Thursday 27 January 2022

"Biden to get gas for Europe" - Really?

It's jolly nice of Joe Biden to say that he'll make sure "Europe is able to make it through the winter and spring" as regards natural gas, if Putin switches off (some of) the taps.  But he'll search in vain for a good precedent.

Oil is proibably the most relevant.  Yes, Saudi Arabia has been prevailed upon from time to time to open the taps a bit - but in terms of total volume, only to marginal effect.  (The effect on the price can be disproportionate, of course: that's how the market dynamic of commodities operates.)  But what about the First Oil Crisis 1973-74?

Recap: Israel invaded Egypt; OPEC reduced overall production and instituted an "embargo" of sales to countries it deemed to be supporting Israel - notably, the Netherlands on some pretext I've forgotten.  So the OECD set up a small working group in its Paris offices, (an organisation that was later to become permanent as the IEA) to coordinate the entire free world's oil stocks.  Everyone played ball, and a scheme of global rationing was put in place.**  It kinda worked, and eventually OPEC backed down.

But let nobody imagine it was a walk in the park.  (a) All motoring was severely impacted, for months++.  (b) Not a few power stations around the western world were oil-fired back then, and there were serious power cuts.  (c) The price of oil went up from around $3 to $12, and stayed there (until the Second Oil Crisis in 1979, of course, when it went to $30).  This of course is widely blamed for the serious western inflation and economic downturn of the '70s, Thatcher & the Wicked Tories etc etc.

And oil is very much easier to re-direct and store than natural gas, even with today's big fleet of LNG vessels.  Biden makes great play of how he's talked to the Qataris about "more gas for Europe" but believe me, at recent prices they and every non-Russian gas producer on the planet has been flat out at max already.  (Whisper it softly but the UK has been importing US shale gas for months now.) 

The parallels of the oil crisis of 1973 if played out in natural gas in 2022 would be extremely painful, possibly long-lasting, and inflicted on populations that have forgotten about commodity privations and how to get by.   (1973 was less than 30 years after WW2, and only 20 years after UK rationing stopped.)   In particular, who can see the Germans - among the worst exposed - going along with it?  As noted here before, Merkel spent the long years of her regime doing absolutely nothing to lessen German dependence on Russian gas (not even a single LNG terminal) because, truth be told, (i) she's a Russophile and (ii) Germany's foreign policy vis-à-vis Russia has long been based on a voluntary Danegeld principle, which privately they've convinced themselves is a positive thing.  They're appallingly exposed; and the rest of us still largely depend on gas for heating, and (across the whole of Europe) balancing the grids when the wind doesn't blow.

So Good Luck Joe, and thanks for the thought, even as we contemplate shivering through until spring.  But you try getting the Germans fully onside.

ND

_______________________

**  They wanted the rationing to be "optimal" (big word, that) so they needed a Linear Programming approach of unprecedented magnitude.  The maths doesn't change with size so it's conceptually straightforward - but not so easy on the computers of the day.  So Exxon offered the use of its suite of mainframes at Florham Park, NJ, and its expert staff of mathematicians (which big energy companies used to have in those days).

++ I was at Sandhurst at the time.  We had our use of trucks severely curtailed, and frequently had to get to training areas on 1930's vintage iron bicycles!  Riding a heavy bicycle, in winter, on unmetalled tracks in full kit with a GPMG on your back is no joke, I may tell you.  Character-forming, indeed ...

  


23 comments:

Thud said...

I hate bike riders and their lycra but could be persuaded to abandon my truck if I was allowed the GPMG.

Nick Drew said...

I believe they've just changed the Highway Code specifically with people like you in mind, Thud

Anonymous said...

According to both the Mail and Guardian (caveat emptor) - "Nord Stream 2 gas pipeline won’t open if Russia invades, says US".

Have they the ability to turn off NS2? Isn't that up to Germany?

Also Lavrov has responded - basically the US will not respect the Russian red line.

"On the main question in this document [from the US] there is no positive reaction. The main question is our clearly-stated position about the admissibility of further expansion of Nato to the east and deployment of strike weapons that could threaten the territory of the Russian Federation."

Incidentally it is 60 years (!) since the Cuban missile crisis, I've been a (mostly amateur) student of history and politics for decades, but only in the last decade did I realise the backstory to Cuba - the nuclear missiles the US had stationed in Turkey (i.e. on Soviet border), which provoked the Russian missile move to Cuba, and which were quietly removed post-Cuba.

The standard narrative - bad Soviets move to threaten US, no country could tolerate such a threat, Kennedy moves, possibility of nuclear war, Soviets back down - was pretty much the inverse of the truth, and it lasted 50 years.

(It's also only in the last decade that I discovered Nixon was probably defrauded out of the 1960 election by Kennedy's Dems - Illinois was definitely fixed. Theodore White, whose books on The Making Of The President we Modern History students took as the definitive studies, owned up well into his retirement. The standard narrative is that Nixon lost cos he didn't look good on TV, sweating under the lights with his five o'clock shadow.)

Anonymous said...

To support democracy we won't have our gas from nasty dictatorship Russia, but instead get it from democratic Quatar!

"The Al Thani dynasty has been ruling Qatar since the family house was established in 1825. The eighth Emir of Qatar is Tamim bin Hamad Al Thani, whose father Hamad bin Khalifa Al Thani handed power to him on 25 June 2013."

decnine said...

I was in the TA back in the oil crisis. Our unit's monthly petrol allocation was insufficient for all of our vehicles to make one return trip to the refuelling point.

Anonymous said...

Guardian -

“The Fed’s gone from being the market’s best friend, to a possible enemy,” said Kyle Rodda, analyst at the online trading platform IG in Sydney, adding that the Fed was set on “bringing inflation down, rather than protecting asset prices”.

Given that central banks have been inflating asset prices at least since the 2008 market correction/liquidity shock, it's about bloody time. Asset inflation has been huge, goods inflation lowish because they're all made in China/Far East, services inflation lowish because immigration keeps wages down.


I wonder how old Kyle Rodda is? If he's under 50, he probably thinks inflating asset values is what the Fed is FOR, because that's what they've been doing at least since the post-dotcom crash .

dearieme said...

"she's a Russophile": she's a former Young Communist.

The new Chancellor is probably, according to a retired head of the Kraut intelligence service, a former Stasi agent.

Oh joy!

jim said...

Well I suppose we could survive a cold winter. Free Primus stoves in all those high rises, Perhaps Bags and headscarves are this year's fashion statement. Maybe Boris could let us have a Keeping Warm App - only for charged phones though.

Maybe Putin just wants a warm water port to play with - let him have one. The puzzle is why did Putin go to all this trouble otherwise. Is there some kind of power struggle inside the Kremlin - my willy is bigger than yours. Why go to this bother, just turn down the gas.

The Russian economy looks a bit lopsided. Only so many Gucci clothes you can buy, only so many Rolexes will fit on ones arm, only so many ways to dish up caviar or have sex with hookers. Must get a bit boring for your average oligarch. No one buys Russian computers or smartphones but plenty buy Russian armaments - but a specialist market. Quite good at software though, always were brainy.

A bit like having an incredibly rich but annoying neighbours who is apt to throw noisy parties and invite thuggish friends. Can't be nasty to them, they do have the gas tap. Despite all this talk of Green there is so far no alternative - apart from oil. So I suggest we just throw a party, invite Putin to Buck House and show him a bit of class, a quiet chat afterwards over million year old brandies. No real need for a cold winter.

Anonymous said...

"why did Putin go to all this trouble"

Same reason Khruschev went to the trouble of sending missiles to Cuba in 1962, after the US installed missiles in Turkey. See upthread.

Russia doesn't like having American nuclear missiles on its borders. And I can't say I blame them. When you only get a minute's warning of a nuclear strike a lot of deterrence/MAD goes out of the window.

I wouldn't imagine they are too thrilled about the idea of US or British nuclear armed submarines in the Black Sea or Baltic either.

dearieme said...

And yet the recordings from the Kennedy White House (which he knew about, of course, but his advisors didn't) reveal them all agreeing that the Cuban missiles were of no strategic importance. I imagine that means that they viewed them as a purely domestic political matter; willy-waggling as Jim would say.

Timbo614 said...

If I remember correctly in 73 the maximum speed limit all all roads was reduced 50 MpH to save fuel. Maybe we should re-instate that immediately then all cars (electric or ICE) would go further.

At the time I was driving an Austin A60 van - so 50 wasn't a big problem, loaded up it wouldn't go much faster anyway!

Elby the Beserk said...

Nick Drew said...
I believe they've just changed the Highway Code specifically with people like you in mind, Thud
10:08 am
===================================

New Highway Code will go down like a lead balloon in areas such as ours, with windy roads and many many hills. As it is you can often see cars in a convoy behind a struggling bike, with no clear view round a bend or over a hill to ensure you can pass safely. Nor does any cyclist have the good manners to pull off the road for 10 secs to let cars past.

I see a huge rise in road rage in the Mendips.

There was me thinking we'd elected a Conservative government, only to find we'd elected Socialist idiots.

Frankly, if Johnson were spotted down here no a bike he'd soon be in a ditch.

lilith said...

Nick Drew said...
I believe they've just changed the Highway Code specifically with people like you in mind, Thud

LOL!!

Charlie said...

I can't imagine hating someone because they sometimes ride a bike.

If you have to change your driving to account for changes in the new version of the HC, I'd suggest you were driving like a pillock in the first place.

Why is being courteous to more vulnerable road users in order to ensure their safety in any way controversial?

Elby the Beserk said...

Charlie said...
I can't imagine hating someone because they sometimes ride a bike.

If you have to change your driving to account for changes in the new version of the HC, I'd suggest you were driving like a pillock in the first place.

Why is being courteous to more vulnerable road users in order to ensure their safety in any way controversial?

11:12 am
===================

Courtesy is a two way thing. Would that cyclists were to extend it also to drivers. Standard practice now amongst the lycra louts is

1. No single file, regardless of motors behind.
2. Ushering you round blind corners and then getting pissed when you decline the opportunity to have a head on crash with an oncoming vehicles.

For country roads, this nonsense will cause bedlam.

Charlie said...

1. When you're driving a car that is 2 feet wide, then you can complain about how wide a pair of cyclists is.
2. This happened once and they were p*ssed off that you had been driving thre inches from their back wheel for the last half a mile.

Being thoughtful when driving your car in close proximity to vulnerable road users won't cause "bedlam" you absolute berk.

Timbo614 said...

[On topic]
The cyclists in 1973 must have been laughing!
[off topic]
There are dickhead drivers and suicidal cyclists I've seen them all but I've probably seen more of the dickheads.

lilith said...

Charlie, you have no idea how my husband drives, even if you have concluded he is a berk. He is talking about the swarms of gentlemen of a certain age who occupy the winding country lanes for miles and miles at a time and who, if they consider the motorist at all, do so only to suggest you overtake them on a blind corner. He has been a cyclist himself as have I. I have never known him to sit on the back wheel of a cyclist. If he did I would remove his keys. Really, there is no need to be so rude.

Seelby the Berk said...

I’m starting to understand why the US never wanted Nord Stream 2.

Frankly, Russian’s speak another language but more importantly think differently to Europeans and the US.
Go out with a Russian and you’ll get it.

I’m getting the feeling the American Democrats mean business.

Diesel in the southeast is £1.49 p/litre. My 70l tank , 35mpg rocket bimmer is starting to look stoopid.

Thankfully the f wits berks down west won’t be able to afford to run over the Lycra clad when we all ride bikes.

Rock on.

Elby the Beserk said...


Anonymous Charlie said...
1. When you're driving a car that is 2 feet wide, then you can complain about how wide a pair of cyclists is.
2. This happened once and they were p*ssed off that you had been driving thre inches from their back wheel for the last half a mile.

Being thoughtful when driving your car in close proximity to vulnerable road users won't cause "bedlam" you absolute berk.

4:18 pm
=====================================================================

Quite. I drive extremely courteously around cyclists, regardless of their antics.

Manners, eh? Politeness costs nothing, as my late mother used to say. She didn't suffer fool gladly, either

Charlie said...

I'm only polite to people who deserve it. People who refer to "swarms" of riders and who moan about HC changes aimed at protecting vulnerable road users just because one rider once flicked them the Vs don't.

I see my previous posts were deleted, I assume because there was too much swearing and not enough anti-vaxx, anti-"cyclist" conspiralunacy. How far this place has fallen. I'm heading over to the Daily Mail comments section now as it's slightly less insane.

Bloke in Callao said...

Charlie,

I'm only polite to those who deserve it too. So piss off!

E-K said...

Lycra, aluminium and 50 cal with no tracer.

I see the attraction.