Fri. Mar 29th, 2024

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

July 4, 2022

Germany is probably the best organized, most practical, and rational nation around the world. Unfortunately, the war in Ukraine started on February 24, 2022, and the ensued sanctions against Russia apparently are posing immediate threats to Germany as a nation and Germany seems to be completely caught off guard, which is surprising! But Germany is the largest economy in Europe so if her “entire industries” collapse, the economy of Europe will not be able to survive. Germany is also the 4th largest economy in the world, the consequences of a collapsed European economy will immediately cause an extreme global recession without any hope for a speedy recovery. We in the US should enjoy this Independence Day as much as we can because who knows what the global economy will look like by July 4th, 2023?

All the data of past years clearly show how heavily Germany’s economy depended on Russian energy. It is public knowledge. But before the war in Ukraine started, Germany suspended the commission of Nord Stream II pipeline which was designed and bult to supply Russian natural gas to Europe through Germany. Looking back, the suspension of a completed Nord Stream II was not rational at all.

Then the US led sanctions against Russia was focused on defeating Putin and not focused on ending the Ukraine war. But as the Ukraine war drags on those sanctions have not disabled Putin because European Nations, including Germany, keeps importing Russian energy at full price every day. These sanctions have not worked so the original “sanction strategy” could not be rational.

The current energy crisis faced by Germany is not unique, other European nations face similar or worse predicaments. These European nations, if they went bankrupt, will not impact the global economy as Germany’s collapsed economy, but their people will suffer as much or even worse.

Now the following headlines are very alarming, and something needs to be done immediately:

  1. The country’s (Germany’s) energy crisis is already driving inflation to record highs, which threatens social stability!
  2. the country (Germany) would see gas shortages through the autumn, the winter, and next spring…
  3. We are in a much worse crisis than most people realize,” Kerstan said in a separate interview with the Hamburger Abendblatt on Sunday. He urged people to take shorter showers, avoid full baths, and install modern thermostats and water-saving shower heads.
  4. Germany posted its first monthly trade deficit in over 30 years in May as the price of its oil and gas imports soared in the pull of Russia’s war in Ukraine.

Should Germany take the lead to end the War in Ukraine as soon as possible? “Stand by Zelensky as long as it takes” is Biden’s sound bite.

Entire industries in Germany could collapse due to Russian natural-gas supply cuts: union head

Huileng Tan

Sun, July 3, 2022, 10:38 PM

  • Germany’s top union official said entire industries could collapse due to Russia’s natural-gas cuts.
  • Europe’s largest economy is heavily reliant on natural gas piped in from Russia.
  • A key gas pipeline will shut from July 11-21 for maintenance amid fears supplies will not resume after that.

Entire industries in Germany could collapse due to natural-gas supply cuts from Russia, said Yasmin Fahimi, the country’s top union official.

“Entire industries are in danger of collapsing permanently because of the gas bottlenecks: aluminum, glass, the chemical industry,” Fahimi, the head of the German Federation of Trade Unions, told Bild am Sonntag. “Such a collapse would have massive consequences for the entire economy and jobs in Germany.”

The chemical industry, which employs about 346,000 people, is the third-largest industry in Germany, according to Germany Trade & Invest, the country’s investment promotion agency.

Germany — Europe’s largest economy —  is reliant on piped natural gas from Russia, which accounts for 35% of its imports of the fuel. The industrial powerhouse imports almost all of the natural gas it uses, which accounts for about a quarter of the country’s total energy mix, according to the economy ministry.

The country’s energy crisis is already driving inflation to record highs, which threatens social stability, Fahimi told Bild am Sonntag.

Russian state gas giant Gazprom has already cut gas flows to Germany via the key Nord Stream 1 pipeline by 60% from last month, citing an equipment hold-up in Canada as a result of sanctions over the war in Ukraine.

Berlin fears the situation may get worse after the pipeline’s scheduled shutdown for maintenance from July 11 to July 21. Germany’s economy minister Robert Habeck said last week natural-gas flows may not resume after the scheduled works, which would in turn impact fuel storage ahead of winter, when demand spikes.

“We aren’t dealing with erratic decisions but with economic warfare, completely rational and very clear,” Habeck said at an event on Saturday, Bloomberg reported.

Germany — Europe’s largest economy — moved into the second stage of its three-stage emergency gas plan last month after Russia slowed supplies to the country. If the situation worsens, the country may start rationing natural gas in the last of the three-stage plan, as outlined by Germany’s economy ministry.

Under the country’s emergency plan, industry would be first in line for supply cuts. The move could devastate the economy and lead to job losses, Germany business leaders and unions have said.

Habeck said natural-gas rationing would likely hit factories not connected to the residential networks first, per Bloomberg.

Benchmark Dutch natural-gas futures have more than doubled year-to-date.

Germany May Need More Than $15 Billion To Solve Its Gas Crisis

Editor OilPrice.com

Mon, July 4, 2022, 8:00 AM

The $15.7 billion (15 billion euro) that Germany has extended as a credit line for gas purchases this summer may not be enough to help Europe’s biggest economy reach adequate levels of gas storage by the winter, according to the head of the German federal network agency, Bundesnetzagentur.

If Russian gas to Germany stops flowing after the end of Nord Stream’s regular two-week maintenance beginning on July 11, the country would see gas shortages through the autumn, the winter, and next spring, the agency’s president Klaus Müller told WirtschaftsWoche magazine in an interview published on Monday.

If Germany wants to avoid a massive shortage, it must start conserving gas immediately, not only in the winter, Müller added.

The money the government has set for gas purchases to fill storage to 80-90% by the winter may not be enough because of rising natural gas prices in Europe, he added.

Europe’s biggest economy—which is also the biggest customer of Russian gas—is struggling to secure gas supply after Moscow drastically cut deliveries to Germany via Nord Stream in the middle of June.

Before the Russian invasion of Ukraine, Germany was importing 40 percent of its natural gas from Russia.

Since Russia reduced supply to Germany and other major consumers in Europe, gas providers and buyers in Germany have been struggling with surging prices of non-Russian gas, which is severely burdening company finances.

Case in point: German energy giant Uniper, one of the largest customers of Russia’s Gazprom, said last week it had initiated talks with the German government on possible measures to stabilize its finances amid low Russian gas deliveries and soaring gas prices, including possible guarantees, credit a facility, or equity investment.

Last month, Germany triggered the second phase of its three-phase gas emergency plan as it braces up for the possibility of a complete halt of gas supplies from Russia via the Nord Stream pipeline. Germany is racing to implement emergency measures before July 11, when the regular maintenance of Nord Stream will stop all supply via the pipeline for at least two weeks.

By Tsvetana Paraskova for Oilprice.com

Germany’s second-largest city is preparing to ration hot water as the Russia energy crisis escalates

Grace Dean

Mon, July 4, 2022, 4:06 AM

  • Hamburg’s environment senator said the city could set limits on when people can use hot water.
  • Jens Kerstan told Welt am Sonntag that this could happened in the case of an “acute gas shortage.”
  • Germany is scrambling to plug the gap in energy supplies after cutting its dependence on Russian gas.

Hamburg, the largest non-capital city in the European Union, has warned that it could ration be forced to hot water as the Russian energy crisis causes chaos.

Jens Kerstan, environment senator for Germany’s second biggest city, told German newspaper Welt am Sonntag on Saturday that Hamburg could restrict availability of hot water to certain times of days “in an acute gas shortage.”

We are in a much worse crisis than most people realize,” Kerstan said in a separate interview with the Hamburger Abendblatt on Sunday. He urged people to take shorter showers, avoid full baths, and install modern thermostats and water-saving shower heads.

“The more we save now, the better the situation will be in winter because the stores will fill up,” he told the Hamburger Abendblatt, speaking about reducing demand for natural gas.

Western nations have been moving to pivot from Russian energy sources after the country invaded Ukraine in late February. Some have imposed sanctions on Russia’s energy sector in an attempt to cut off funding to its military, while Russia itself has cut off some gas supplies to countries including Germany over their refusal to pay in rubles.

Germany’s economy and climate ministry said that it previously imported around 55% of its gas from Germany but that this this had fallen to 35% by mid-April. Germany says that Russian imports could account for as little as 10% of its natural gas consumption by summer 2024.

Like other countries, Germany is scrambling to plug the gap in gas supplies. The head of the German Federation of Trade Unions told Bild am Sonntag that gas bottlenecks could cause the collapse of “entire industries” including aluminum, glass, and chemicals.

On June 23, the economy and climate ministry announced that Germany had entered the second of its three-stage gas emergency plan and warned that supplies were under pressure. German energy minister Robert Habeck said that the country’s top priority was filling its gas stores, which he said were 58% more full than last year.

The country has imported more natural gas from Norway and the Netherlands, as well as more liquefied natural gas. Alongside encouraging energy efficiency and ramping up renewable-energy infrastructure, Germany has also made plans to fire up idle coal power plants as a short-term fix.

Kerstan told Welt am Sonntag that alongside potential hot water rationing, the city could also consider reducing the maximum room temperature in the district’s heating network. He said that if there were a gas shortage, technical reasons mean it wouldn’t be possible to distinguish between commercial and private customers everywhere in Hamburg.

Germany Posts 1st Trade Deficit in Over 30 Years as Energy Crisis Deepens

Sun, July 3, 2022, 8:05 PM

By Geoffrey Smith

Investing.com — Germany posted its first monthly trade deficit in over 30 years in May as the price of its oil and gas imports soared in the pull of Russia’s war in Ukraine.

Europe’s largest country, whose economic model has been built on substantial trade surpluses since the Second World War, swung to a deficit of €1.0 billion ($1.04 billion) in May, as its import bill surged by nearly 28% from a year earlier. Imports were up 2.7% from April.

At the same time, exports fell for the third time in five months, by 0.5% in calendar- and seasonally-adjusted terms, but were still up 11.7% on the year.

The data are a powerful illustration of the problems facing Germany, whose dependence on Russian energy was brutally exposed by the war. The deficit is set to widen in June, reflecting a 60% cut in Russian gas supplies that forced importers to cover their obligations by buying on the spot market at much higher prices. Many German analysts fear a complete stop to Russian supplies in the second half of the year.

The news comes at the start of a day when German Chancellor Olaf Scholz is set to hold crisis talks with union and employers’ representatives in Berlin on the state of the economy.

“Entire industries are in danger of collapsing forever because of the gas bottlenecks,” Yasmin Fahimi, the head of the German Federation of Trade Unions, told the newspaper Bild am Sonntag in an interview at the weekend, singling out the chemicals, glass-making, and aluminum industries, all of which are major suppliers to the key automotive sector. “Such a collapse would have massive consequences for the entire economy and jobs in Germany,” she added.

The euro has fallen some 7.4% against the dollar since the war started, hitting a five-year low in May. It was unchanged at $1.0434 by 03:10 AM ET (0710 GMT).

By user

Leave a Reply

Your email address will not be published.