European Gas Prices On The Decline

Early start of summer and ample LNG supply push gas prices down

European natural gas prices have been on the slide for several days now as an early start of summer combines with ample LNG supplies to quench supply worries. According to a Bloomberg report, natural gas prices in Europe have been on the decline for five days now as demand eases while supply remains strong thanks to LNG and continued deliveries by Gazprom via Ukraine and the Nord Stream 1 pipeline.

Europe became the biggest buyer of U.S. liquefied natural gas a few months ago as it sought to reduce its dependence on Russian gas even before Russia’s invasion of Ukraine. This has led to a spike not only in gas prices but also in LNG carrier rates, which recently hit the highest in a decade.

Despite the lower demand, gas prices in Europe remain quite elevated as importers seek to refill their reserves ahead of the next heating season. Some of these might be worse off than others as Gazprom suspended deliveries to Poland, Bulgaria, the Netherlands, and Denmark over their refusal to pay for the gas in rubles.

Still, most of the large gas buyers that supply European countries with natural gas from Gazprom have accepted the latter’s payment terms, ensuring the uninterrupted supply of gas. According to unnamed sources cited by Bloomberg today, Gazprom was unlikely to cut off supplies to any other European buyers for now.

Bitcoin investment giant Grayscale debuts ETF in Europe

The new ETF includes companies directly involved in cryptocurrency mining

Grayscale announced its first European ETF, listing on the London Stock Exchange, Borsa Italiana and Deutsche Börse Xetra. The crypto investment giant is expanding operations by launching a new crypto-linked exchange-traded fund (ETF) in Europe.

Called Grayscale Future of Finance UCITS  the ETF will begin trading on Tuesday. The new investment product is getting listings on major European stock exchanges, including the London Stock Exchange, Borsa Italiana as well as Deutsche Börse’s electronic trading platform Xetra. Listed under the ticker symbol GFOF, the ETF will also be passported for sale across Europe.

Launched in partnership with Bloomberg, GFOF UCITS ET tracks the performance of the Bloomberg Grayscale Future of Finance Index. Bloomberg and Grayscale jointly introduced the index in January 2022, aiming to track the digital economy, focusing on the three main directions of technology, finance and digital assets.

Europe Determined To Ban Russian Energy Exports

How to hurt Russia’s finances without raising the price of oil and gas

Europe is determined to ban—fully or partially—imports of Russian oil and gas, a senior White House advisor said on Friday. Europe has been under pressure to decrease its reliance on Russian energy, including coal, natural gas, oil, and nuclear fuel in order to starve Russia of its main income stream. “I have confidence that Europe is getting the message, and they are determined to close off this last source of export revenue,” Daleep Singh, deputy White House national security advisor, told CNN in an interview.

But several particularly oil-dependent countries in Europe, including Germany, have so far refused to support an immediate or full ban on Russian oil and gas. “It’s important that they do this as soon as they can,” Singh said, adding that they need to do it “in a way that’s smart.”

According to U.S. Treasury Secretary Janet Yellen, a full EU ban on Russian crude oil and gas imports could have unintended economic consequences for both the United States and its Western allies. While Yellen agrees that the EU needs to reduce its dependence on Russian oil and gas, “we need to be careful when we think about a complete ban on, say, oil imports,” Yellen said on Thursday.

The sticking point is finding a way to hurt Russia’s finances without raising the price of oil and gas, hurting Europe and the United States.

High Natural Gas Prices Could Lift Green Hydrogen Investment

Major green hydrogen deals and projects in Europe and Australia

As the price of natural gas is soaring globally amid a scarcity of supply and Russian threats to cut off flows to Europe unless buyers start paying in rubles, the economics of the so-called blue hydrogen have deteriorated. Green hydrogen made of electrolysis from renewable energy is now the preferred choice of future hydrogen supply as governments target net-zero emissions and a reduction of reliance on Russian gas.

Scalability and costs are still issues to be overcome in green hydrogen production. Yet, Europe’s dependence on natural gas supply from Russia and Putin’s war in Ukraine have prompted the European Union and many of its member states to embrace green hydrogen development, preferring it to the so-called blue variant made of natural gas with carbon capture and storage (CCS).

Companies in Europe and U.S. allies such as Australia have recently announced major green hydrogen deals and projects. Although costs of green hydrogen production are yet to drop to economically scalable and feasible levels, the prospect of using home-grown energy resources—wind and solar—rather than relying on gas imports from Russia is now paramount for policymakers in the West.

Elon Musk calls for nuclear power in Europe

Musk  pledges to eat food grown near reactors

In a tweet on Sunday, Tesla CEO Elon Musk called for Europe to generate more nuclear power to offset fears of a gas shortage.

It is “extremely obvious,” Musk wrote, that Europe should restart dormant nuclear power plants and boost the output of those that are operational. The tweet — which has been retweeted more than 31,100 times as of press time — drew its fair share of backlash online.

Elon Musk says that nuclear energy is the key to breaking Europe’s dependence on Russian oil as crude prices continued to surge to near-record levels amid the ongoing invasion of Ukraine.

Musk is so certain that there is little risk from relying on nuclear power that he is willing to go to a “high-radiation” area and “eat locally grown food on TV.”

Facebook says it may quit Europe over ban on sharing data with US

EU court ruled there were insufficient safeguards against snooping by US intelligence agencies

Facebook has warned that it may pull out of Europe if the Irish data protection commissioner enforces a ban on sharing data with the US, after a landmark ruling by the European court of justice found in July that there were insufficient safeguards against snooping by US intelligence agencies.

In a court filing in Dublin, Facebook’s associate general counsel wrote that enforcing the ban would leave the company unable to operate. “In the event that [Facebook] were subject to a complete suspension of the transfer of users’ data to the US,” Yvonne Cunnane argued, “it is not clear … how, in those circumstances, it could continue to provide the Facebook and Instagram services in the EU.”

A Very Predictable Global Energy Crisis

Emissions of carbon dioxide are not the planet’s single biggest problem

Gas prices in Europe are breaking record after record. The UK is facing supply shortages reminiscent of the late 1970s winter of discontent. Chinese factories are shutting down because of power shortages, and the outlook is grim. In fact, it may be the first crisis of many.

When gas prices in Europe started rising faster and faster last month as the continent prepared for winter and found out it was not the only one, gas suddenly became important. That’s after being excluded from the list of low-carbon energy sources and after the EU’s green transition chief Frans Timmermans said gas had no place in the transition. It now appears Timmermans and his fellow Brussels bureaucrats could not have been more wrong.

For years Europe has been retiring coal plants and building solar and wind farms as it strived to become the greenest continent on earth and lead the energy transition on the premise that emissions of carbon dioxide are the planet’s single biggest problem because they lead to unfavorable climate changes. This has been coupled with investment declines in oil and gas production, as this only made sense. Now, the EU has got the first bill for its low-carbon feast.

U.S. image abroad has rebounded since Biden took office

Reinforcing partnerships with key European allies

The United States’ image around the world has improved sharply since President Biden took office, according to new surveys conducted in 16 countries, including many long-standing allies of the U.S. The Pew Research Center surveys show majorities of the citizens across the countries — more than 6 in 10 in each — express confidence in Biden to “do the right thing” in world affairs.

Biden arrived in Britain on Wednesday on the first leg of his first overseas trip, hoping to reestablish the U.S.’ global standing and reinforce partnerships with key European allies.

Favorable ratings of the U.S. have started to rebound after declining considerably during former President Trump’s four years in office, growing as much as 30 percentage points since last year in partner nations such as France and Germany. In 2020, positive views of the U.S. reached or neared low points in these two countries, as well as in the United Kingdom, Canada and Japan.

BREXIT: The UK is heading for a decade of Italy-style decline

The Resolution Foundation warned that exports to Europe have seen a major decline since Britain’s exit from the EU

Britain’s economy is on course to deteriorate to the level of deeply-struggling Italy over the next decade if it is unable to overcome the hit taken by challenges, including Brexit, according to a new report.
The Resolution Foundation, an economics think-tank, and the London School of Economics said in a report on Tuesday that Britain faced a long decade of decline and underperformance due to its departure from the EU, as well as the impact of the COVID-19 pandemic, automation, and the expensive challenge of making the economy less reliant on fossil fuels.

“The UK now faces a decisive decade, as the aftermath of Covid-19, Brexit and the net zero transition come together with major shifts in technology and demography. This matters far more than economics. Failing to rise to this challenge risks leaving the nation diminished and divided,” the report said.

Europe faces a wave of bankruptcies and the lost of 15 million jobs

European governments must help businesses boost their equity

The International Monetary  Fund (IMF) estimates massive public cash handouts during the pandemic helped save 30 million jobs, but the share of insolvent companies still increased, with small firms particularly affected. To lift European business out of danger, it said a combination of public and private support totaling 2% to 3% of economic output is needed.

“Healthier firms will forestall a return of “doom loops” between Europe’s real and financial sectors,” Laura Papi and Alfred Kammer, director of the IMF’s European department, wrote in a blog published on Tuesday. “Most importantly, healthier firms will create more jobs.”

Euro-zone non-financial company debt soared in first nine months of 2020 and to avoid pitfalls like wasting public money trying to save non-viable firms or allowing businesses that get support to be mismanaged, the economists said there should be a principle of involving banks, so the private sector has “skin in the game.”