A look into Germany’s winter energy crisis and what it means for U.S. fuel prices and availability moving forward in 2022

German industry and business is in the throes of a crisis, due to skyrocketing energy prices. Looking at a Bloomberg chart of German electricity futures, you can see a 400% increase in prices. 

Coal, natural gas, liquid fuels and nuclear power prices are not faring well either. 

Top down political policies are at the heart of this catastrophic price increase, which can be traced back to 2011, following the Fukushima meltdown in Japan (caused by a massive earthquake and tsunami). Germany’s government responded with a feel-good program which would shut down 17 domestic nuclear power plants over the next 10 years. 

Germany’s plan was to replace nuclear-fueled electricity by building a new infrastructure of allegedly “renewable” energy projects such as windmills and solar converters, while moving away from coal- burning plants as well. This noble goal of eliminating CO2 emissions has been shared by and promoted by global groups such as the U.N., and has been adopted by the E.U. and many others. 

It all sounded great, and looked great to the untrained eye. But there’s one major problem:

“Renewable energy” can’t be created in the blink of an eye or at the swipe of a politician’s pen. That’s because the fossil fuel input required to manufacture exotic metals and proper infrastructure is nothing short of colossal. Even if a transition to renewables by 2030 is successful, fossil fuel prices will continue to skyrocket as demand increases during the transition. 

So in the gap between the present situation and future functioning renewable energy sources lies a long, dark and cold winter (or many winters). Adding to this is the unreliable nature of the current renewable ‘solutions’ being proposed and aggressively subsidized by governments (Germany isn’t the only one). 

Sun and wind energy rely on the right weather conditions. As we saw in Texas in winter of 2021, wind mills freeze in cold weather. Millions in Texas were left without power and those without generators and supplies were left exposed to the elements and hundreds of people froze to death ( the largest number of lives lost from a power outage on the U.S. mainland).

Forbes estimates over 700 people died during the outages caused by the storm in Texas in 2021 (four times higher than the state’s initial tally). And this outage was relatively short- lived (2 weeks). Can we begin to imagine the human toll of a more prolonged outage caused by widely adopted “renewables” policies (which only function in optimal weather conditions)?

The answer is no, and this is the reason for attempting to understand where this heavily- politicized energy policy is headed and what it means for us. 

Back to Germany- Germany has an advanced economy which relies on reliable, consistent power to keep the lights on, factories producing, and homes heated. As the new reality in the power sector revealed itself, Germany’ s grid managers saw they had a problem, and began importing large quantities of electricity from plants in the Czech Republic and France (much of it nuclear power). 

Meanwhile, Germany has relied for decades on natural gas imports from the former Soviet Union. And today, due to political tensions related to the US/ NATO standoff with Russia, future gas imports are in question (although Russia is ready to sell gas to Germany).

The end result is that Germany will not have sufficient energy for home-heating, power generation and industry going into winter 2022. 

In a country full of crowded cities, towns and villages, factories and industry, this could spell disaster for everyday people. 

With German policy drifting out of control, there is no resolution in sight. This could lead to massive blackouts, social unrest and more. 

And the U.S. seems to be following suit, just a few years behind. 

So where does it lead?

Stay tuned. Until next week,

Andrew