Tue. Dec 6th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

September 24, 2022

The war in Ukraine enters the 7th month today with no end in sight. But one thing is for sure: there is no winner. Russia military has suffered great loss and Putin has been forced to mobilize 300,000 reserves. About one quarter of the pre-war Ukraine population is now refuges outside Ukraine. Further, Russia is annexing about 1/10 Ukraine territory this weekend.

But European nations and her people are facing a very dark future already. Of course, when winter hits Europe, they will also face a very cold winter. How it becomes so bad? “Reduced energy supply due to the sanctions against Russia and Moscow shutting down key pipeline gas export routes.” Obviously, this crisis is caused by Europeans.

The attached, headlines also spill out some long-term challenges for Europe and the world.

  1. The dreadful “R” word means Recession has already hit Germany, other nations in Europe will fall soon.
  2. Europe’s economic power houses are already “buckling” because energy shortage.
  3. Whatever EU or UK put forwards the “emergency measures” will not be sufficient because energy demand will getting higher in the winter and supply will only decrease. Because no one is addressing the root-cause of this crisis: war in Ukraine.
  4. The bad fortunes will not be limited to Europe, the global economy and supply chain are already fragile due to the three-year old COVID-19 Pandemic and worsening US-China rivalry. Economy in US and China both are slowing down. A disastrous global recession is inevitable.

But the only good news is that “recession” will cause the “destruction of demand” and energy prices will cool off. However, the recovery process will be very painful, and some nations may not be able to recover for a long time. A case in mind is the future of Ukraine.

Europe’s Energy Crisis Will Not Be “A One Winter Story”

Editor OilPrice.com Fri, September 23, 2022

Reduced energy supply due to the sanctions against Russia and Moscow shutting down key pipeline gas export routes will leave Europe scrambling for oil and gas well after the coming winter as the current crisis is not “a one winter story,” according to analysts at consultant Energy Aspects.

“This is not a one winter story, let’s just make it very, very clear,” Amrita Sen, founder and director of research at Energy Aspects, told Bloomberg television in an interview on Friday.

Europe will need to ration demand in order to be able to balance the market,  not only this winter but also the next winter and potentially the one after that, she noted.

The energy crisis is already pushing Germany – Europe’s biggest economy – into a recession, which will deepen as we head into the winter months amid the ongoing natural gas and energy crisis, Bundesbank, the central bank of Germany, said in its monthly report earlier this week. Germany also moved this week to nationalize its biggest gas importer, Uniper, to prevent a collapse of the German energy and gas suppliers. Across Europe, industries are forced to curb or shut down production due to soaring energy prices, and several European industry associations say the European Commission’s proposals to reduce energy prices and help households and businesses through the crisis are not enough to help them survive the winter.

German Economic Momentum Slows Further Amid Deeper Energy Crisis

Alexander Weber Fri, September 23, 2022 at 12:30 AM

(Bloomberg) — Germany’s economic slump deepened as demand for goods and services deteriorated rapidly on the back of surging energy costs and an increasingly uncertain outlook.

Euro zone likely entering recession as price rises hit demand -PMI

Jonathan Cable Fri, September 23, 2022 at 4:47 AM

LONDON (Reuters) – A downturn in business activity across the euro zone deepened in September, according to a survey which showed the economy was likely entering a recession as consumers rein in spending amid a cost of living crisis.

Liz Truss’s Historic Gamble With the UK Economy Is Already Unraveling

Philip Aldrick Fri, September 23, 2022 at 3:01 PM

(Bloomberg) — Liz Truss’s plan for growth, melding the biggest tax giveaway in half a century with Thatcherite deregulation, is a straight-up gamble with Britain’s future, and even before her chancellor of the exchequer had finished delivering it on Friday the bet was starting to sour.

European Industry Buckles Under Weight of Soaring Energy Prices

William Wilkes, Albertina Torsoli and Carolynn Look Fri, September 23, 2022

(Bloomberg) — Europe’s industrial giants have fretted for months that gas shortages this winter will cripple production. But even with fuel available, companies are discovering they can’t afford it.

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