Trade Wars

Putin retaliates with natural gas shutdown after G7 announces oil price cap – Mish Talk

Brent crude chart courtesy of, captioned by Mish

Brent yawned at the news of the buying cartel.

I laughed.

G7 ministers push ahead with Russian oil price cap

Reuters reports G7 ministers push ahead with Russian oil price cap, details thin

Group of Seven finance ministers agreed on Friday to impose a cap on Russian oil prices aimed at cutting revenue from Moscow’s war in Ukraine while keeping oil in circulation to avoid price spikes, but Russia has pledged to suspend sales to countries that impose it.

Ministers confirmed their commitment to form a buyers’ cartel after meeting virtually. They said, however, that key details, including the level of the cap per barrel, would be determined later “based on a range of technical inputs” to be agreed by the coalition of countries applying it.

Oleg Ustenko, senior economic adviser to Ukrainian President Volodymyr Zelenskiy, welcomed the development and said he expected the price range to be between $40 and $60.

“It’s fantastic. It’s exactly what we needed” to reduce the revenue Russia was collecting, he told Reuters. Brent crude futures rose 66 cents to $93.02 a barrel on Friday.

Slim Details

Details are thin because the plan cannot work.

Russia is the largest exporter of petroleum and petroleum products to the EU, supplying 2.2 million barrels per day (bpd) of petroleum and 1.2 million bpd of petroleum products, according to the International Energy Agency. energy (IEA).

China and India will not follow, and Russia has said it will not sell oil to any country that supports the plan.

The price of Brent Crude is currently $93 per barrel. China and India would gladly accept oil at $10 off, or $83 a barrel, if it were much higher.

Talking about $40 is crazy. Russia would not supply oil and the price would skyrocket in response.

Putin’s response

Putin’s reaction to the plan was swift.

He claimed routine maintenance of the Nord Stream 1 pipeline had uncovered a problem and all Nord Stream supply would be shut down indefinitely.

Putin’s ‘economic war’ is freaking out the UK, says ex-energy boss

Bloomberg reports Putin’s ‘economic war’ is freaking out the UK, says former energy boss

Vladimir Putin has left the UK ‘freaking out’ by ‘waging economic and psychological warfare’ with tactics such as shutting down a major gas pipeline to Europe, a former energy industry boss has claimed.

Angela Knight, former chief executive of trade association Energy UK, spoke after Russian state energy company Gazprom announced that its Nord Stream 1 pipeline to Germany would remain closed indefinitely.

It had been closed for three days, apparently for maintenance work, but will remain closed for longer after Gazprom claimed to have discovered an oil leak in a turbine, raising fears of further increases in energy prices in Europe.

She said: “He (Putin) plays economic warfare extremely well. He plays psychological warfare extremely well.

“We panicked as a country – Europe panicked too – and that’s not surprising and I’m not criticizing it.

Whose economic war?

Putin has started a war with Ukraine. American interference led to this result. Nonetheless, blame Putin 100% for the invasion if you wish.

In response to the invasion, the US and EU have begun economic warfare with a series of escalating sanctions against Russia, the latest of which is a senseless buyer cartel.

If you put yourself in Putin’s shoes, his reaction made the most sense.

This will lead to absurd accusations that I support Putin. I do not know. I never support starting wars or trade wars that are not winnable.

The absurdity of all these sanctions and coordinated actions is that they have driven up the price of oil and natural gas to the point where Russia is making more money than ever while selling less oil and gas to the EU .

How stupid is that?

And is there any reason to believe that Putin wouldn’t stop all oil exports if the buyer’s cartel price cap was actually maintained?

UK exposed

Scroll to continue

In Putin’s Nord Stream 1 shutdown left Britain exposed, Spectator complains”It’s pretty obvious what game Russia is playing.”

Germany’s supply of Russian gas had already fallen to 20% of its level before the invasion of Ukraine. No one should expect the gas to be turned on. Eventually, Europe will do just fine without Russian gas, once we commission more terminals to receive liquefied natural gas (LNG) from the United States, Qatar and elsewhere. But it won’t be this winter.

Britain and Europe face an additional problem that Russia does not have: climate protesters who will automatically oppose any move to produce more oil and gas in Europe, or to build infrastructure to import it. This, apparently, is leading us down the wrong path and we should invest more in wind and solar instead. Except that in 2019, wind and solar accounted for just 4.2% of Britain’s total energy needs – and, in the absence of more than a token amount of energy storage, we are absolutely dependent on gas-fired power plants to fill when the wind isn’t blowing and the sun isn’t shining.

Admittedly, it takes time to bring new oil and gas capacity into service. But we are decades away from building energy autonomy based on renewable energies. We are already waging an economic war with Russia, and we are not winning. To keep the lights on, the government is going to have to win the battle against Just Stop Oil and all the others who oppose any investment in oil and gas.

Reality of blatant games

The title of The Spectator caught my eye and I was mentally prepared to debate the article.

Instead, I commend writer Ross Clark for getting to the heart of the matter.

Only wind and solar seem cheaper

I said the other day that wind and solar aren’t cheap, knowing full well that solar power, where the sun shines reliably, seems to be cheaper than natural gas.

But what about the night? What about clouds? What about winter when the sun only shines for eight hours?

OK solar is cheaper, provided you can rely on it. Maybe the American desert or Spain. But cloudy UK? Germany?

What about storage? What about bringing daylight energy from Spain to Germany? Arizona to Chicago? How many favorable lands are there in Europe?

Is storage scaling? How much minerals will we need to mine and how cheap would they be if we went completely green by relying on batteries?

We seem to be getting to the heart of the matter.

Clean energy is cheaper provided you ignore all the reasons why you can’t rely on it. The configuration is even worse because natural gas as a backup only for night and winter is extremely uneconomical.

Chat needed

Solar dealer: This wonderful system is really cheap.
Me: Does it run at night? In winter? In Canada? United Kingdom?
Dealer: No, no, no, no.
Me: If it’s not reliable, is it cheap?
Dealer: Don’t worry, we’ll fix this by 2040 at an unknown cost.
Me: I think, I’ll wait.

Please note that the State of California has just asked people not to charge their cars due to the heat wave and electricity capacity.

So here we are. “To keep the lights on the government is going to have to win the battle against Just Stop Oil and all the others who oppose any investment in oil and gas.”

One day we may solve all clean energy problems, but mandating its use before then will increase problems and costs, not solve them.

Telling everyone that solar power is cheaper without solving all the problems of solar power addiction is the unfounded hype of the day.

If it’s not reliable and scaled storage isn’t implied, then it’s not exactly cheap, is it?

Meanwhile, the economic madness continues.

Major stress test in Europe as Russia closes gas pipeline

For more information on events in Europe, please see Major Stress Test in Europe as Russia Shuts Down the Natural Gas Pipeline

Also Consider A Laughable Explanation for the Emergence of the G7 Oil Price Buyers Cartel

This post is from MishTalk.Com.

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