Here's L'il Volodya signing Something Important (the annexation document?); and note, by way of weighty and none-too-subtle symbolism - classic Russia - in the display case is a model of the sunken cruiser Moskva. So this is obviously revenge, writ large.
Compo: your speech bubbles for some of this motely crew. I'll start you off.
No.13 - Couldn't we have found some carpet instead of this manky kitchen flooring?
No.15 - Shut your face and get your T-shirt in the wash!
ND
This was to have been your weekend treat, but in light of the global gloom and local BTL burblings, here's a diversion for an autumn Thursday while we wait for CU to bring us more proper economic input ...
Remember this story of aerial derring-do, espionage, and not a little smoke & mirrors?
I promised you'd hear it here first, if and when the legendary Lockheed G-AFTL returned to these shores. Well, it has. Registered to Fighter Aviation Engineering Ltd, one Graham Peacock, it is undergoing very careful (and somewhat secretive) restoration at Sywell Aerodrome, Northants. Aerodrome - love that word.
At the same time as the restoration, some equally careful aviation detection work is going on, in the long-running attempt to get to the bottom of some of Cotton's pretty implausible claims and the myths that have grown up around them (which he would have loved). The old airframe has many secrets to reveal. Serious progress is being made and a tru-er story may be told some day soon. I have photos from the inside but I'm not permitted to share them yet - sorry!
Read that story again and enjoy!
ND
Oh wow. Both Nord Stream pipelines have apparently leaked their guts out in the last day or so. Ol' Joe Biden always said he'd be making sure NS 2 never went into operation. To be honest, I never really believed he'd resort to the Semtex Option, but who knows ...
Scope for a tremendous range of imaginative conspiracy theories here. Cui bono? Well probably not German industry. Make of that what you will - and I'm sure some of you will.
Quiz: who blew up NS1 and NS2?
Incidentally, Putin's announcement of last week is really, errrr, stirring things up, isn't it? Not sure that his "partial mobilisation, I stress, only partial" is entirely going to whatever plan he had in mind, unless you consider it was simply to give the Russian people to understand in a rather graphic way that they're all in it now, whether they thought of themselves as armchair spectators or not. BTW, despite his and other Russian leaders' placatory TV language, the Executive Order he signed contained nothing that limits the mobilisation, and might almost amount to conscription - a very different concept indeed.
But putting guns into the hands of tens of thousands of morose, drunken and undisciplined Russians is something that ... well, let's just note it's something that Lenin went to great lengths to avoid, his first act on taking power being to dis-arm and disband the army and get them all out of Moscow.
Finally, let's elaborate on the point I made last week, that his sinister (but technically nuanced) nuclear 'hint' leaves him awkwardly placed next month when he's annexed four new formerly-Ukrainian oblasts and they are all still under determined "NATO" attack. OK, by the letter of his dictum, they'll be under conventional attack, so his nuclear threshold hasn't been crossed: but try telling that to the bellicose woman who fronts on Russian national TV. She'll want retaliatory nukes - "this is not a bluff" - starting as soon as the next big town falls back into the hands of the Ukrainians.
And - and this is the Big One - if he really does annex the lot, it puts these new fully-under-seige territories in the same category as Crimea - or maybe the other way around. Now he'd probably been enjoying a de facto pass from the world at large since 2014, on keeping Crimea in his poaching-pocket. But maybe he's just jeopardised that: he's taking one helluva gamble as to how it falls.
Or maybe he's just jeopardised the whole of Europe. Did the man say Interesting Times?
ND
Kwasi Kwarteng is an Eton scholar, went to Harvard and has a Phd in economic history from Cambridge. Surely, he is one of the most economically educated Chancellors we have ever had.
Liz Truss too is no slouch, having worked her way to Oxford from humble beginnings.
So here they are, as Mr Drew points out below, trying to do something about the UK economies performance in a big hurry. For a very long time now, the UK has been sinking back to its post-war status, with socialist policies driving down growth and leading to higher taxes in a cycle of despair. Not since the late 1990’s have pro-market policies been popular or implemented. Blair, Cameron and Boris all worshipped at the NHS cult and in massive state redistribution.
With the large tax cuts seen today, the current leaders are trying to change course. To redress the large tax burden to encourage investment. It is the right approach but the timing is so bad, that they have taken the biggest gamble since Cameron agreed to a Brexit referendum.
With the tax cuts, come no spending cuts. Indeed the energy support offered is enormous and comparable to the Covid state spending madness. Still the socialist grasp on the media and body politic insists that gross spending and help for all is the purpose of Government. This year, with interest rates rising, the pound falling and inflation out of control, we will borrow more than during covid and getting on for 2009/10 levels of borrowing.
The markets are shocked, not believing that the UK won’t continue to follow the EU orthodoxy of managed decline. However, with massive spending there are no guarantees of success and possible horrendous downside risks.
Next year super energy bills will finish many businesses. No one is paying £35 for a cod and chips. The war in Ukraine is likely to escalate not end. Interest rate rises will cause huge problems in the housing market and start to damage bank balance sheets.
This will likely lead to a Schumpterian crisis, one where massive destruction is wrought on our zombie economy with the hope that out of the ashes a leaner, better focused and more profitable one arises.
The fact that the rest of the West will get this too more or less is not much of a consolation for us. Perhaps the real gamble is that with everything buggered anyway we need to set things up for a recovery on a more pro-growth economic base?
A better approach would have been to sign-post these changes. Agree some cuts to budgets no longer affordable to go with them and so limit the real fiscal easing until next year when inflation should drop (it will when high energy prices are baked in, big drops will occur, even if only back down to 5-6%).
Thatcher had to endure first and my take is that this is the Truss plan. It is her 1981. Risk it now, go for growth and hope something turns up. It is a big gamble, we are left to hope it works.
Failure will be a hard burden. Massive debt, a pound heavily devalued trying to buy expensive energy valued in strong dollars. Double digit interest rates that will induce a recession worse that 2008 in the real economy with huge unemployment and negative equity a common experience for many of us. Plus a Labour government keen to say it is all the fault of Tory tax cuts, trying to tax our way back to growth.
... for which, we await CU who will hopefully be along later.
Being a total non-economist, all I can say is this: whether good, bad or empty, it's being done in the right way - crash bang wallop, within days of taking office. Exactly the same as Kwarteng's dismissal of Tom Scholar - I've no idea whether it was a good or crazy thing to do: but I am sure it was right to do it on Day 1.
Oh: and I very much hope it's all, hmmm, extremely well-considered and adroit policy-making.
So - while we wait ... have at it!
ND
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| Big boss: lots of phones ... |
It's also interesting to look at the body language, the delivery and the props etc.
Firstly, though he's still clearly very nervous indeed, Putin didn't look as ill as he did earlier in the year - though our own dear Queen died only two days after looking quite perky with Boris and Truss, so that doesn't betoken much.
Secondly, the way he emphasised, very earnestly and very quickly, that his new mobilisation is only 'partial', is a huge sign of weakness; as of course is "this is not a bluff" - akin to when you hear a parent shouting "stop that - and I mean it!" to a kid.
Thirdly, I laughed out loud when I saw his bank of phones, carefully in camera-shot to prove how important he is. That's truly Russian, too. You realise he'll have a full-size office-grade photocopier by his desk, too? See this old story of mine from my Moscow days ...
All very scary. We try, but we still don't really understand these people.
ND
OK, so this development - not unforeseen - is way above the pay grade of a mere blogger. But we can still have opinions.
It was pretty obvious, when Ukraine swept the Russian rag-bag out of Kharkiv earlier this month, that Putin would respond. Taking his cue from Uncle Joe in 1941, he went hull-down and took his time. On 2nd Sept, as the counter-offensive began I wrote:
Worst case? This happens, say, in October, after the Russians have conducted the spurious "referendum" they have long been trying to carry out - now looks like a colossal mistake by Putin not to have done this already - and which presumably records 104.6% of the population of Kherson declaring itself to be now a province of Mother Russia. Then Putin can declare that Russia herself is in mortal peril, and ...
And so it transpires.
It was indeed a colossal, complacent mistake, one of his multiple errors. Painted-into-the-corner Putin now has a massive problem, in painfully easy stages:
It's a bit difficult to be definitive on the new PM's 'energy price guarantee' package, because "details are awaited". The Funeral is the pretext, but actually of course they're making it up as they go along.
So: politics first. She has to do something extraordinary, or she'll be defenestrated by poll-tax style riots before Xmas. As has always been the case, announcements like this shut Starmer up immediately - he never knows what to say. All the commentary has essentially been technical, save for a little peep of "it's not progressive - the wicked rich benefit too": true, but since all eyes are on the Bier, that's not getting any traction.
We might also note that Truss obviously considers it politically unacceptable to announce any form of rationing. it's gonna happen anyway (and we know the Grid already has the power to do it unilaterally), so I think this mealy-mouthed cowardice is stupid. The time to ready the populace for what's to befall is right now, as Macron is doing quite purposefully.
As regards the economics, not that I'm your man here and we look to CU for more; but quite obviously, in the short term the package does almost nothing to increase supply, and not much that I can see to curtail demand (no mention of rationing or compulsory reductions in usage). So the fundamental issue - i.e. this is a genuine (if artificial, as regards Putin's actions) global supply crisis - is being glossed over: it's been decided the state will underwrite whatever the energy is going to cost. So the first big takeaway is: cost-push inflation will go roaring on.
What about spontaneous demand-side response? Industry will certainly retreat in the face of even the newly capped level of price it's paying: some of this might be in the shape of a bit of efficiency, but mostly it will be outright demand destruction (or 'demand export' - to N.America, which won't be suffering so badly). Likewise, even at the capped level, which is 'merely' twice last year's rather than three times, residential energy consumers will definitely use less. I don't think anyone knows by how much domestic demand will fall - some of it has historically been totally inelastic, but we may find that changes. Again, some of this will be efficiency (and putting on a jumper) but for sure, problems of illness and damp will arise over time. The housing stock won't benefit at all, and nor will sickly people.
All that said, my best guess is that rationing will still be required, certainly if anything like the Beast from the East (meteorological beast, that is) comes along, or even its small brother. This is an outright, absolute energy commodity shortfall, with Europe being as badly affected as any region.
I'm disinclined to bang on about too many of the details just now, because we await so many more. Likewise, the longer-term aspects (North Sea licensing, fracking, nukes) designed to improve supply are for another day, in every sense**. I will say, however, that there is to be a 'commercial' strand of activity undertaken, as Truss favours buying out the generating sector windfalls with secure long term offtake contracts (on a voluntary, negotiated basis!) instead of windfall-taxing them. This is really stupid, in my judgement. Any ideological resistance to windfall-taxing has long since lost its virginity; and the idea that the civil service is up to this 'commercial' task flies in the face of all experience.
Jury is out: but on this and indeed the whole complex package, I'm not even slightly confident a Truss / Kwarteng government is up to the task either. It's just so big. As is the parallel EU effort, by the way (and over there, it's very fraught politically, too: and their grasp of how markets work is really awful). In both cases, there will turn out to be equally big gaps; and overall, the unintended consequences will be legion.
ND
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** ditto the global aspects of the crisis, of which there are many
So while we await my digesting of the Truss energy masterplan ...
... at the weekend, granddaughter Drew (9) entered a 'roar race'. Nope, me neither. These racers are small electric bikes with a 'reverse megaphone' attachment. The louder the kid roars into the megaphone, the more power they get! Bloody brilliant, I wish they'd been around several decades ago.
Anyhow, gD was pretty confident of her decibel potential, and so it proved. Overcoming a severe jostle-induced wobble at the start - did I say this is fiercely competitive stuff? - she got well into her power-yelling, and snatched the lead around the outside in the closing couple of yards, to take first place on the podium.
Grand-paternal pride, or what?!
To round things off nicely, gD's cousin (8) had staked her pocket money on gD to win, knowing all too well the power in her playmate's lungs. We're talking Yorkshire here, where people seem to make a book at the drop of a hat (is this a legacy of whippet racing, or summat?). The cousin cleaned up.
A very satisfactory outing. The energy stuff can wait.
ND
I must be joking, right? Death of the Monarch; new PM with the most shocking lack of appropriate qualifications, or abilities, or 'ear'[1]; economic crisis; crazy energy plans issuing from every western orifice; war raging.
Well, yes. But here's a list of the straws I'm clutching at this morning:
ND
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[1] in her statement she told us that the Queen was "the very spirit of Great Britain". Does she have the slightest idea how hurtful that is to an Ulsterman? How it convinces them they are completely forgotten in Westminster? Anyone wanting to be PM has to be the instinctive master of this stuff (as well as needing staff who are even cleverer still). Sheesh. Maybe she is beyond redemption after all.
[2] you can always spot Framing - they can't help themselves saying it three times in a row and twenty times thereafter
The EU and, we are assured, newly-minted PM Liz Truss, are hatching plans to cater for - I can't immediately think of a better phrase - the energy crisis this winter and maybe beyond. Well, they certainly have to do something: "Devil take the hindmost" doesn't count as public policy (even if a handful of commenters seem to favour the bracing Nietzschean approach).
Whatever these plans turn out to be in detail, by definition they will be epic in scope and scale. In such extreme and complex circumstances, with so many moving parts, I don't trust any bureaucrat to do anything adroit; so we may be equally sure the "unintended consequences" will be monstrous. We could all guess at a few. Greta thinks she can guess, too - and she's not happy.
I particularly don't trust the EU in general, and Germany in particular, to do anything half-way intelligent by way of intervening in markets that are international (electricity, carbon) if not global (oil, gas, coal). As opined here many times before, there is a profound shortfall in German understanding of how markets actually work, which is inevitably and amply reflected in Brussels.
Come to that, the much-hyped G7 plan for a "cap on oil prices" also sounds cracked.
And do we trust Truss, to invoke a recent coinage?
But of course we await details on all of this high-minded blundering; so perhaps we should calmly wait and watch, with equanimity and an open mind ...
ND
WTF? There's many a nastier beast in the world of top-end criminality than Mayor Khan, unprincipled little opportunist that he is. What we need in our Metropolitan Police Commissioners is someone who can look absolutely any mortal man squarely in the eye, unblinking, and read his fortune for him. Stick it up your arse, Mr Mayor.
Before I am accused of sexism (or being a neocon shill, or whatever it is our sub-marxist trolls like to say), let us immediately add that in my varied career I have met several women quite capable of facing down the Khans of this world. Yes, bullies exist and yes, the Fred Goodwins, the Maxwells and the Bernie Madoffs make ground too easily in a world where most people back off from confrontation at the narrowing of a glowering eyebrow.
But it shouldn't be too much to ask that the top police job spec includes backbone. Moral fibre. Character.
ND
... and we needn't expect much detailed news on it. There's a very good essay as to why this should be so, in the opening 4 paragraphs of Wednesday's assessment from the excellent ISW. Obviously this development has been widely anticipated, and Ukraine's systematic, highly successful interdictions into Russia's lines of communications and supply over the past few weeks have reinforced that expectation.
In strictly observer mode (OK?): another reason why there won't be much detailed news is that we needn't expect any sweeping arrows on the map, as we were treated to in February when Russian armoured convoys and air-assault operations burst clean through the borders on their way to Kherson, Mariupol, Kharkiv and, errrr, Kyiv. My assumption would be that Ukraine will prosecute this campaign largely as a foot-infantry operation, kilometre by kilometre.
Why? Well, (1) as we periodically remark hereabouts, there's no such thing as strategic surprise, but there can be tactical surprise. In this case, Ukraine has at least pulled off several of the latter - the supply interdictions mentioned above, particularly in Crimea: but such is the ubiquity on both sides of persistent / loitering aerial reconnaissance these days (drones), a covert build-up of armour is well-nigh impossible. So a "surprise" lightning armoured thrust, so beloved of 20th C military writers, is highly unlikely, at least at an early stage.
(2) It doesn't seem likely Ukraine has major tank forces left to it (western material aid has mostly been in terms of artillery and lighter weapons); and anti-tank defences for a set-piece action aren't difficult to muster when you've had four months to prepare (i.e. since I wrote my little memo to Putin, saying that defence of Kherson should be his primary strategic goal).
(3) Ukraine's massive advantages are (a) near-perfect intelligence (from western sources, plus the fact that the population of Kherson oblast is very hostile to its occupiers, with a long tradition of partisan warfare) ; and (b) the morale, determination and tactical skills of their infantry - up against what is, on average, the ultimate in non-coherent, unmotivated, rag-bag rabble. In infantry actions, this matters more than almost anything. It's a rabble that turns and flees.
Artillery? Both sides will have made sure they are as well-placed as possible in this dimension. Russian preponderance is clear: but their supply lines are very ropey into this part of the occupied territory (right bank of the Dnipro), the bridges having been put out of commission and the ammo dumps having been blown up. Obviously they have effectively limitless reserves, but they are relying on pontoons to get ammo etc forward. If they stream forward in large numbers on known crossing-points, there will be carnage.
And while artillery is great against (e.g.) armoured build-ups or static targets, that isn't going to be what Russia is faced with. You can't easily use artillery against 1,000 adroit platoon-sized attacks across a 100 mile front.
Russian response? We're already seeing it.
The biggie will come, if and when Kherson city is recaptured, or even on the brink. Worst case? This happens, say, in October, after the Russians have conducted the spurious "referendum" they have long been trying to carry out**, and which presumably records 104.6% of the population of Kherson declaring itself to be now a province of Mother Russia. Then Putin can declare - see that second link again - that Russia herself is in mortal peril, and ...
Have a great weekend!
ND
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** now looks like a colossal mistake by Putin not to have done this already
There's a thing, eh?
Nope: this is about the USD. Always the safe haven. Never underestimate ... etc etc.
OK - now back to all your favourite Ukraine themes.
ND
Thar she blows, £3,549. What now? Some observations and considerations:
But what of its political stability for the long haul? Its ability to re-equip? To raise adequate manpower? For a very good essay on this, I recommend Can Russia Continue to Fight a Long War from the esteemed RUSI, whose Ukraine coverage is generally quite excellent.
To the question of whether Russia has the political capacity to sustain a prolonged conflict, the answer must be a qualified yes. What of the material capacity of Russia to generate military power? Here, the answer is more ambiguous. A key consideration will be how Russia’s major manufacturers function in the absence of Western components – which, notably, they have failed to substitute in the last decade...
The growth of China as Russia’s largest supplier of machine tools may provide a margin of safety for the Russians, but Western suppliers still account for a large percentage of machine tool imports. The more important point, however, is what an inability to produce machine tools domestically tells us about the state of Russian industry and its potential to achieve import substitution. As such, Russia is likely to struggle with many areas of import substitution even if it accepts lower quality products and higher costs. There are certain things it simply cannot make. Russia will not replace nonfungible military capabilities without external help from China ...
If Russia has to keep a steady stream of resources flowing to the front lines because it is not allowed the luxury of a pause or because a second offensive also fizzles out, its material capacity to conduct a long war will be limited...
Moreover, the Russian military training system will struggle to generate combat-effective units in numbers – even if it can push new recruits into existing understrength units ... Russia can generate a large number of new troops, but only if it avoids intensive refresher training and trickles new recruits into existing units, which risks mixed units on the front underperforming. If it seeks to generate fully formed units during an operational pause for a second phase of offensive activity, its training pipeline may substantially limit its capacity.
ND
In my experience, the reasons for someone resigning are rarely revealed by the ostensible account. Sometimes they've actually been fired. Sometimes they were at the end of their tether - maybe out of their depth - and looked for some convenient pretext, or picked a fight on a semi-spurious 'point of principle'. Sometimes they are just one of life's serial resigners with a track-record of flouncing off. And sometimes, I suppose, the whole thing should be taken at face value.
Anyhow, last week there was an interesting one: "Ofgem director Christine Farnish resigns over price cap change". Who she? Good question. Is the precise mechanism of the Ofgem price cap a resigning matter? Well, it's incredibly technical, as a glance at Ofgem's many publications on the topic indicates: a helluva balancing act in fraught circumstances, with lots of competing strategic desiderata in play. Only Theresa May ever wanted this cap thing, and the weight now resting upon it is wildly more than it was ever designed to bear.
The underlying complexity is a genuine one: what should be the hedging strategy of a utility supplier in ultra-volatile market conditions? An answer to this is required because the price cap logically needs to take it into account. What's being hedged is technically a short option - always ultra-problematic. There's no single "right" answer, not least because high volatility (and we are talking off-the-scale vol here) is naturally accompanied by thin liquidity in the hedging markets, and acute pressure on lines of credit, all for very logical technical reasons. In case anyone imagines there's an element of crying wolf here, just consider the number of suppliers who've gone bankrupt or otherwise exited the market in the past 12 months. Much of that was Ofgem's fault for licensing minnows in the first place, but Bulb (e.g.) isn't in that category and Bulb is languishing under state control at the expense of all of us. The government, for one, has no idea how Bulb should hedge, and so it ruled that it wasn't to be allowed to.
For those interested, there's another technically fascinating phenomenon at work in the hedging arena: backwardation in the gas market. This is where the forward curve is trading at lower prices than the spot market - generally not something seen in the gas market, except ultra-fleetingly**. But since last year when this whole thing kicked off (starting in the Far East - see this blog from Feb 21 - long before Putin played his hand about 12 months ago, but made much worse by his subsequent actions) there have been unprecedently sustained periods of deep backwardation. This, incidentally, is the only reason the big players like Centrica are still alive and kicking: they've been able to lock in at prices they are fairly sure will end up looking OK, relative to spot prices. They may still have had to take the risk of an open long position for quite a while, however. The small players might have wanted to go the same way - but didn't have the credit standing to take on the same position. The strain on even Centrica's lines of credit is enormous.
The last 8 weeks have seen astonishing movements along the forward curve - prices for calendar '23 and '24 have more than doubled. Even with this, there's still a degree of backwardation.
I don't know if the "£6,000 price cap" forecast is warranted - putting numbers on predicted commodity prices is a mug's game; and I've no idea who "Auxilione" are, except that they seem to be attention-seeking. (As an MP acquaintance of mine says, you can always get on the news if you are willing to take your trousers down in public.) Doesn't detract from the difficulties ahead, though.
But resigning over the technicalities of the price cap? She should have done that a long time ago: it's been a can of worms since the very start.
ND
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**There are all manner of pseudo-science theories about this - e.g. "backwardation can't ever be sustained in the gas market" - but, like econometrics in general, they are mostly bullshit
I last wrote at length about the 'Rough' gas storage facility five years ago, and the story is taking another turn; so, once again by popular request ...
Many moons ago it was discovered by offshore operators (Amoco) that the 'Rough' gas field they'd developed in the North Sea had almost uniquely favourable reservoir geology. The sandstone is incredibly regular, making it highly suitable for gas storage. So, only a few years after commencing production, they sold it (at a very handsome price) to the old monopoly British Gas, which had decided it could use a mammoth offshore storage facility for seasonal storage (pump gas in during summer, pump it out in winter).
More: BG declared it was an absolute necessity, to support the heavily winter-biased demand of its residential customer base - the first of many porkies it has told in this tale. Pre-privatisation, BG was, remarkably, an unregulated monopoly, though it was still liable to the occasional inquiry into its capital expenditures (which it was of course foisting on us captive customers): so it made a bit of a case for why Rough was essential. I won't bore you with it now, not least because it turned out to be entirely spurious when, a decade later, the privatised BG was being split up and the division which handled BG's residential customer base - still a monopoly at that stage - was invited to bid for whatever capacity in Rough it required to meet customer demand. It bid for ... precisely zero: yes, somehow when push came to shove Rough wasn't essential - it was in fact totally unnecessary.
Anyhow, in the meantime they'd spent around £1bn - quite a lot of money in the 1980s - on converting the offshore production facilities to be able to inject and withdraw gas at will, coupled with substantially upgraded onshore facilities for the same purpose. When anyone tells you (as they often will) that essential utilities are too important to be in private ownership, and that monopolies are the right way to go for efficiently ensuring security of supply etc, remind them about Rough - and apply to me for yet more examples of grotesque monopoly gold-plating at our expense, because they are legion.
Well, the thing had had been built, so it was sunk costs by then. No need to record the complex chain of transactions by which the facility was separated out from what became Centrica, passed through various hands, and eventually was bought back by Centrica to become part of their complex and quite cleverly managed portfolio. (Just in case anyone thinks I have a down on Centrica, read back through the Centrica-tagged posts by clicking on the label below: you'll find I used to have a high regard for them. It's their recent subsidy-farming manifestation I dislike.) Suffice to say, Centrica ran Rough quite intelligently on an open-access commercial basis for many years. Over time, seasonal storage (pump in for 180 summer days, then pump out across the winter period) became less attractive in the face of much more flexible new (and smaller) onshore gas storage facilities, plus increasing access to a big surfeit of storage capacity on the continent (another long story) via two big cross-channel pipelines, plus burgeoning LNG import capacity of a very flexible nature. Even then, Centrica was able to respond with clever, more flexible storage packages which they delivered via use of Rough.
Eventually as the beast grew older, they needed to think about how long it would last. There was a small explosion at one point, and other old-age mishaps. Ten years or so ago, they started angling for government money, firstly to build more storage, then to bail them out at Rough itself. They started spinning yarns about safety, and how much new drilling would be required to replace the old wells, and how only a subsidy would allow them to do this, and how we'd all freeze in winter if they closed it down. They didn't convince anyone, so five years ago they shut it down, saying they would pump out the rather large amount of "cushion gas" - the minimum inventory a gas storage facility requires to operate at all - and that would be the end of it. Amazingly enough, once again, it turned out that UK plc managed quite nicely without Rough, thank you very much. The wonders of the free market, which was comfortably delivering all the necessary seasonal flexibility without any subsidy whatever.
More recently, Centrica somewhat unexpectedly started hinting that all might not be over at Rough. First, they suggested it might be converted for CO2 storage ... then (as hydrogen started to become all the rage) for hydrogen storage - all somehow needing a big subsidy (because, of course, it's all totally uneconomic). And there was everyone believing they'd pulled the plug forever / it was rickety and unsafe / etc etc.
Now ... it turns out they think they can press it back into service as a regular natural gas storage facility - by October! FFS! They've just obtained two of the permits they need to be able to do so - and, needless to say, are in intense negotiations with the ever-gullible Civil Service for what public money is going to be sent their way for coming to the rescue this winter, when Putin's punishment reaches its wintry worst. Inventing a whole new rationale - a strategic reserve of gas (equivalent to a whole couple of days' worth to start with, maybe rising to 10 days' worth with a big refurb job. 10 days, just think ...) Well, fair to say, times are different now.
We can only hope someone in Whitehall is playing back to Centrica its bullshit statements of many years, and giving them a very hard time. Somehow, though, I doubt it.
ND
One of the few noteworthy outcomes from Cop26 in Glasgow was an international agreement to reduce methane leakage, CH4 being a far worse GHG than CO2, albeit much less persistent in the atmosphere. Until then the gas had never received the attention it deserved, though if we get to the point where trapped methane from the Siberian permafrost starts escaping big-time, it certainly will.
There are many places in the western world - OK, in some states of the USA, to be precise - where regulatory standards for methane leakage and/or their enforcement, are essentially non-existent. But the technology for tightening up on this is very straightforward, so it should be low-hanging fruit. It's important for every reason under the sun, but not least that methane leakage from the natural gas system as a whole gives shale fracking a bad name: if you've ever paid close attention to the notorious anti-fracking film GasLand, the genuine problems it highlights are not really to do with fracking per se, but rather the leaky infrastructure downstream of the drilling.
Needless to say, (a) the COP26 agreement is being resisted by the oil & gas lobby in America; (b) Russia, China, India et al didn't sign up to it anyway; and (c) by far the greatest culprit is of course Gazprom and the entire Russian gas system, which is as leaky as all Hell (and there's a lot of leaking methane in Hell), on a scale hard to comprehend. The World Bank has for 30 years been promoting schemes for doing something about it in Russia, whose own technology is not up to the job.
So to the story. When I was in Moscow some years ago, one of the Russians I was on after-work-beer terms with told me this. He was a mathematician working in the gas sector, and one day he was assigned to a small team that had been set the following challenge. There were no gas meters to speak of in the entire Russian gas system, from one end to the other (domestic heat control was famously achieved by opening the windows in winter), but in order to satisfy certain World Bank requirements they needed to quantify gas leakage across the network. They had some basic pressure readings etc at various points on the system, but they would need to develop some kind of modelling technique to derive an estimate of the methane lost.
Diligently, they worked on the task, and after some months came up with a complex formula for making the required estimate, in classic Russian fashion. This they presented to the relevant Board member of Gazprom, who received their conclusions with interest. He thanked them for their hard work, but told them that they'd overlooked something, namely the "environmental factor". What is that? they queried. Well, he said, you take the formula you've come up with, and multiply the whole thing by 0.1. Why? they asked.
He leaned forward, and quietly but pointedly said: Because we couldn't be losing that much gas - could we, hmm?
ND
Dunno how many of you know who Aaron Bastani is, so we'll start with a brief and hopefully fair pen-picture. Bastani is highly articulate, apparently well-read, and sharp. He's in the category I tend to describe as "honest lefties": with notable blind-spots and a distorted worldview (usually a variant of sub-marxism), they'll nevertheless generally bow to truth and logic when confronted inescapably. (The code for this is that they've noticed something is "problematic" - i.e. sits very awkwardly with their worldview, making them deeply uncomfortable, exactly because they feel the force of the logic and the truth.)
Plus, Bastani is a tough cookie, a serious and driven entrepreneur who Gets Things Done: notably, his impressive Novara Media creation, now a burgeoning mini-empire of alternative media. At the start of this project, his purposeful and businesslike conduct could have been labelled "social entrepreneurship", but it must now fast be reaching the point where he can start to cash in, if he wants to. (His commitment to leftism is clearly intellectual rather than temperamental, and he has many very traditional conservative traits: enthusiasm for family & becoming a house owner; married in church; etc etc.)
And now, hahah! he gets to interview "The World's Biggest Political Streamer", Turkish-American Hasan Piker, "arguably the most influential political voice on livestreaming service Twitch". Mr Piker, we very quickly realise, makes a shedload of money from his own ultra-successful leftie media activity.
Bastani is just wide-eyed & drooling with pleasure at talking to this guy. 54 minutes in, he gets to ask his new friend about ... his big, new, nice-part-of-LA *ahem* mansion and his costly new electric Porsche. Now to be fair to Bastani, he does kinda try to get his man to justify such expenditures; but boy, he let's him off the hook easily. They quickly agree that the Red Line is, never to become a landlord ... oh, and not to have three Porches - "that would be ridiculous!". Right, right. Everyone should have nice things that are within their means "... as long as your morals are not compromised." Ah yes, of course.
It's just so funny. Because it looks for all the world like Bastani is casting for arguments as to how he's gonna justify his own Porche in a year or two's time. Go for it, Aaron! You know that a part of you is capitalist, really.
ND
