Electricity’s Shocking Rise – It’s the Fossil Fuels, Stupid.

July 30, 2022

Business Insider:

The natural gas market is still in a state of crisis in response to Russia’s invasion of Ukraine and isn’t likely to get better while war in Europe rages on. 

A report from the International Energy Agency states that natural gas is no longer the reliable and low-cost energy source it once was, and that it’s future is uncertain as global powers battle an energy crunch amid sanctions aimed at curtailing funding for Russia’s war in Ukraine. 

The situation is exacerbated by a myriad of other factors worldwide: a fire at a liquefied natural gas facility in Texas hobbling exports, US industry output suffering from high energy costs, and European factories shuttering for the same reasons, have all helped paint a bleak picture for global energy flows.

“The European Union’s commitment to speed up the phase-out of Russian imports — historically its largest supplier – is transforming Europe’s gas market, with repercussions for global gas dynamics,” the IEA note says.

While the EU is desperately trying to replace Russian supply with liquefied natural gas, which is cheaper to transport, the move is further straining the market. The US has quickly become a large supplier of the energy source since the beginning of the year,marking a quick shift away from Russian flows. The report added that much of its forecasted uncertainty assumes that Russia will curtail flows to more European countries as it has done to Bulgaria and Poland. 

But the US has it’s own supply chain constraints that put a ceiling on flows to Europe, experts say. The fire at the Freeport LNG facility in Texas shuttered the plant for two weeks, and officials said it wouldn’t be back to full capacity until the second half of this year. 

“Generally, I do not think that the U.S. can fill the void of Russian gas if it were to be shut off completely,” said Sean Morgan, director at Evercore ISI. “U.S. exports are essentially maxed out already and the recent Freeport fire took about 17% of U.S. exports offline for a prolonged fire.”

Stephen Ellis, energy and utilities strategist at Morningstar, echoed the sentiment, adding that the current trajectory for LNG exports is already operating at full capacity. In the near term, he said, “there’s not much more that they can do.”  


4 Responses to “Electricity’s Shocking Rise – It’s the Fossil Fuels, Stupid.”

  1. “Electricity’s Shocking Rise – It’s the Fossil Fuels, Stupid.”

    No it’s not the fossil fuels! It’s the unreliable wind and solar creating an utter reliance on gas. There is no grid scale battery solution. There’s not enough mining. There’s not even enough mining for EVs.

    A recent analysis by the Wood Mackenzie consultancy found that if EVs are to account for two-thirds of all new car purchases by 2030, dozens of new mines must be opened just to meet automotive demands—each mine the size of the world’s biggest in each category today. But 2030 is only eight years away and, as the IEA has reported, opening a new mine takes 16 years on average.

    Despite these and similar analyses, many countries, and many US states, are now proposing to accelerate deployment of solar, wind, and battery technologies without clear plans for overcoming the material shortfalls. One study sponsored by the Dutch government offered a blunt statement of reality: “Exponential growth in [global] renewable energy production capacity is not possible with present-day technologies and annual metal production.”

    Another area of concern for these new technologies is their future cost, which will be inseparable from the velocity and scale of their entry into the market. Today, future plans for solar, wind, and battery technologies assume costs will continue to fall significantly, as they have over the last decade. But the implications of record-breaking demands for mineral commodities suggest the reverse is more likely.


    The only thing like an alternative to gas is coal, which is what Germany uses. They have reliable electricity, but its’s the most expensive in the world. If you want to cut CO2 emissions, build nuclear plants. These are just undeniable, indisputable, economic and physical facts.

    • jimbills Says:

      You’re conflating a potential future problem (resource issues with massive growth in renewables) with a current problem (the very recent spike in electricity prices). The recent spike in prices, which is what this blog post is about, is down to two things – the invasion of Ukraine causing NG supply issues, and the upturn in the economy after COVID creating a sudden increase in energy demand. It’s not the already built renewables that are causing this – if anything, they are saving economies with preexisting energy supply that doesn’t need to come from Russia or lethargic U.S. NG production. The current rise in electricity prices would be much, much worse without renewables.

      Future problems – if the money is there, the mining will be built. Period. You’re worrying about a future problem from present-day eyes – i.e., we don’t have the mining in place to create EVs and dollar panels today, therefore it’s impossible they’ll be built in the future. You see the logical error there, right? The mining gets built first.

      I won’t argue about nuclear – I also think it should be on the table for future electricity supply.

    • rhymeswithgoalie Says:

      “Today’s plans to decarbonize global energy systems, which center on a massive expansion in the use of solar, wind, and battery technologies, need to better account for the high environmental and economic costs of materials and minerals.”

      Oopsies! They seem to have left out the grossly disproportionate effects of extraction of use-once fossil fuels when comparing to the extraction of materials that have long term use and can be recycled at end of life.


      EVs are to account for two-thirds of all new car purchases by 2030, dozens of new mines must be opened just to meet automotive demands—each mine the size of the world’s biggest in each category today.

      Duh! Of course lithium and other mines will be much bigger than current ones, because we haven’t been using as much lithium as we will in the future. The lithium previously extracted from the Salton Sea geothermal plants did not get as much attention as it did because market demand was low, but now they’re sitting on a rich source they’re only now beginning to tap to meet long-term growing demand.

      After the ramp up to a new level of extraction to meet the transition to new uses, there will be a steady-state supply of recycled materials (especially lithium). Compare that to ICE vehicle catalytic converters, which contain upwards of $300 worth of material for scrap (depending on the current market value of those costly minerals).

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