Back in April 2020, just as the scope and depth of the Covid-19 pandemic was becoming evident (except in the USA’s White House), Nouriel Roubini wrote his piece “Ten Reasons Why a Greater Depression for the 2020s is Inevitable.” We refer to his ten deadly drivers of this depression scenario in Part I of this series. During the course of this series on signs of economic system breakdown, we will delve into these factors.
(October 7, 2021 updates to this Aug. 25th post at bottom of page).
Part One of this series referenced Roubini’s statement that “you finish with deadly, manmade disasters like pandemics and climate change–they’re not natural disasters, but as we know are manmade.”
During 2020 and 2021 we began to find in the financial media pages, a number of stories which showed the impact of climate-change-related events on the actual supply of natural gas in the global economy. Gas shortages had developed around the world and because of the global nature of energy trade, this impacted even the United States, which has grown the natural gas supply enormously since 2010 owing to the development of fracking for tight oil and natural gas.
This story appeared prophetically in January, 2021, a month prior to the enormous disruption wrought by a “freak winter storm” that struck Texas and brought down the power grids in that state, along with shutting down much refinery activity and even oil and gas drilling sites.
From Oil and Gas Middle East-dot-com, in January 2021
by Staff Writer January 24, 2021
As the climate is changing, the Arctic is warming four times faster than global averages, causing the circumpolar Jetstream to weaken and move southwards. Consequently, freezing cold air masses – known as the Polar Vortex – descend to more densely populated areas in the earth’s Northern Hemisphere, where humans have no other immediate choice but to increase fossil fuel consumption to keep warm.
Analyzing global temperatures and related weather phenomena, Rystad Energy believes that the increased frequency of this weather pattern – which has caused a rise in demand for coal, liquefied natural gas (LNG), electricity and even a bit of oil – is here to stay. Recent eye-popping price spikes and their spread between summer and winter will widen, especially for gas, both natural and liquefied.
With European and Asian markets hungry for natural gas and LNG, storage levels are getting depleted. And with the Polar Vortex expected to create another cold snap in February, a perfect demand storm will likely cause a spike in global demand and contribute to a 4% rise in LNG consumption this year, reaching about 377 million tonnes (MT) in 2021 versus 363 MT in 2020.
Josefine Fokuhl, John Ainger and Isis Almeida
August 5, 2021·5 min read
(Bloomberg) — After lockdowns forced Basel Hamzeh to close his cafe in a trendy Berlin neighborhood for months, the 53-year-old is confronting a fresh crisis: high energy bills.
The cost of natural gas and electricity has surged across Europe, reaching records in some countries, as businesses re-open and workers return to the office. In Germany, wholesale power prices have risen more than 60% this year, leaving the owner of the Frau Honig cafe in Friedrichshain with no option but to raise prices of everything from cappuccinos to cinnamon rolls.
“The higher power prices were a double whammy after our cafe was forced to close for such a long time, doing only takeaway during the pandemic,” he said. “We just had to pass on the costs to customers.”
Energy prices are rising around the world as the global economy emerges from the pandemic, fueling concerns about inflation. In Europe, plans to decarbonize the economy are also playing a part as utilities pay near-record prices to buy the pollution permits they need to keep producing power from fossil fuels.
Add to that shortages of natural gas and the result is super-charged electricity prices, a bill consumers will eventually have to foot. Spain was already forced to cut energy taxes as power prices rose to a record, and the U.K. is expected to allow utilities to increase bills a second time this year, a move that will be announced Friday and affects 15 million people.
Mon, July 26, 2021, 2:03 PM
Natural gas prices continued to break out to fresh contract highs but finished well off the peak of the day. Prices hit a new contract high at $4.18 per MMbtu easing to close up 1% for the day. Warmer than normal weather is expected to cover most of the United States over the next 6-10 and 8-14 days. According to the National Oceanic Atmospheric Administration, there is one tropical storm in the Atlantic or Gulf of Mexico that has a 10% chance of becoming a tropical cyclone over the next 48-hours. U.S. consumption of natural gas rose 1% in the latest week.
Natural gas prices continued to rally on Monday. The August contract closed at an all-time high for the 6th consecutive trading session. Target resistance is now the 2018 highs at 4.92. Support is seen near 10-day moving average at 3.84. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought. The current reading on the RSI is 79 above the overbought trigger level of 70 which could foreshadow a correction. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line crosses above the MACD signal line. The MACD histogram also generated a crossover buy signal.
Power Generation Drives Demand
Natural gas consumption in the electric power sector drives total consumption higher. Total U.S. consumption of natural gas rose by 1.5% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 3.3% week over week as much of the West and Northern Plains continued to experience higher-than-normal temperatures.
This article was originally posted on FX Empire
Anna Shiryaevskaya, Stephen Stapczynski and Ann Koh
August 6, 2021
(Bloomberg) — The era of cheap natural gas is over, giving way to an age of far more costly energy that will create ripple effects across the global economy.
Natural gas, used to generate electricity and heat homes, was abundant and cheap during much of the last decade amid a boom in supply from the U.S. to Australia. That came crashing to a halt this year as demand drastically outpaced new supply. European gas rates reached a record this week, while deliveries of the liquefied fuel to Asia are near an all-time high for this time of year.
By 2024, demand is forecast to jump 7% from pre-Covid-19 levels, according to the International Energy Agency. Looking further out, the appetite for liquefied natural gas is expected to grow by 3.4% a year through 2035, outpacing other fossil fuels, according to an analysis by McKinsey & Co.
Surging natural gas prices means it will be costlier to power factories or produce petrochemicals, rattling every corner of the global economy and fueling inflation fears. For consumers, it will bring higher monthly energy and gas utility bills. It will cost more to power a washing machine, take a hot shower and cook dinner.
It’s especially bad news for poorer nations like Pakistan and Bangladesh that reworked entire energy policies on the premise that the fuel’s price would be lower for longer.
European natural gas rates have surged more than 1,000% from a record low in May 2020 due to the pandemic, while Asian LNG rates have jumped about six-fold in the last year. Even prices in the U.S., where the shale revolution has significantly boosted production of the fuel, have rallied to the highest level for this time of year in a decade.
Updates – October 7 2021
Elena Mazneva and Javier Blas
Wed, September 15, 2021, 9:47 AM
Europe’s soaring energy markets are exposing the risk of power blackouts this winter, especially if freezing weather worsens the region’s already exceptionally low natural gas inventories, according to Goldman Sachs Group Inc.
While higher gas prices can trigger supply and demand adjustments to offset the tight market, these are largely already priced in, Goldman analysts including Samantha Dart said in a note. As a result, a colder-than-average winter would mean Europe needing to compete with Asia for supplies of liquefied natural gas, driving prices even higher.
And there’s a “non-negligible risk” that LNG directed to Europe won’t be enough to prevent a depletion of gas inventories by the end of winter, especially if weather is cold in both Europe and Asia, the analysts said.
“Under such an outcome, the only balancing mechanism would be a significant further rally in European gas and power prices reflective of the need to destroy demand, with curtailed power demand in the industrial sector through blackouts,” they said.
This scenario from the bank adds to mounting concerns about an energy crisis in Europe, just as economies recover from the pandemic.
Joe Carroll and Gerson Freitas Jr
September 28, 2021· Bloomberg News
For a multitude of reasons, U.S. shale is in no position to bail out Europe. Indeed, supplies are so tight that Americans are staring down their own supply squeeze — and the accompanying sky-high utility bills.U.S. stockpiles haven’t been replenished as much as usual in recent months after summer heatwaves sent energy demand soaring and the post-pandemic industrial recovery diverted fuel to power plants and factories. Meanwhile, many major shale drillers have been funneling cash to shareholders and focusing on climate goals rather than boosting production.
The result: There’s very little supply cushion in the U.S., and whatever is available for export as liquefied natural gas is going to be fought over — not just by desperate European importers, but also by buyers in Asia, who face an energy crunch of their own and are willing to pay a premium.
Millions of people around the globe will feel the impact of soaring natural gas prices this winter.
By Stephen Stapczynski, Bloomberg Businessweek
Sept. 26, 2021
Nations are more reliant than ever on natural gas to heat homes and power industries amid efforts to quit coal and increase the use of cleaner energy sources. But there isn’t enough gas to fuel the post-pandemic recovery and refill depleted stocks before the cold months. Countries are trying to outbid one another for supplies as exporters such as Russia move to keep more natural gas home. The crunch will get a lot worse when temperatures drop.
The crisis in Europe presages trouble for the rest of the planet as the continent’s energy shortage has governments warning of blackouts and factories being forced to shut.
The spike has forced some fertilizer producers in Europe to reduce output, with more expected to follow, threatening to increase costs for farmers and potentially adding to global food inflation. In the U.K., high energy prices have forced several suppliers out of business.
Mon, October 4, 2021,
(Reuters) – Regional natural gas markets in the United States are seeing prices for this winter surge along with global record highs – suggesting that the energy bills causing headaches in Europe and Asia will hit the world’s top gas producer before long.
Gas prices in Europe and Asia have more than tripled this year, causing manufacturers to curtail activity from Spain to Britain and sparking power crises in China.
The United States has been shielded from that global crunch because it has plenty of gas supply, most of which stays in the country since U.S. export capacity is still relatively small.
The benchmark U.S. natural gas contract has been rallying, lately hitting seven-year highs, but its $5.62 per million British thermal units (mmBtu) price is a far cry from the $30-plus being paid in Europe and Asia.
However, the U.S. market is worried about the coming cold, particularly in New England and California – where prices for gas to be delivered this winter are far above the nationwide benchmark. In New England, buyers are expecting gas to cost more than $20 per mmBtu.
High winter prices are nothing new for New England and California, where the limited number of pipelines into both regions regularly become constrained on the coldest days. But this winter could be worse.
Stories such as these illustrate that the impact of geophysics, the Earth System, on our human economy is here and now. It is not a matter of when these impacts will be felt, any longer, but rather, how will our societies respond?
In a lower-income / moderate income region such as our North-Central Wisconsin, the impacts of natural gas shortages will be felt first, and hardest, by our elder population who depend on gas furnaces to maintain heat in their housing units during winter. Also impacted will be low-income workers and their children who pay their own utilities in rental units where the rent is already “too damn high.” Add in disabled persons trying to maintain independent housing. In summer months, elders will again be impacted by the need to maintain livable temperatures when temperatures rise beyond the level which is healthy for them, and they cannot afford the electric bills for air conditioning, when their electric utility burns natural gas to provide their electricity?
How can a society such as ours, which failed to come together to protect itself from a deadly pandemic, come together to handle the degradation of the energy substrate that underlies and powers the entire economic system of the society? If we understand both climate change and pandemics as deadly manmade disasters, how are we going to respond to the climate disasters better than we responded to the viral disaster?
These are the questions that we hope our North-Central Wisconsin people will begin to ask themselves, to take seriously, and to act on, in a unified and well-planned manner. These are matters that require very long-term planning, on the time-scale of decades, not 2-year Congressional election cycles. Are our communities going to be able to work together on such huge long timelines?
These are questions we need to be asking ourselves now