Friday, 30 April 2021

Inflation Ahoy (?)

Ever since QE was invented, some folks have been predicting inflation and others deflation.  Anyhow, back in January I commented (BTL here) that energy prices were stirring, led by gas and the Far East's insatiable demand for LNG cargos that would otherwise be available for Europe.  

A very mild March dampened this down a bit, but it's roaring away now, to the extent that this week, forward prices for this coming summer in Europe are only a fraction below forwards for next winter.  You might guess that is quite unusual for a very seasonal commodity like gas.  You'd be right: it's really remarkable.  (BTW, the fact that next winter's price is relatively low doesn't represent any kind of comfort that easier times are ahead.  Say after me: "a forward curve is not a forecast ...")

What's going on?  (a) Absolute demand, especially in the east; (b) Russia / Gazprom is playing silly-buggers, holding back supply capacity they could easily fill.  Why?  Because the are reminding the Germans, none too subtly, of where their energy comes from, pressuring them to resist US sanctions on Nord Stream 2.

The prices of oil, coal and carbon allowances are steaming ahead, too (and therefore electricity).  Is this destined to continue?  Well, Russian tantrums come and go, so the parochial matter of European gas supply can ease at the drop of a hat.  And the dreadful situation in India suggests that Covid may yet bring GDP-wrecking times ahead, offsetting the strong Asian bounceback from a year ago.  So who knows?

But when Biden's trillions start hitting the economy, on top of China's regular growth, the demand for steel and concrete (and copper, and ...) should boom.  Covid vs Concrete ... who knows?  You thoughts invited below -



E-K said...

Of course hard times are ahead as we can't lock down countries for years (which it will be) and not expect there to be grave economic and political ramifications.

Inflation and high tax is what "getting poor" looks like.

The Great Reckoning (not The Great Reset) - a long overdue shift of spending power from the people of the West to (some of) the people of the East.

Elby the Beserk said...

"But when Biden's trillions start hitting the economy, on top of China's regular growth, the demand for steel and concrete (and copper, and ...) should boom. Covid vs Concrete"

Have to larf. Production of cement accounts for a huge %age of industrial CO2 emissions

"Cement is the source of about 8% of the world's carbon dioxide (CO2) emissions, according to think tank Chatham House."

Of course, huge amounts needed for wind turbines. Shame the concrete poisons the land around for ever. Shame the turbine will be replaced within 25 years at the latest.

But there was me thinking we all have to REDUCE emissions.

And then there's steel. Steel cannot be made without coke, a coal product. Indeed, many calculations show that the CO2 emissions needed to make wind turbine exceed those saved by them. Good old Green's, only target they EVER hit is their feet. When shooting at them.

What a muddle...

GridBot said...


Genuine question please can you site some data/studies to back up the statement: "many calculations show that the CO2 emissions needed to make wind turbine exceed those saved by them"



CityUnslicker said...

I was going to post on inflation too today ND!- great minds - nearly all agri products up hugely (from very low points last march). Everything has gone up in price, except labour and yet globally inflation is low.

It won't be so much by the end of the year, it wont be hyper inflation or anything, but for the first time in over a decade the Central banks will have to apply serious policy thought to curbing inflation.

Elby the Beserk said...

@Gridbot 11:41am



no quotes.

Take your time...

and from one Thomas Homer-Dixon of Carbon Shift

One 2MW windmill contains 260 tonnes of steel, requiring 170 tonnes of coking coal (mined) and 300 tonnes of iron ore (mined) all mined, transported and produced by haydrocarbons ... a windmill could spin till it falls apart and never generate as much energy as was invested in it"

If you compound that exponentially, you get what is now called, "NetZero", a return to the agrarian economy of pre industrial revolution days. Enjoy

Elby the Beserk said...


Good breakdown here. And remember, all turbines will need replacing, many before their supposed 25 years.

andrew said...

hm using that search I get

It’s true that wind power isn’t a zero emission energy source. Greenhouse gas emissions are produced when wind turbines are manufactured, built, maintained and decommissioned. But the “life cycle greenhouse gas emissions from solar, wind, and nuclear technologies are considerably lower and less variable than emissions from technologies powered by combustion-based natural gas and coal,” says the NREL.

"To be more exact, wind energy produces around 11 grams of carbon dioxide per kilowatt-hour of electricity generated, Garvin A. Heath, a senior scientist at NREL, and colleagues concluded after reviewing the scientific literature. That’s compared with about 980 g CO2/kWh for coal and roughly 465 g CO2/kWh for natural gas, Heath found.

In other words, coal’s carbon footprint is almost 90 times larger than that of wind. The footprint of natural gas is more than 40 times larger."

(it goes on to note nuke power is the one thing that is lower in co2)

Elby the Beserk said...

@Andrew 1:30pm

Sure. But as pointed, turbines use VAST amounts of fossil fuels before they even start to work. And it's now been discovered that windfarms actually warm the local environment. This is what happens when you leave idiots and ideologues in charge of policy. Suggest you go to the GWPF forum to read some of their papers on NetZero. Beyond folly.

"Britain’s Electric Car Strategy Is ‘Doomed To Failure’
Date: 03/06/20Transport Xtra
The UK Government’s push to electrify road transport is based on naivety, the undue influence of the Committee on Climate Change, and a lack of engineering expertise within Government, an academic has said. "

"Turning to the raw materials needed to produce batteries, Kelly claims: “If we replace all of the UK vehicle fleet with EVs, and assuming they use the most resource-frugal next-generation batteries, we would need the following materials:

207,900 tonnes of cobalt – just under twice the annual global production;
264,600 tonnes of lithium carbonate – three-quarters of the world’s production; at least 7,200 tonnes of neodymium and dysprosium – nearly the entire world production of neodymium; and 2,362,500 tonnes of copper – more than half the world’s production in 2018."

Got it? Not even the most basic checks on the availability of what we need for NetZero has been done. Very good PDF in the link above summarising this crap.

"Britain’s plans to decarbonise the economy have not been properly thought through, and there is a dangerous lack of systems and project engineering input.

That’s according to Michael Kelly, emeritus professor of technology in the Department of Engineering at the University of Cambridge, who says that replacing fossil fuels with electricity from renewables is impractical on the timescale of 2050."

Again, get the PDF linked to in this article as well.

NOTHING has been thought out. EVs forever - what if you live in an inner city and can never park nearby? Or in a tower block? And those heat pumps? How much will they cost to install in tower blocks? A figure of £25k per household is already being quoted to replace gas boilers with heat pumps. WTF? WTFF?

As for batteries, well...

"However, a brief glance at the numbers shows that this cannot be true. The £45 million battery installed by Elon Musk
outside Adelaide, South Australia, can power that city for 30
minutes. It would power the emergency wards (20% of total
demand) of Addenbrooke‘s Hospital in Cambridge for 24 hours
on a single 80–20% discharge. Back-up is currently provided by
two 1500-kVA diesel generators, which run for as long as fuel
is available and cost £250,000. So if you wanted to be able to
cover a week’s power outage after a major storm, it would cost
around 1300 times as much using batteries as it would with
diesel generators. The idea is ludicrous, and it would be equally
foolish to apply batteries anywhere else on this scale"


Elby the Beserk said...

andrew said... 1:30pm

Notable that "fact check" completely ignores the vast amounts of CO2 required just to birth a turbine. Selective fact checking. And the footprint figures are hence utterly fallacious. Not to mention that all renewables require fossil fuel back up, that as matters stand, over reliance on renewables endangers the grid as they are by definition intermittent (go see JoNova on the horrible mess SA have made f their grid in OZ)

And yes, of course we should have gone for nukes way back. But we keep electing idiots.

Bill Quango MP said...

Insurance is up on every product. Especially business insurance which is 25-500% more than pre Covid.
Business waste collection is 20% more.
Much stock is 5-10% more as shipping is taking a long time, demand is high. Airfreight is very much higher than pre Covid. Mailing rates for worldwide are already 15% more 2021 than 2020 and predicted to rise 13%. That includes uk domestic post too. Which rose 9% last year and will do so again.
The house buying boom has meant that solicitors, surveyors etc are charging more. Builders plumbers, trades people of all kinds, are in unprecedented demand, with a post Brexit shortage of that exact labour. Plaster, cement, carpet, even paint ..everything is in demand,
Garden furniture is in low supply in stores and online with long lead times after last years excessive demand for it.

The losses from being closed and the huge costs of being open through 2020 have to be made up before the tax rises come. That means higher prices.

The papers will soon be talking about the amazing boom times and the incredible bounce back.

It will all end in tears.
The housing boom has pushed prices to beyond bursting. In many areas I hear there is now a slowdown in housing sales. Simply because the solicitors cannot complete in time for stamp duty, and there is almost nothing left on the market to buy.

E-K said...


It really is vital that we count the numbers of houses being sold. Just because 1% of houses in an area are being sold and are going at record prices does not mean that 100% of houses in that area are worth the same.

Even 20% of those houses coming to market at any one time would see prices drop like a stone.

Rising house prices = rising (uncounted) inflation which means at least 50% of those people in the transactions have got poorer - more if the vendor has to buy in the same area.

None of this is good news and it is not just my usual pessimism.

There is a gargantuan and costly State apparatus to be funded from all of this. They need crises in order to justify their existence and so these bureaucratic organisations have no interest in solving the problems they were created to solve but in perpetuating them.


Pop that mask back on. The Covid Police are about.

E-K said...

And to my favourite critic - I have an agreement with the three Capitalists@Work that if any one of them doesn't want me to be here I'll simply disappear and promise not to take it personally.

Bill Quango MP said...


Every house I have in my ‘ rightmove saved list’ from January- February, is sold and no longer on the market.
That is over 100 homes in the local area. All so.d and completed first or second time.

Any viewing has a waiting list.
No viewing unless you are a cash buyer.

Probably like that for a few more months

E-K said...

I don't know how big your catchment is and what percentage of houses are for sale but I don't doubt that all of the houses for sale are selling. That is not the point.

A constriction in available property for sale vs pent up demand gives us the price rises - not the fact that *all* house prices are rising, because they can't be.

However we look at it this is the inflation of an essential for life which does not get counted in the cost of living.

It's not good news. Not even for the vendors if they are having to buy back into a similarly priced area or even to one where prices are rising as well.

The only winners are estate agents who are - quite ludicrously, with few qualifications and training - paid on percentage.

Don Cox said...

"The only winners are estate agents who are - quite ludicrously, with few qualifications and training - paid on percentage."

If you can't beat 'em, join 'em. It should be a good way to get enough money together to buy a nice house.

Don Cox

Anonymous said...

Dont go EK, I love your posts.
BTW, Is everyone assuming CO2 is a problem? At 0.04% of the atmosphere, the vast majority occuring naturally.

andrew said...

On the subject of inflation:

My (completely subjective) view is that inflation will not really kick off

... until the US Fed raises interest rates a lot.

Even then the inflationary surge will be short lived as this will trigger the failure of a fair number of zombie companies, boosting unemployment and so triggering the recession/depression that we have been dodging since 2007 or so.

On the upside (to some), this cannot be blamed on Brexit and so the pointy finger of blame might move on.

rwendland said...

Re the comment about a lot of concrete goes into wind turbine foundations. I think that is a bit out-of-date. Technology moves on.

For offshore turbines by far the most popular anchoring method is monopiles - 97% according to Arup in 2015, which uses virtually no concrete. Monopile uses a steel tube screwed or piled into the seabed by 20 to 60 metres, and suitable for use in 10 to 40 metres depth of water. A small and shallow "scour protection" area is needed, which I guess uses a few tens of tonnes of concrete. Seems like monopiles are easy to install from a ship above the site.

We hardly build any onshore wind turbines in the UK any more, but I'd guess most of the already built ones used concrete slab bases of about 750t concrete/MW, per above. But I gather the more modern methods are piles or where feasible rock anchors. From what I read the pile method uses about 200 tonnes concrete for a 4MW turbine, or about 50t/MW. I guess rock anchors would use even less concrete.

For comparison Hinkley Point C uses "Three million tonnes of concrete and 230,000 tonnes of steel reinforcement" (plus the steel in reactor island and turbines etc). That works out at 937t concrete/MW. Quite a lot more than modern wind turbines it seems.

I don't have the numbers to calculate the steel usage unfortunately.

Don Cox said...

" Is everyone assuming CO2 is a problem? At 0.04% of the atmosphere,"

The ratio of CO2 to other molecules in the atmosphere is irrelevant. It acts as a greenhouse gas, and it would do the same if there were no other gases present.

Doubling the quantity will have an effect on climate. Whether it's such an urgent problem as Greta and her allies claim , I doubt. But it is a problem.

The development of a working nuclear fusion device will largely solve the problem. Wind, solar and batteries will certainly not.

Don Cox

Nick Drew said...

Don, most long-range plans, when you scrutinise them, are based on solar becoming dirt cheap (right or wrong), thus electricity almost free. To choruses of "where have we heard this before?" it should be pointed out that solar costs have fallen precipitously and continue to do so (with new and better science coming along all the time, it's quite extraordinary), whereas nukes have become ever more expensive right from the start

if the prospect of "ultra low cost solar" is real then hydrogen becomes the storage medium for electricity energy produced in daylight, and Bob's your uncle

as stated here many a time recently, you shouldn't underestimate the amount of money and effort going in to this - unlike SMRs and CCS, which are just hanging around idly on political street corners, touting for bungs

Don Cox said...

Solar is certainly useful in the tropics. I can't see it ever being useful in a British or Swedish winter.

As for Hydrogen, there will be a great many deaths from explosions.

Don Cox

E-K said...

Thanks, Anon.

(I am NOT Anon btw - and nor is it my Mum.)

Elby the Beserk said...

Anonymous said...
Dont go EK, I love your posts.
BTW, Is everyone assuming CO2 is a problem? At 0.04% of the atmosphere, the vast majority occuring naturally.

1:37 pm

Yup. And it is known that the capacity of CO2 to radiate heat drops as the ppm rises; indeed, many scientists believe that we are near enough there already. It's not CO2 per so, rather ECS which matters. And if you don't know what ECS is, you probably should keep clear of discussing climate, as it is perhaps THE most important factor. If you are interested, Judith Curry and Nic Lewis are the go to people on this subject.

CO2 is the basic building block of life. We are a carbon based life form on a carbon based planet. So when morons speak of "carbon pollution" they are simply parroting ideology. And nonsense. Geological history shows NO correlation between CO2 and temperature, tho' BOTH sets os ice cores, from Vostok in Antarctica and GISP2 in Greenland who some post correlation. Which means that CO2 follows temperature. Not vice versa. Climate "science" and now "pandemic" science we now have to call "The Science" and the technocrats now running the West will brook no disobedience...

Recommended reading on the corruption of science here -

and the author, Matthew Crawford wrote on of my favourite books of 2020 (and boy did I read a lot of books). No Amazon link (I deleted my account after reading another fine book - "Surveillance Capitalism" by the splendidly named Shoshana Zuboff) -

Elby the Beserk said...

Blogger rwendland said...

Concrete and nukes.

How many nuclear power stations? 10 at most

How many turbines? Thousands and thousands and thousands


Anonymous said...

I am sure rwendland can speak for himself but his numbers are 937 t/MW nuke and 50 t/MW wind. If hes right and we assume wind is only 25% load and nuke is 100% (which is VERY conservative, some windfarms achieve ~50% these days and nukes don't acheive 100%) thats 200 t/baseload-corrected MW wind vs 937 t/baseload MW.

Even on that conservative basis, still very strongly in favour of wind. Steel is surely the same because the windmill blades are fibreglass-reinforced polyester or epoxy.

lilith said...

We are getting a new fence (bastard wind!). The fencer says that he's quoting and then by the time he has ordered materials all his labour gets swallowed up. Wood going up in price really fast just now.

Nick Drew said...

it's Black Death syndrome - potentially marks a big shift in the balance of power in the labour market

E-K said...

Except it isn't the Black Death, nothing of the sort. It killed a very identifiable section of the community, most of those of low economic activity and in much smaller numbers than the plague.

There is a surfeit of labour, in fact, and a pile of money for those WFH and a pile of debt for those newly UE or on furlough.

I believe that inflation is because there are new international competitors for materials with real spending power. I'm also sure the Suez blockage is still having an effect.

For example. Gym equipment. That has not come down from last years' rush and there are still shortages. I've a feeling that this is permanent.

lilith said...

Yup E-K that's why I'm getting the fence fixed now, not when it finally blows down. Fixed the leaky roof too. Thank goddess for Bitcoin. Now I just need a generator and to learn how to handle a shotgun....

lilith said...

You wouldn't believe how many people pretend they still have money after losing everything in the 2008 crash and carry on living as if they do have money...won't even tell their best friends. If you are labouring for the middle classes, make sure to get your costs upfront....

andrew said...

Lilith +1

Just as there are zombie companies living off cheap money and able to carry on as long as cashflow supports repayments in enormous numbers since 2008,

there are quite a few people with nice houses and holidays and nice new cars all paid for on the never never.

I used to feel jealous in my 7 yo paid off car but not so much now.

E-K said...


Turns out H was the stale, pale, male senior detective. Who'da thunk ?

Well I did, actually.

Without watching any of it I pointed to him and said to my missus, "That'll be H."

Not because I'm a good detective but because that was about the only person the BBC was going to allow to be the villain.

I spoke to another ex copper the other day and we both agreed that we can't watch TV cop shows. They get so much wrong. The acronyms are all bollocks (especially GSW for gunshot wound - think about it), the procedures are inaccurate and there is zero sense of humour of which there is an abundance even in today's police.

lilith said...

E-K, when people come alive again with a few chest compressions I have to give up on whatever cop show it happens to be.

lilith said...

Andrew, I'm looking sideways at my lease car and wondering if an ancient Passat might be a better plan...

Anonymous said...

"Wood going up in price really fast just now"

Same in the States ('lumber') over there.

Over here its housing - vast acreages of formerly green fields being built on. My rural retreat will soon be suburban, and roads which were country lanes when I first came here are now rat runs.

E-K - I said to my wife it would be a middle aged white guy, it could never be the feisty lady cop who runs rings round the men, or the black IT whizz who runs rings round the white guys.

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rwendland said...

Anon @ 12:37 pm, yes that's pretty much the sum I would have made for inshore wind.

Though we could factor in the useful lifetime of the concrete as well. For HPC nucs "at least 60 years", so lets call it 80. For onshore wind it depends to what extent the bases (and towers) are reused with a turbine replacement at ~25 years. Lets call that 40 years to make the sums easy. Last time I looked UK inshore wind had a capacity factor of 29%, and HPC EPRs should be about 90%. So

wind: 50 * (1/.29) / 40 = 4.3 tonnes concrete per MW-year
HPC nucs: 937 * (1/.9) / 80 = 13 tonnes concrete per MW-year

So onshore wind about a third of the concrete of HPC nucs, and offshore wind using monopiles immensely less concrete. But of course we'd have to analyse the steel and maybe copper to get a complete view.

I did google around trying to get a second/better estimate of the concrete in pile anchors for wind turbines, but no joy. I did though find a case study of using piles on UK onshore wind turbines at former RAF Lissett - as long ago as in 2008. So my assumption the older UK onshore windfarms used heavy concrete slabs might not be sound. The case study does not give the mass of the concrete, but it says costs were £48k for design, install and load test of the base for a 2.5MW turbine. That seems a pretty reasonable cost to me.