Putin’s Carbon Tax in Action

March 8, 2022

What no politicians have had the guts to try, Vladimir Putin has enacted unilaterally, and globally.

Wall Street Journal:

Natural-gas prices shot to record highs in Europe as intensifying fighting in Ukraine threatened to reduce supplies of the heating and power-generation fuel from Russia.

Russian gas is still flowing through Ukraine in large quantities to customers in Europe. However, traders fear those supplies could be cut off as Russia intensifies its fighting, and that Russian gas supplied via other pipeline routes might get disrupted by Western sanctions on Moscow. Alternatives such as liquefied-natural gas from the U.S. would struggle to fill the hole left if Russian exports were removed, and come at huge expense as Europe competes with other gas-consuming regions for scant supplies.

Those concerns drove futures contracts for gas in the northwest European market up 42% compared with Friday’s close to more than 270 euros, equivalent to $293, a megawatt-hour Monday. Earlier in the session, prices hit a record high of 345 euros.

Before Friday, prices had never topped 200 euros, according to FactSet data stretching back to 2013. Before last year, they had never surpassed 30 euros.

The surge in prices for a fuel widely used to heat homes and generate electrical power threatens to cause economic disruption in Europe, where energy-intensive industries including fertilizer and metal producers already had cut output in 2021 when prices were well below where gas traded Monday. The rise will likely cause difficulties for the European Central Bank, which has taken a more cautious approach to raising interest rates than the Federal Reserve and Bank of England in the face of rising inflation.

Seeking Alpha:

Regardless of any need for more natural gas abroad, “we have limited capacity to export LNG. Once those existing facilities are running full-out to load cargoes, that’s it,” University of Tulsa’s Tom Seng says, even as U.S. liquefied natural gas expansion projects are a top priority as the need becomes more evident.

Cheniere Energy said it has sold out through the 2040s of the planned production from the newest trains at its Sabine Pass and Corpus Christi projects.

Oil too.

Rig count reflects price crashes in 2014 and 2020, still fresh in the minds of drillers, who are reluctant to jack up production too quickly, preferring to make good on long delinquent promises to investors.

3 Responses to “Putin’s Carbon Tax in Action”

  1. John Kane Says:

    I was not aware Vladimir Putin was such a fervent environmentalist.

    Let me get this straight, after years of sanctions, blockades, a possible assignation attempt, stealing gold reserves, and coup attempts the USA is going to ask Venezuela for oil? Well, that’s nerve anyway.

    • rhymeswithgoalie Says:

      Ach, between that and the nonlinear affect of increasing EV growth on oil demand, Putin must be freaking out about loss of revenue (whether skimmed or used by the state).

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