The article quotes a source that the Russians will be driven out of Ukraine. This is factually incorrect and we all need to have a more sober picture of what is happening on the ground if we are going to understand this conflict.

  8. David says:

    The gas storage facilities are filled to a 87.9% capacity. How much of that capacity is useable this winter? Doesn’t the system require a certain level of gas to remain operable? I would think you can’t run it below a certain level (i.e. 15% capacity) just like you can’t run a refinery at 100%.

    • Prof. Emeritus says:

      10-15% is about right for cushion gas, though the problem is rather that storage capacity varies a lot between countries, so those percentages don’t show the whole picture in themselves without knowing what’s in the denominator.
      For example Germany is at 90%, but that only translates to 200 Twh out of 220 Twh capacity, which is only about ~60 days of their annual consumption, while Austria might only be at 70%, but that is 70 Twh, which – being a far less populous country – can last them whole winter and even for the spring.
      Worth looking at the stock/consumption column of the official storage data Wolf linked as there are some extreme outliers that won’t be much safer even with 100% storage capacity. Of course one would assume that sharing the natural gas capacity is a given in the EU, but that shouldn’t necessarily be taken for granted.

    • Observer says:

      First of all, storage is to SUPPLEMENT pipeline flows when pipelines are running at maximum capacity. Generally that is at peak winter flows.

      Storage was rarely if ever built for the complete delivery.

      Gas flows from higher pressures to lower pressures (except when flow compressors are in operation), so the draw down is constrained by the end users pressure needs to run their equipment. Many industrial users would require pipeline pressures of 5-800 PSI. Households generally require less than 2PSIG. Medium size manufacturing 20-100 psig.

      Maximum drawdowns depend on the type of storage, much of which is in porous underground rock. At certain low pressures the porous rock can start to become ground water laden, and that is a problem because when regulation stations drop pressure at the end user, it causes the gas temperature to drop (think of refrigerant equipment) and can freeze off delivery if the gas is wet. Dehy units came remove moisture but can become overwhelmed if there is too much water.

      Some storage maybe pressurized steel tanks which do not have water problems.

      My understanding is that the Nordstream pipe was 56 inches in diameter and had a max operating pressure of 1450 PSI. That’s a delivery of roughly 45 billion BTU/hr – depending on the pipeline internal friction.

      It is likely a fallacy that storage/LNG can supply anywhere near a pipeline continuous flow of that rate in my opinion.

      As you can see there are many moving parts to the issue of supply.

      Rationing looks like a done deal and necessity. Warm weather is critical.

      Maybe others with more knowledge of all the infrastructure in the EU can correct my assumptions, but I worked for 35 years in the NG business.

    • Jay says:

      If storage capacity is – for example – only one week supply then at 88% filled they are in big trouble. According to Fitch Ratings they have reached 80% storage capacity but storage capacity is only 20-25% of annual usage. This would indicate they are still in a very bad spot.

  9. Ed Jones says:

    Germany is not reckless. They are building 3 large electric grid projects to move renewables equal to 12 nuclear plants to be completed in 2025. North sea wind plants will be starting soon In addition there is a steady shift to residential heat pumps away from gas. The German drive to renewables is the strategic reason Russia started the war. Russia must keep fossil fuel relevant to survive. Germany is the long winner

    • 2banana says:

      The average 1200 MW nuke power plant takes up about 50 acres. Times 12 equals 14,400 MW.

      The average high quality commerial windmill farm gets about 15KW per acre with sufficient wind.

      Doing the math….did Germany really clear and build, assuming 24/7 winds, nearly 1 million acres of windmills?

      • Harrold says:

        Nuclear power plants take up a lot more room. Its not like you can put one in the middle of a city. Nobody wants a nuclear power plant next door.

        • robert says:

          The nuclear plants are all in place. They have been and are shutting them down for some reason. Maybe the Japanese tsunami. Does Germany suffer many tsunamis?

        • 2banana says:

          No one wants a windmill farm in the middle of a city either.

          So, let’s say a tie on that measurement.

        • Trucker Guy says:

          @robert

          My brief understanding of German culture when I had to learn that despicable language is that Germans and the German culture are rabidly anti-nuclear. It has some mystic fear for the population it seemed to me. Maybe Chernobyl? Or Japan being bombed? I’ve no clue but it’s like aspartame in the US. It’s been proven time and time again to be safe but ask any Joe off the street and aspartame causes holes in your brain or some nonsense. Although, obviously nuclear is inherently more dangerous than splenda.

        • Harrold says:

          I’ve been to Holland and they have windmills all over the place. Some are quite picturesque and over 200 years old.

        • 728huey says:

          But Germany can build out windmills in the Baltic Sea. Denmark and the Netherlands already do this for renewable energy.

      • MarMar says:

        You don’t need to clear all the acreage for wind farms, and you can have regular food farms or pasturage underneath.

        • ru82 says:

          You do need wind to power wind farms. Mother nature does not always cooperate,

          I have a friend in the midwest whose utility company uses a lot of wind for electricity(50%). H e bought a diesel generator for backup power because he has 5 ir 6 blackouts per year when the wind is not blowing on those days. He is also going to install solar panels on his roof, The generator is not that expensive of an option but the solar panels will set him back $39k

          ———

          In 2019, wind power on one day rose to 59 percent of German power generation, but it fell to as low as 2.6 percent on another day of the year. In the same year, solar peaked at 25 percent and bottomed out at 0.3 percent.

      • Edward Jones says:

        The windmills will be built in the North Sea and the Baltic and will flow power down to Germany, the entire thing is connected to Norway where excess water power will flow south.

        • Bruce Livingstone says:

          Norway has had record low storage levels in the last 2 years and is considering limiting electricity exports. Its water and electricity supply authority is warning of a serious crisis this winter if water levels are not allowed to rise.

      • fajensen says:

        Including the mining operation, the refining of the ore, and the tailings, never mind the pits of waste nobody will deal with and the land to be cleared when another one cooks off?

        Nuke-bros are not big on factoring in externalities.

    • JD says:

      Renewables still account for only 3% of growing energy usages. If it weren’t for all the decommissioned nuclear and coal plants, Germany wouldn’t be so dependent on Russian gas. Keep your wind farms and other BS that triples the cost of a KWH. People want reliable (non-intermittent) energy, not power based on rainbows and unicorn farts.

      • gametv says:

        the last analyst report i read the price per kwh of certain types of solar energy (like First Solar) were lower than natural gas or coal plants. now this might be dependent upon the right conditions and maybe not good for Germany.

        that old lie about renewables not being competitive is just a lie. of course, it costs more to replace a plant than to just run the dirty old plant.

        • jimY says:

          @gametv
          Did that price per kwh include the cost of 100% backup natural gas, coal, nuclear standing by ready to cut in when solar quits?

        • Ervin says:

          The UK has about 25,000 MW of installed wind power and looking at the GridWatch website annual generation graph, the production never has reached 15,000 MW. So what is the cost of electricity produced by the 10,000 MW of capacity never used?

        • Wolf Richter says:

          Ervin,
          The “fuel” is free, always will be. No price hikes ever. The costs are capital investment and maintenance, which fossil fuel plants also have since God didn’t create them for us. The cost of electricity from fossil fuels is the fuel cost plus the capital investments plus maintenance spread over the life of the equipment. The advantage that wind turbines have is that there is no fuel costs ever.

          When power plant owners decide what to build, they estimate the costs of electricity generated by new wind turbines compared to the costs of electricity generated by new fossil fuel plants, and they consider ALL costs, including fuel costs, and they estimate the actual production of electricity and what price they can sell it for over time. People that make power plant decisions aren’t stupid. And “free fuel for life” is always something to take seriously.

        • nightdipper says:

          Costs have skyrocketed where I live. Renewables are MANDATED by Government. It’s not a free market. Power Companies do not generate power base on what would be most efficient, most reliable or what would be most profitable. Government Experts Regulate the way power is generated in my state with no regard to the price the consumer will pay. I’m paying the highest cost in the continental US for electricity and gasoline along with receiving threats of rolling blackouts over the past week but the weather is great. I’m for renewables when they are cost effective and against them when they are not.

        • Wolf Richter says:

          OK, NG in the US has quadrupled in price. Renewables haven’t changed.

        • CRV says:

          @Wolf.
          You triggered the following question: “If renewables are fuel/cost free, why is it then that i pay fossil fuel prices for my 100% green energy contract?”. I can only answer that as energy = energy and the retail price is determined by the mix, not solely by the way it was produced.
          Green energy is expensive because it is unreliable for now. It only becomes cheaper and more profitable when that unreliability is solved. At the moment it’s backed up by fossil fuels mostly.
          Yet i feel tricked in paying the price for gas-generated electricity, while i have a ‘green’ energy contract. Something is not right here.

        • Wolf Richter says:

          What you pay the utility has little to do with what the utility pays its power generators and what the power generators charge the utility has nothing to do with their own fuel costs. Everyone is trying to make a profit, and market rates jump up and down depending on market dynamics, and you’re paying for it all, for the grid and distribution system, corporate profits, dividends, share buybacks, new investments, fancy office buildings, executive bonuses & retirement funds, etc.

          You’re dealing essentially with monopolies. Regulators are supposed to keep abuses down, but they may not.

          By the way, my green energy contract seems to be a little cheaper.

      • james wordsworth says:

        Personally I want energy that does not eventually make the planet unlivable.

        When you use fossil fuels you are never paying the full cost (which would include the replacement cost).

        When something is mispriced (fossil fuels), people overuse and think it is their “right”.

        We need higher energy costs to bring use back to a level that does not damage the long term viability of humans on this planet.

        The american mindset of an unlimited (energy gorging) lifestyle is just a bad dream.

      • fajensen says:

        Eh? About half of Frances nuclear fleet was/is out of commission so Of Course Germany relied on Russian gas to fill the gap. It’s hardly their fault that two suppliers conk out at the same time!

    • Ed7 says:

      I don’t think Russia attacked Ukraine because Germany is investing in renewables. Russia had a very good thing going selling gas to Germany and would have had it continue for many, many more years had they not attacked.

      I would say Russia attacked Ukraine because of Putin’s excessive vanity, his resentment at the fall of the Soviet Union, and because he got some very bad advice about Ukraine from eager-to-please advisors.

      V. Putin actually likened himself to Peter the Great in a recent interview. Imagine how that played in Helsinki and Vilnius.

      • Happy1 says:

        Yes. He made a massive error of hubris and vanity based on sycophantic advisors and dreams of empire.

    • Ian says:

      Then they have not actually learned anything. Renewables will never be a 100% guaranteed source for base load. Nice power if it is there (although renewable is a deceptive term and cheap they are actually not) but they are not strategically dependable enough.

      • AK says:

        Renewables can be a main source of power for industrial civilization if they are paired with the large-capacity energy storage (batteries etc.) to allow uninterruptible power supply when wind dies down or clouds obscure sun. With climate becoming more disruptive and unpredictable, size of this energy storage will have to increase to a point when large portion of the country will have to live off the power storage for weeks. I don’t follow the renewables field closely so I dont know if the technology for such large scale energy storage actually exists, and if it does, what would be its cost and required material. That cost will have to be added to the overall cost of renewables if they are to become the main power source for most of the country.

      • fajensen says:

        That does not matter. What will happen is that those few, who actually, really, need a “100% guaranteed source”, will invest the money to have it.

        The rest will happily (or grudgingly) take the discounts offered for having “smart appliances” that will follow the availability of electricity in “the market”. Every large manufacturer like ABB or Hitachi has this very scenario in their product pipelines.

        PS:

        “Base Load” is some old 1970’s engineer talk, today they use power electronics, like FACTS, to adjust the power flow in the grid. Not the US, of course, the USA has become the “can’t do, won’t do, country”.

  10. Depth Charge says:

    Speaking of speculators, we’re back to moon shots on Wall St. and in crypto. “Fight the FED tooth and nail” is the new narrative.

    I hope Jay Powell and Co. take these speculators behind the woodshed again later this month, and uncork a 150 basis point rate hike followed by “how do like me now?” or some such, to finally put an end to their fantasies. “Dreaming is free.” Alas, still waaayyyy too much money sloshing around.

    • Einhal says:

      There is too much money. The QE of the past 4 months has unwound around $150 billion, while they were adding $120 billion per month recklessly for over a year.

      They need to speed it up, pronto.

      • Depth Charge says:

        “They need to speed it up, pronto.”

        Not happening, because “soft landing.” Get ready for years of excruciating pain as the FED does its own version of ripping the Band-Aid off one hair at a time. They will maximize the torture on the little people who are most hurt by inflation.

        Those hoping for car prices and things to return to what they were are going to be sorely disappointed. The FED is trying to make all of that stick at a permanently high plateau,slow-poking their inflation fight. The longer they take, the higher the price plateau.

    • Ricky says:

      Off to a promising start based on the August CPI data and the market’s knee-jerk reaction over the past hour.
      We’ll have to see how the next 160 hours, or so, play out.

  11. Hans says:

    Wolf, with all your thoughtful commentary and time spent hand-wringing about price increases, it can’t be a careless omission you didn’t mention inflation at all in this report.

    Do you think there’s going to be any correlation over the next few months when prices start to abate?
    Or is that only going to occur because the ECB is the one at the tiller, dictating to all the lowly German bakeries, they need to add a couple euro cent on top of the price for each buttered bretzel?

    Honestly, the narrative is breaking down.

    • Wolf Richter says:

      You apparently have never read ANY of my articles. I’ve been advocating for a Buyers’ Strike since spring last year TO BRING PRICES DOWN. Energy, used vehicles, new vehicles, housing, you name it. The fact that you didn’t read these articles and comments doesn’t mean that I didn’t write them. But we’re now seeing some of these buyers’ strikes.

      I addressed the dropping demand in this article.

      If you ever look at an inflation chart (I doubt it), you will see that inflation rates fluctuate. I said months ago, that in the US, CPI would decline in the second half for reasons that I spelled out and that were already baked in. And I said that CPI rates will rise again in 2023, also for reasons that I spelled out. That’s how it goes with inflation.

      Now services are beginning to be the big drivers of inflation in the US and Europe as well — not energy, where prices are plunging.

      Just as an FYI: I understand that you’re just trolling my site by using different logins, and that actually reading anything I write, or reading anything at all, is the last thing you’d ever do, and that replying to your BS is a total waste of time. But for the purpose of entertaining our readers here, I occasionally crush your troll comments manually; and if I don’t have time, I just throw them unread into the shredder.

      • gametv says:

        you might have already written this in previous articles, but i am very interested in the components of service inflation and the trends.

        as you have probably read, i actually believe inflation is going to drop of pretty rapidly, even before we do much QT. I think we see many areas of goods prices dropping.

        but services inflation is an area that seems to me to be different. the same competitive forces are not necessarily the primary drivers.

        healthcare inflation and upper education inflation have been rampant for years, right? or am I wrong here? and i am real curious how housing inflation is related to home prices? in a high interest rate environment with home prices falling, does that support higher rent payments because people dont want to own, or cant due to high monthly mortgage payments?

        i guess i just surmise that these service areas are not as much supply and demand driven and more driven by government policies.

        • Wolf Richter says:

          In my CPI articles, I break out services inflation into its major components. And I will do so again tomorrow morning when the data comes out. This one will be interesting.

        • Mark Stoneweapon says:

          We’re not going to escape our inflationary feedback loop until defaults are permitted to flush out the excess. Higher rates removed the froth from commodity prices because future markets can be easily manipulated, but prices of goods and services on Main St. not so easy.

      • JeffD says:

        My household has switched to full bore buyers strike. If anything, the price increases are getting even more ridiculous. When they have to refill the Strategic Petroleum Reserve, we are going to feel the substantially gigher price of oil for years to come. I’m expecting somewhere between $120 and $180 per barrel, relatively soon.

        • Flea says:

          All planned so oil companies continue to fleece the public ,of course put it on the middle class bill. No one else is paying,not poor or rich

      • Prince Gbanga says:

        > But for the purpose of entertaining our readers here

        Mission accomplished.

  12. Sams says:

    A comment to the last side note about Russia have to cut natural gas production as it can not be exdported as LNG and they can or will not sell it to Europe.

    That amount of natural gas is then taken of the market, redusing overall supply. Other producers may ramp up production, but only with idle capacity in a short timespan.

    LNG and natural gas prices may then stay elevated for a long time. At least the time it will take to build new capacity.

  13. Xaver says:

    I am living in Germany and my heating runs on natural gas. Households are protected and will get gas even if we have a cold winter. Industry is hurt much more as they had very low prices.

    Because consumers had to pay high prices anyway I am paying now only about double price of last year on an agreement I had to renew in April this year. I think we will have high prices at least for several years.

    As usual poorer housholds face harder problems with inflation. General price increases are expected for 2023 like this year.

    I have no idea what to expect, but it will not be a total disaster.

    • JD says:

      That’s assuming you keep getting gas. Price controls may seem great (in theory), until the supply/demand curve isn’t allowed to function, and the inevitable result is shortages. Hopefully that doesn’t happen… stay warm bruder!

      • Mike Herman Trout says:

        Yes I often read that historically, price controls end badly so I find it interesting to see them popping up around the world at present.

      • rick m says:

        JD- a Bundestag member who cowrote the Renewable Energy Law legislation some twenty years ago says now that “old” energy and “new” renewable energy are two different things and two different markets and the “old” should be disadvantaged at the expense of the “new”, which should be favored. That was the nicest thing he had to say. Government price controls as you said. You’d think that people would have learned better than that by now. Wirtschaftsminister Robert Habeck’s Green paint has peeled some, the fervent anti-AKW people and FDP smell blood. They’re unhappy about some nuke shutdowns that may be being surreptitiously prepared for quick reactivation on his watch, and as was mentioned above they’re not worried about getting home to a cold place themselves. (Fell, Tageszeitung)
        In the late sixties and seventies there were lots of protests against nuclear weapons all over northern Europe and the UK. Germany was split between two superpowers who were planning a rumble on their front lawn, guess I’d be hot about it too. The association of weapons with nuclear power seems natural enough unless you’re a physicist, im not.
        The two planned land based LNG terminals at Wilhelmshaven and Brunsbüttel (assuming they’re not anything to do with the LSRU’s) that will take a while to build are going to be political footballs until complete, if completed. The coalition has had to put aside some differences to prepare for a critical winter and has done well in the time. Next spring will be contentious in Berlin, unless Russia folds like a lawn chair in the interim.

        • Sailorgirl says:

          Rick M.. The Bundestag member when referencing the old renewable standard vs the new renewable standard was referring in particular to biomass aka wood pellets. Wood pellets are classified as carbon neutral when they are far from it. Not as Green as everyone advertised. Even in the US it takes 30 years to grow a southern pine which are harvested for pulp and paper, wood pallets and wood pellets. 90% of current production is being exported to Europe at a huge profit even given transportation costs. . Pellets will be used to supplement NG in district heating and in home furnaces. The primary heating source in old European river towns and cities. River water heated and converted to steam heating apartment blocks and government buildings before being returned to rivers after the steam cools. Big problem besides NG is water. Some plant intakes are below current river levels. Not much of a problem in summer with minimal AC but huge in Winter.

          The NYT had an article where old growth forests were being cut down in order to feed the pellet market in central Europe from Romania, Bulgaria and Slovenia. Governments appeared to look the other way as Virgin growth forests disappeared even in broad daylight.

          Reducing Carbon outputs is much harder then people think.

      • Xaver says:

        Thank you! The gas reserves we already have are enough for the population for this winter. Parts of the industry could face problems. If we are lucky gas will be almost sufficient, but expensive for sure.

    • Old school says:

      The good thing about cold is you can buy appropriate gear if you have some time to prepare. A lot of good camping gear can keep you alive to really cold temps. You don’t really need to keep keep home at 70 degrees F. It would tough to make the sacrifice because politicians got energy policy or geopolitics wrong.

  14. Dawnrider 2054 says:

    My understanding is that the conversion factor to compare the way natural gas is priced in Europe (MWh) versus in the U.S. (MBTU) is 0.293. As a result, the current price in Europe of E191.92 is equivalent to $55.97, about 6.7 times the current U.S. price of $8.389 MBTU.

    Among other things, this should help the U.S. natural gas producers make a little money.

  15. Yort says:

    “In Germany, gas storage facilities have been filling at record pace and are 87.9% full…”

    This is good news, yet I’d be cautious in investing in Germany right now as even a 100% full capacity will not last if the winter is colder than average, as the system needs to be continuously fed natural gas in order to not run out of capacity when the winters are colder than normal.

    German “GDP” will be shut down first as corporations don’t vote politicians into office, and frozen voters don’t either…thus the Germany economy has a high probability of much lower output this winter…

    Mother nature will determine the price of natural gas this winter, which is difficult to predict due to quickly changing weather patterns across the globe. Thus a good idea to have a back-up plan…

  16. historicus says:

    did not the new Prime Minister of Great Britain say she was going to control the prices? And if she does put a cap on the prices there still maybe outages and shortages but the price won’t go above the ceiling she sets.
    A short circuiting of the free markets. Let high prices be the solution to high prices

  17. Rivenshield says:

    What does all of this bode for American natural gas? Should we be investing in LNG futures or fleeing them?

  18. Marty Milner says:

    If you lost money early in the year by underestimating Putin, perhaps you need a second round. Putin hasn’t responded yet to the drop in nat gas or the battlefield reversals. He is more like himself, than anyone else, and he knows leverage and strategy applied to the weak and dependent. October might revert to its historic unpredictability. Don’t be complacent this is a market of experience and agency.

  19. 9Booger says:

    Showing my ignorance, but I have a question. How is natural gas priced by MW-hours? I work in the nat gas industry, and the common measure of volume is SCFH (standard cubic feet per hour, usually in thousands or millions) or sometimes BTU per hour. Electricity I can understand as watts ( or kwh or mwhr)

    • Prof. Emeritus says:

      The heating value is measured on different inspection points. In some areas you get 34 MJ/cubic meter, in others it can go up to 36-37 or even 40+ MJ/cm. From that you can convert to MWh. In the old days cubic meter or cubic feet was common, but people realised they’re often being cheated by the utilities with worse quality gas.

    • Ervin says:

      It all comes down to the btu. A KWH has 3412 btus. In the US households pay by the therm (100,000 btus). Industry pays by the decatherm (1,000,000 btus).

      • B says:

        Just to be pedantic :-)

        Capitalisation is important with units.

        Capital K is kelvin, lower case k is the ‘kilo’ prefix like in kilogram (kg) or kilowatt (kW)

        mWh is milliwatt hour or a thousandth of a Wh
        MWh is a million Wh

  20. Greatvampire says:

    The Russians are not a rich country. In spite of the reserves of natural resources, Russia remains technologically backward and capital-short. It needs Western investment to update its remaining Soviet-era infrastructure, which has been only partially modernized, such as the deal with Renault to produce within Russia itself.

    Renault has recently written off its investment in Russia. Such punishing moves cannot but hurt the Slavic homeland. Look for the Russians to begin clamoring to re-supply Europe with natural gas in 2023-24.

  21. Bobber says:

    What is the purpose of allowing any speculator to purchase commodity futures? A speculator has no underlying business needs, and they have no ability to take possession of anything. They contribute nothing to price discovery. Instead, they offer price volatility and speculation, usually at the worst crunch times. That’s why oil was a NEGATIVE $35/barrel in 2020, then POSITIVE $120/barrell a couple years later.

    • historicus says:

      Speculators are INVALUABLE to a free market.
      They do not create RISK but assume the risk of others.

      They buy from those who wish to sell…
      They sell to those who wish to buy…
      They contribute EVERYTHING to price discovery. The astute speculator creates the most realistic pricing. The market benefits.
      The inept speculator goes broke.

      • Bobber says:

        Not buying it. I guess it comes down to what type of price discovery we want.

        Do we want to discover the market price of a commodity between legitimate producers and consumers, or do we want to discover the price of a commodity driven by speculators, which is based on price momentum and greater fool theory.

        I don’t care if speculators drive up the price of Bitcoin to $1,000,000 because that doesn’t impact anybody else’s life, but when they temporarily drive up the price of a commodity like oil or natural gas, people suffer for no legitimate reason. People have to buy commodities to live. It’s not a choice.

        • historicus says:

          “drive up the price of a commodity like oil or natural gas, ”

          Note the article. High prices brought supply. Markets find equilibrium. Do you wish the govt to set the prices? The producer?
          The speculator must be the third leg of the consumer / producer arrangement. The speculator keeps both honest. They ONLY buy from those who wish to sell….and only sell to those who wish to buy. They themselves must eventually sell what they buy and buy what they sell.

        • Bobber says:

          I don’t see it that way. The commodity speculators buy and sell to each other, distorting the true price. They trade on momentum and emotion, as opposed to fundamentals of the commodity. They provide nothing of value to markets.

          Commodity producers and commodity consumers should set the price. Let the speculators play with Bitcoin.

          The goal is to encourage a stable functioning market, not a casino.

  22. Thanks, Wolf. Great article. Very informative. While prices have backed off, they are still insanely high. Another dilemma for Russia is that shutting down production is not like turning off a switch. It is difficult and expensive. And doubly expensive to turn back on. That being said, it is extremely optimistic to believe that the war will soon be over. To the contrary, Russia may resort to using small tactical nuclear weapons which could quickly collapse the Ukrainian war effort and force them to surrender.

  23. CCCB says:

    Seasonality has obviously been left out. September and October are historically low demand months due to weather… kind of like demand for Christmas trees in June.

    Lets revisit these charts in February 2023 and see where gas prices are.

    • Wolf Richter says:

      Seasonality??? Hahahaha. If something multiplies by 10 or by 20, it’s NOT seasonality. And besides, look at the chart and detect the seasonality. The peak of pikes since Jan 2021 in the chart were:

      Oct 6, 2021
      Dec 21, 2021
      Mar 7, 2021
      Aug 26 2022

      But yes, we’ll revisit the chart, don’t worry.

      • RedRaider says:

        UNG has been very good to me this year. In fact, it might be my most profitable trade ever. It might be dumb luck. But I made the trades based on seasonal factors. The northern tier states need to heat their homes in winter, Dec – Feb. The southern tier states need to cool their homes during summer, Jun – Aug. Due to the vagaries of weather during spring and fall you might have to include a month on either side of these two monthly ranges.

        Last Thanksgiving I decided to play UNG primarily because of the mess in Europe/Russia. I bulked up on UNG from thanksgiving thru Dec, the first month of the range. I took profits during the last two months of the range when appropriate. I was planning on sitting out Mar-May but when the price move started I took advantage of it. Then in Jun I slowly started bulking up on UNG again because it was the first month of the second range. Then I took profit the last two months of the range.

        I think of this as two seasonal trades with a bonus round in between from Mar-May. Even if I hadn’t played this bonus round UNG would have been good for me.

        • RedRaider says:

          PS

          I am currently out of UNG. Waiting for Thanksgiving to arrive to start bulking up on UNG for the winter runup. Of course, if it looks like another bonus between now and then I’ll play it.

  24. Vick says:

    ExconMobil is not dumb. They are planning to produce 1.7 million barrels of oil a day before 2026, in a tiny South American country called Guyana.

    The company secured a lucrative deal in the lucrative Stabroek Block which may contain as much oil reserves as Venezuela, making Guyana as rich as Luxembourg due to its small population of 800,000 people.

    Russia wants to continue the war and halt natural gas? Guyana has about 35 TRILLION square feet of natural gas and about 20 billion barrels of oil discovered and prospected to date in less than 5% of the acreage.

    • Sams says:

      A pipeline from Guyana to Europe is mighty long.😉
      The process make LNG more expensive than pipelinegas unless the pipeline is very long. A pipeline from Guyana to the USA would be shorter, and may make money on the expense of US production.

    • Adam says:

      What happens to oil and natural gas prices the day that Venezuela and Iran get back to production?
      My prediction is that oil prices will fall the only exception being a world war skyrocketing oil prices for a short while.
      Remember that Guyana’s western neighbor Suriname has 7 billion barrels of oil discovered to date and they are less corrupt, have their own state company and Staatsolie predicted 30 billion barrels of oil and gas. So much for peak oil.

  25. rjs says:

    how many days of normal consumption does 87.9% full storage cover if Russia stops all exports?

    • Wolf Richter says:

      That’s the wrong question because not 100% of NG comes from Russia. Now only a small percentage comes from Russia since Russia stopped most exports, and Germany is getting most of its NG from somewhere else.

  26. Realist says:

    Russia is burning gas for estimated 10 million € close to the Finnish border. The flare is visible from Finland. This is gas that the Russians are unable to sell elsewhere.

  27. Mike R says:

    Music to my ears, that this is happening, and that Putin does not have a total stranglehold on whether Europeans get enough gas this winter.

  28. Ervin says:

    Wolf

    When the cost of a new wind farm’s $/kWh is determined the cost of the real necessary standby power is never included.

    When politicians determine the building new power systems based on carbon emissions as the primary concern then good engineering choices for the most reliable least expensive system goes out the window.

    • Wolf Richter says:

      As I said, power operators aren’t that stupid. They make those calculations routinely in their decisions because they want to make a profit — and they’re making a profit. It’s not politicians that build power plants in this country. It’s industrial companies.

  29. c1ue says:

    Couple of notes:
    1) As I understand it, storage facilities in Europe were never intended to replace incoming natural gas. They exist to smooth out spikes in demand due to extreme cold weather events because large ramps in demand cannot be met by supply. Full storage capacity thus won’t mean much unless winter is very mild.
    2) LNG cargos – even if 1 ship cargo = 1 bcm, Europe uses at least 400 bcm of Russian gas. 18 more per FSRU, even times 7 – is nowhere remotely approaching 400 bcm.

    The apparent import of “Chinese” LNG shows just how ludicrous the entire situation is.

    • Wolf Richter says:

      c1ue,

      ” Europe uses at least 400 bcm of Russian gas.”

      No it doesn’t. Not anymore. Russian gas has been mostly cut off. Europe is now mostly doing without it, and it’s finding ways to cut demand and get supply from other sources. Yes, it’s a tough situation.

      LNG tankers go where the highest prices are. And right now, they’re in Europe.

    • Prof. Emeritus says:

      The 1) point is highly dependant on geophysics. If you don’t have huge depleted oil & gas fields with the right rocks that are easily convertable to storage facilities then it’s a lost cause to begin with. Austria, Latvia or Hungary had it and there are also speculations Sweden is lying about their true capacities and they actually have massive underground reserves, but officialy they don’t have anything in the drawer.

  30. CreditGB says:

    So now the story is happy days are here again?

    I’d put money on manipulation of a big dip to allow BTFDers to lock in a lower price before the next SHTF item comes floating down the sewer pipe.

    What was it, 3 or 4 articles ago where some edge of bankruptcy SPAC investment was being hawked by the big investment houses.

    These aren’t markets anymore, but a chart machine with levers to raise and lower prices to allow for the ins and outs crowd to cash in on every change.

    Can ya blame me for being so skeptical?

  31. Tom Jones says:

    Boycotts are only good short term. Work.- Arounds always follow. Everybody shoots theirself in the foot. The US weaponizes the dollar, and alternatives are found. Russia cuts gas. Alternatives found. The dollar loses some of its hegemony as a reserve currency. Russia loses a cash cow. Europe loses cheap energy. World economic integration is ideal for best prices, as long as there are no psychopaths in charge in any major country, or in any with nukes. Therefore, redefining necessities as national security will again be required, and supplied within-country, as much as possible. Fragility/vulnerability will give way to becoming Robust/self-sufficient,
    in the long term.

  32. IronForge says:

    Engdahl did a Piece on NEO and his website on this NLD Energy Xchg.

    Escobar cites Engdahl in his “Autopsy on Germany” Article widely distributed.

    These Xchg and EU Policies are designed to replace Long Term Contracts with SpotPx/Futures Trading.

    Explains why Scholz/Baerbock/Habeck couldn’t get anything from QAT/UAE – they wanted to sell in 20year Contracts.

    Hopefully, they’re importing Coal and/or Timber/Pellets from the Americas+AUS for this Winter…

  33. SpencerG says:

    Europeans pretty much always prove to be smart and industrious when they get motivated.

  34. Ash Quaraishi says:

    “In Germany, gas storage facilities have been filling at record pace and are 87.9% full” – Gas storage capacity is only 20% of the overall demand.

  35. John k says:

    German prosperity has for decades depended on cheap Russian energy. This is the reason no chancellor regardless of party has made any real effort to reduce Russian energy imports. A buyers strike at any point in time would have left the world short with gas-intensive corps shutting down, exactly as is happening now in Germany… and winter is months away. Putin still provides a bit bc he dreams of reviving trade with eu; maybe futile, maybe not. If not, Russia/ China will quickly complete pipelines to shift cheap gas from eu to China/other Asia, who will be very happy to replace pricey lng that eu is desperate for at any price.

    There is not sufficient infra now to replace Russian gas in eu, much less Germany, which was importing 55% of consumption. Not enough ships. Renewables are cheaper, but take time and for at least an extended period must have fossil backup.
    Us gas producers making big bucks but result is 3x gas/electric in us, consumers not amused. Biden talking of reducing exports bc midterms even though he promised we would replace Russian gas, he must have known that’s not possible for years, if ever. We’re shipping gas out even though fracking sweet spots have been drilled, explains why frackers are not rushing to drill, baby, in spite of big prices.
    As others have pointed out, storage is designed to supplement for winter cold’s peak demand when pipelines not sufficient to meet demand, not to replace the pipes. (The us northeast is arranged exactly like this.). Nearly half of German normal supply is out now, poorly supplemented by an insufficient amount of record priced lng. Gas energy ind have shut and won’t reopen for an unknown period. Fertilizer, chemicles (big in Germany) metal smelters. Likely steel mills, meaning eu shortages/high prices/supply problems, think autos. There will be knock-on employment effects around those factories.
    Eu citizens have not been consulted, maybe unhappy as jobs go away, gov cuts support in various areas. Still months from cold.
    But eu gas price down 40%! My spec is that optimistic market dropped enough with high storage that longs had to sell into falling market to cover. We might have a new situation at 1-year anniversary of invasion in feb. Pray for warm winter there and here.

  36. Arthur says:

    “Recklessly.”

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