Euro Energy Markets Blowing Up

August 23, 2022

How many times have we had to learn this lesson? Relying on bad actors for fossil fuels which can be turned off, held up, or embargoed is a lousy idea.

Mike Peters cartoon from the 70s is still relevant today.

Bloomberg:

European gas and power prices surged as panic over Russian supplies gripped markets and politicians warned citizens to brace for a tough winter ahead.

Benchmark gas settled at a record high, while German power surged to above 700 euros ($696) a megawatt-hour for the first time. Russia said it will stop its key Nord Stream gas pipeline for three days of repairs on Aug. 31, again raising concerns it won’t return after the work. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month.

“The catastrophe is already there,” Thierry Bros, a professor in international energy at Sciences Po in Paris, said. “I think the major question is when EU leaders are going to wake up.”

In one of the most dire warnings yet, Belgian Prime Minister Alexander De Croo said Europe could face up to 10 difficult winters. It would put sustained stress on major economies and leave thousands of households struggling to pay their bills. Concerns over the economy pushed the euro currency to a two-decade low on Monday, while inflation is at the highest in years.  

Europe finds itself in a precarious situation with the official start of the winter heating season just over a month away. Nations are rushing to fill storage sites, but they are still heavily dependent on Russian gas and any further cutbacks could make rationing a reality. 

French President Emmanuel Macron warned people of the potential hardships in the coming months, and asked them to “accept paying the price for our freedom and our values,” he said in a speech Friday commemorating the liberation of a town in southern France in World War II. 

Germany’s circumstances are particularly urgent: the country’s dependence on Russian gas leaves it vulnerable as it desperately searches for alternative supplies. The nation is considering restarting coal-fired power plants and may extend the life of remaining nuclear power plants, while urging gas conservation. Industries in Europe’s biggest economy are already take a major hit. 

Same is true for any limited commodity that can be turned on or off.

New York Times:

As Western leaders have raced to respond to Russia’s invasion of Ukraine with steps to reduce imports of Russian fossil fuels, U.S. lawmakers and officials are confronting a thorny dilemma over another source of energy: the Russian uranium that powers many American nuclear plants.

While President Biden banned imports of Russian oil, gas and coallast month, his administration did not immediately move to halt uranium imports from Russia. The United States relied on Russia for about 16 percent of its uranium in 2020, with another 30 percent from two of the country’s close partners, Kazakhstan and Uzbekistan, according to the U.S. Energy Information Administration.

Russia’s exports of oil and gas have received outsize attention as Western nations have sought to impose economic penalties on the country. But the invasion of Ukraine has also put a spotlight on Russia’s sale of uranium to the United States, the world’s largest consumer of the metal, where nuclear power accounts for about 20 percent of electricity generation.

Dismay over the war has given common purpose to energy officials who view nuclear power as key to Mr. Biden’s long-term vision for reducing carbon emissions and to members of Congress who have argued for years to scale up domestic uranium production and enrichment. To both camps, Russia’s aggression adds urgency for the United States to reduce its dependency on imported uranium and invest in domestic suppliers that could help power the next generation of nuclear plants.

Senator John Barrasso, Republican of Wyoming, introduced a bill in March to ban imports of Russian uranium, and a matching, bipartisan bill was introduced in the House last week.

“While banning imports of Russian oil, gas and coal is an important step, it cannot be the last,” Mr. Barrasso said in a statement. “Banning Russian uranium imports will further defund Russia’s war machine, help revive American uranium production and increase our national security.”

At her confirmation hearing last month, Kathryn Huff, Mr. Biden’s pick to lead the Energy Department’s Office of Nuclear Energy, said the invasion of Ukraine demonstrated the nuclear industry’s vulnerabilities and highlighted the need to increase domestic production.

“It is critically important that we wean ourselves off unstable, untrustworthy sources of our critical fuels, including uranium,” she said.

The United States has sought to manage its reliance on Russian uranium since the end of the Cold War. Under an agreement reached with Russia’s Ministry for Atomic Energy in 1992, the United States sought to limit purchases of Russian uranium to about 20 percent of its total need. An amendment to that agreement, signed in 2020, aimed to further reduce imports to 15 percent by 2028.

But as of 2020, close to half the uranium used for fuel in the United States was imported from Russia, Kazakhstan and Uzbekistan. The amended agreement authorized the United States to purchase as much as 24 percent of its nuclear fuel from Russia next year.

One Response to “Euro Energy Markets Blowing Up”

  1. rhymeswithgoalie Says:

    “The catastrophe is already there,” Thierry Bros, a professor in international energy at Sciences Po in Paris, said. “I think the major question is when EU leaders are going to wake up.”

    I think we’ve pretty much determined that elected politicians won’t do anything remotely difficult until or unless they believe people are clearly ready to vote them out of office. And while industry, corporate and banking lobbyists are grooming the politicians with dark money, they’re also distracting the public away from any movement to have them taxed or regulated any more. It’s just an automatic mechanism now.


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