Europe Considers Return to Fossil Fuels to Keep the Lights On- March 21, 2022
In the first Sign Of The Times Brief article on January, I wrote about Germany’s looming energy crisis. I covered how the closing of Germany’s remaining coal- fired plants and nuclear power plants could lead to more outages and lack of energy security which has worsened in recent years. Even before the Ukraine war, Germany was at a critical point. And the 2022 brutal winter in Europe has made the situation yet more serious.
Due to this conflict in Ukraine, Germany is being forced to pivot and start securing more oil in order to keep it’s civilization from collapsing into the dark ages.
Activists and politicians now profess their green agenda on TV and online, even coercing businesses (ESG) to jump on board with the agenda of a switch from fossil fuels to ‘renewables’. But when there is no existing infrastructure to support these lofty ideals, millions of people may find themselves without power, without fuel, and yes- without food. In Germany’s case, turning off natural gas, or outsourcing production to Eastern Europe, while banning new drilling and oil exploration domestically is a recipe for disaster. And some of Germany’s government officials seem to be realizing this, as they attempt to get others in government to ‘step back from the ledge’ of energy insolvency.
Russia supplies Europe with much of its crude oil and natural gas, yet suddenly the EU has announced it plans to gradually reduce it’s energy imports from Russia by about two thirds. Europe currently gets 30 percent of it’s oil and 40 percent of its natural gas from Russia.
This means Europe will have to get its energy and fuel elsewhere, either within its own borders or from the US or the Middle East. It’s a precarious position for the continent.
Scrambling for a solution, German finance minister Christian Lindner suggested recently that Germany reconsider its ban on new oil and gas drilling in the North Sea in order reduce reliance on Russia. “Against the changed geopolitical background, I think it is advisable to examine the entire energy strategy of our country without any prohibitions on thinking,” Lindner told the Tagesspiegel newspaper.
Recently Germany has returned to coal as the main electricity source, topping wind. And this comes after the country had planned to shut down 84 of it’s coal fired power plants. Yet, estimates suggest the country will see an increase of 7.7 percent in hard coal imports by the end of the year.
And when it comes to America, here is a concise quote which sums up the situation:
“The technology to supply America with the energy it needs doesn’t exist in the green energy world yet. Well sure you can have instrumental incremental increases in solar and wind battery technology breakthroughs but right now they’re not there,” said Phill Flynn, a senior energy analyst at the Price Futures Group and the author of The Energy Report.
Until renewables can contribute substantially to total output and stay reliable in all weather and market conditions, strategists see a continued reliance on fossil fuels in the global economy even through 2050.
In the U.S., an important metric for understanding how much oil production is on the calendar for years ahead is to look at the rig count. Crude oil rigs in the U.S. increased to 527 last week (the week ending March 11), up from 519 the previous week. This is the highest number of oil rigs in operation since March 2020, when the government shutdowns slammed markets.
Despite producers’ apprehension at throwing capital into new drilling and contracts, oil production is ramping up. The concern which has kept oil production somewhat lower over the past year is due to federal regulatory uncertainty. If a producer thinks there is a likelihood of a project being shut down after production starts, it tends to hold off until more certainty is added to the situation.
One example is the keystone pipeline, which was shut down after years of expense and labor, leaving a massive supply of domestic oil unable to reach markets and households.
This uncertainty may be on the decline, as geopolitical threats and skyrocketing fuel prices may force the U.S. to ramp up oil production over the long term, despite the goal of ‘net zero carbon emissions’.
So prices will continue to rise with demand and increased production.
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