Germany says it still needs Russian oil and gas. Russia responds by threatening a gas embargo.
Germany says it still needs Russian oil and gas. Russia responds by threatening a gas embargo.
By Robert Romano
Germany will continue to import oil, coal and natural gas from Russia as German Chancellor Olaf Scholz rejected calls for a Europe-wide embargo on Russian oil and gas, exposing some of the limits to the West’s response to Russia’s invasion of Ukraine.
“At the moment, Europe’s supply of energy for heat generation, mobility, power supply and industry cannot be secured in any other way [except to import from Russia]. It is therefore of essential importance for the provision of public services and the daily lives of our citizens,” Scholz said on March 7.
That’s actually all accurate, calls from Ukrainian President Volodymyr Zelensky to “boycott of Russian exports, in particular, the rejection of oil and oil products from Russia” notwithstanding. Germany gets 55 percent of its natural gas and 35 percent of its oil and about half its coal from Russia.
The consequences of an embargo for Germany might therefore resemble what happened in Texas with the 2021 ice storm . Last year, 246 Texans died when power could not be restored in Feb. 2021 after half of the state’s electricity generators went offline amid surging demand, forcing Electric Reliability Council of Texas (ERCOT) to engage rolling blackouts across the state to save the electricity grid, and leaving more than 4.5 million homes and businesses without power and heat for days.
The problem with an embargo, from Germany’s perspective, is that it would not last for days, it would last months or even years while the war continues with no offsets in sight.
Even without an embargo, Title Transfer Facility (TTF) natural gas prices in the Netherlands are already up to $41.06 per 1,000 cubic feet as Russia’s invasion wears on, compared to $4.80 per 1,000 cubic feet for U.S.-produced natural gas here . Prices would be even higher in Europe with the embargo.
That is not mere economic pain, it would be deadly as millions could lose the ability to heat their homes, and not just in Germany, but across the entire continent. It might hurt Europe more than it hurts Russia, which has enough oil, coal and gas for itself, even as higher oil and gas prices will absolutely fuel Russia’s ability to wage war — and the embargo might not save Ukraine.
In the meantime, the U.S. is flirting with its own embargo against Russia, symbolic as it is. The U.S. imports about 405,000 barrels a day of oil from Russia , a little more than 2 percent of U.S. consumption , and legislation in Congress would ban it. We’d barely notice it because U.S. producers could easily offset that.
Still, Russian Deputy Prime Minister Alexander Novak hours after Scholz spoke promised to escalate, threatening an embargo on gas to Europe should Western countries enact oil embargoes. Novak warned a "rejection of Russian oil would lead to catastrophic consequences for the global market... We have every right to take a matching decision and impose an embargo on gas pumping through the [existing] Nord Stream 1 gas pipeline."
So, what to do?
The U.S. could produce more, particularly natural gas, while Saudi Arabia and OPEC could deal with the oil.
In 2020, the U.S. produced about 36.2 trillion cubic feet of natural gas in 2020 , and consumed about 30.5 trillion cubic feet and exported 5.3 trillion cubic feet , according to the U.S. Energy Information Administration (EIA). Of those exports, about 793 billion went to Europe. In 2021, the number was about the same at 776 billion, according to the European Commission .
In order to offset Russia — in 2020, the European Union imported 9.1 trillion cubic feet of natural gas , according to Eurostat , and about 41 percent Europe’s imports come from Russia , or about 3.73 trillion cubic feet a year, plus 1.9 trillion cubic feet a year that would have come from Nordstream 2 — it would have to more than double exports by about 5.6 trillion cubic feet to 41.8 trillion cubic feet in order to completely offset Russia, a 15 percent increase.
But we’re not doing that. President Joe Biden has not even announced anything about tapping into America’s vast resources to support Europe. Oh sure, we’ll keep shipping, but increase production? Transportation Secretary Pete Buttigieg on March 2 said the current high prices and Europe’s supply problem related to the war were a “short term problem” that didn't require a “permanent solution”. Tell that to the Germans or the rest of Europe.
It’s easy for us to call for an embargo on oil and gas we don't use here, and a lot harder for Germany and Europe to accomplish it.
Particularly, since there is zero intention for the U.S. from the current administration to fully offset Russia as a European energy supplier. That might help, but President Biden is not even willing to sacrifice his precious Green New Deal or his ESG malinvestment into green energy to challenge Russia’s energy stranglehold on Europe, so, why would anyone expect Germany to commit economic suicide in the same endeavor?
Robert Romano is the Vice President of Public Policy at Americans for Limited Government Foundation.
To view online: https://dailytorch.com/2022/
Cartoon: Hacking Away
By A.F. Branco
Click here for a higher level resolution version.
To view online: https://dailytorch.com/2022/
Congress needs to end Biden’s ESG green energy blind spot
March 7, 2022, Fairfax, Va.—Americans for Limited Government President Rick Manning today issued the following statement urging Congress to end Environmental, Social and Governance (ESG) regulations and pension subsidies that divert investment from carbon and nuclear-based energies in favor of green energies that have made Europe dependent on Russian oil and natural gas :
“When even Elon Musk, the greatest beneficiary of Environmental, Social and Governance (ESG) investment to date, says it's time to drill more oil and gas , and to go nuclear , it shouldn't be difficult for American policy makers to agree. Unfortunately, the Biden administration, working with major investment firms like Blackrock and Vanguard, have deliberately put their thumb on the scale in favor of non-carbon, green energy, rather than providing the capital needed turn on the oil and gas spigots everywhere when the West needs it the most to offset Russia’s energy stranglehold on key NATO allies including Germany.
“Germany has already made an initial shift in their policy , expediting the opening of two new liquified natural gas terminals and increasing military spending, but in the U.S. the Biden administration refuses to shed their green ESG handcuffs by ending financial services policies that restrict investment oil, natural gas, coal and nuclear energy investment.
"We learned everything we needed to learn about the Biden administration when Transportation Secretary Pete Buttigieg quipped when he called the war and Russian energy extortion a 'short term problem' that didn't require a 'permanent solution' by increasing American energy production. President Joe Biden is demanding $10 billion for Ukraine emergency relief. Congress should insist on policies that foster American energy development to offset Russia on global energy markets, so that our nation doesn't find itself tomorrow in the same position that Germany finds itself into today."
To view online: https://getliberty.org/2022/
ALG Editor’s Note: In the following featured report from Gas Buddy, gasoline prices have hit an all-time high in the U.S.:
U.S. National Average Price of Gasoline Hits New All-Time Record High
The national average price of gasoline in the U.S. today broke the existing record, rewriting the all-time high to today’s $4.104 per gallon, according to GasBuddy, the leading fuel savings platform saving North American drivers the most money on gas. The previous all-time high was set back in 2008 at $4.103 per gallon, just ahead of the U.S. Great Recession and housing crisis. The national average price of diesel is also nearing a new record, now at $4.63 per gallon, likely to break the record of $4.846 per gallon in the next two weeks.
In addition to setting a new all-time high, the national average is seeing its largest ever 7 day spike: 49.1 cents per gallon, eclipsing the 49.0 cent weekly rise after Hurricane Katrina in 2005. Many gas price records have been broken due to Russia’s war on Ukraine, which has pushed Western countries to impose severe sanctions on Russia, curbing Russian exports of crude oil to the global market.
On Saturday, the U.S. national average gas price surpassed $4 per gallon for the first time since 2008, and Friday’s spike alone came close to the record daily rise of 18 cents per gallon, increasing nearly 16 cents per gallon in one day. Diesel
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