When, sometime in the distant future, we are all able to pause to catch our breath and reflect on the causes of the unfolding energy crisis, it seems likely that this past week will be seen as the pivotal moment when the reality of the energy crisis facing the world began to set in. . It was a week that saw the lifting of the nation’s fracking ban, an extraordinary speech from the leader of the United Nations, and some very candid statements from two high-profile CEOs.
It was also the week a new study was published detailing the worrying possibility that a continent could run out of a key energy commodity.
Will Europe run out of gas this winter?
On Wednesday, an energy analysis and intelligence firm Enverus released a new study titled “Hope for a ‘normal winter’ key to Europe’s gas outlook”. An emailed summary of the project’s findings states that “If the weather is colder than expected, northwestern Europe could run out of natural gas by March 2023.”
“Our scenarios show that undersupply of gas this winter would mean European countries would run out of supplies by February 2023 if winter temperatures are below normal,” said Krishna Sapkota, senior associate at Enverus Intelligence.
Sapta further notes that if EU countries were to successfully implement their 15% reduction in demand, which are their stated targets, they could emerge after the coming winter with natural gas stocks at similar levels to last April. So if the continent experiences what is considered a “normal” winter in terms of temperatures.
The reality is that we should all hope for such a normal winter.
UK lifts fracking ban
Early Thursday, officials in the United Kingdom announced a recession ban on hydraulic fracturing – or “fracking” – of shale natural gas stored in 2019. Sky News quoting Trade and Energy Secretary Jacob Rees-Mogg as saying that strengthening the UK’s energy security is an “absolute priority” in light of “Putin’s illegal invasion of Ukraine and energy weaponisation”.
The ban was imposed due to fears of seismic tremors allegedly resulting from such operations years of anti-fracking activism in the United Kingdom. Like other European countries, politicians in the UK have decided that these concerns will outweigh concerns about energy security, which will inevitably diminish as the nation chooses to forego the development of its own known mineral resources in favor of importing its needs from other countries whose national interests may not necessarily be in line with UK interests.
But now the building energy crisis and the resulting skyrocketing costs borne by ordinary citizens and the UK economy have caused the energy security equation to be reassessed. So a ban that was considered so crucial just 3 years ago now seems somewhat less so. Nothing causes reality to set in more reliably and quickly than a major crisis.
Dimon refuses to take the “Road to Hell”
CEO JP Morgan Jamie Dimon told congressional inquisitors at another show-trial-style hearing this week that his bank would not hold back on new investments in major oil and gas development projects, telling members when asked: “Absolutely not, and that would be a road to hell for America.”
When asked his thoughts on the progress of the energy transition, Dimon was equally clear. “We don’t get it right,” he said bluntly. “The world needs effectively 100 million barrels of oil and gas every day, and we need it for 10 years. For this we need proper investments in the oil and gas complex.
“Investment in the oil and gas complex is good for reducing CO2 because as we’ve all seen, because of high oil and gas prices, especially in the rest of the world, you’ve seen everyone go back to coal. Not just poor nations like India, Indonesia, and Vietnam, but rich nations like Germany, France, and the Netherlands.
Mr. Dimon’s answers are decidedly at odds with the ESG-focused investment narrative that has prevailed since the beginning of Western governments’ efforts to support this energy transition. They come as another sign that the reality of the unintended consequences of such policy actions is beginning to set in at the big banks.
UN chief pushes fossil fuel companies
Another notable set of remarks came this week from UN Secretary-General Antonio Guterres, who has been a major proponent of the political decisions in the West that have led to the current energy crisis. Sec. Guterres’ remarks to the UN General Assembly on Tuesday stand in stark contrast to Dimon’s, and are most notable for the secretary’s decision not only to once again double down on the ESG-focused narrative and harsh rhetoric of climate alarm, but also to advocate punishing anyone who deviates from that narrative.
Admitting that the world’s governments are “trapped in a colossal global dysfunction,” Guterres accused fossil fuel companies of “eating hundreds of billions of dollars in subsidies and windfalls while household budgets shrink and our planet burns.”
The Section General argued that these industries and their “enablers” must be punished with taxes and tighter regulation, adding: “This includes banks, private equity, asset managers and other financial institutions that continue to invest and underwrite carbon pollution.”
So, as the reality of the consequences of premature efforts, especially by Western governments trying to subsidize the premature transition to reality, begins to emerge, we see one of the leading global proponents of these efforts pointing the finger at the same old bogeymen.
Aramco CEO criticizes governments’ failure to plan
On the same day that Sec. As Guterres delivered his intemperate remarks, the CEO of the world’s largest oil company effectively deconstructed them point by point. Talk to Schlumberger Digital Forum In Lucerne, Switzerland, on Tuesday, Aramco CEO Amin Nasser took global politicians to task for what he called a failure to properly plan for this energy transition.
“Perhaps most damaging of all was the idea that contingency planning could be safely ignored,” Nasser said in part. “Because if you embarrass oil and gas investors, dismantle oil and coal plants, fail to diversify energy supplies (especially gas), oppose LNG terminals and reject nuclear power, your transition plan should be right.
“Instead, as this crisis has shown, the plan was just a chain of sand castles washed away by the waves of reality. And billions of people around the world now face energy access and cost-of-living consequences that are likely to be severe and long-term.”
The reality of the energy crisis is setting in, along with the consequences that a growing number of observers see barreling down on the world like a speeding freight train. The question now remains whether there is time left to clear the tracks before the locomotive arrives.