2nd update:
The European energy picture is degrading at an accelerating rate. From Finland to France and almost all points in between, wind power generation is still (same as all year) off by about one-third relative to what is “normally” expected. For countries like Germany and Denmark that rely on wind for about a quarter (or in Denmark’s case, closer to 40 percent) of their electrical generation, this is a massive hit that requires burning more coal and natural gas to compensate—but the gas is just not quite there. Or rather, it soon won’t be.
The great system of underground gas reservoirs that was set up with Gazprom’s help about 10-11 years ago, has gone from 68 percent to 60 percent full (the latter figure being more consistent with mid-January in a normal year) in just the first two weeks of December, before winter has even properly started in most European countries. And in the Ukraine, the winter gas storage top-up has been used up completely—they are back to where they were around late October. The one thing keeping Ukraine from melting down now is power imports from neighboring Belarus, which can be shut down in a blink if Russia wants to really turn the screws.
Keep in mind, it is likely that this winter will be much harsher than usual in Europe—north Scandinavian temperatures have reached or blown out record lows, and parts of Scotland and north England have seen once-in-a-generation freezes and snowstorms. It seems that “global warming” is taking a break, and that scientists who ignore “the agenda” and instead link reduced sunspot activity to falling temperatures, may be right in their “little ice age” predictions.
Despite all of this, European “leaders”—more Three Stooges than Congress of Vienna types—are still preoccupied with vaccine passport nonsense, and the Germans are still playing high-stakes chicken by slow-rolling (or no-rolling) certification of the completed Nord Stream 2 gas pipeline from Russia. In exchange, Russia is fulfilling all its gas contracts but offering few if any new contracts on the spot market.
Electric prices have responded and are now spiking—the day-ahead wholesale price of a megawatt-hour in the Baltic countries (Europe’s weakest and most useless domino) has reportedly reached as high as $1000 in intraday trading, many times above normal. At this price, if states run out of funds to subsidize household usage, then the lights will go off very quickly. At the same time, fertilizer prices continue to spike; anhydrous ammonia in the U.S. now costs an estimated/surveyed (there is no firm benchmark) $1300-plus per ton, up 18 percent from early November, according to one guy who researches this stuff for the authoritative Progressive Farmer website.
After Uncle Sam piled on to the European Union sanctions against Belaruskali—which produces 16 percent of the world’s potash—the usual Lithuanian export route for this Belarussian product is expected to close potentially within weeks, as the Lithuanians are very keen to make America happy. The stuff will now have to roll the long way around the Baltic countries to Russian ports near St. Petersburg, probably adding ten-plus percent to the sales price. Furthermore, as far as I can tell from the news, Washington is still on track to implement penalty tariffs on foreign fertilizers at the request of market oligopolists CF Industries and Mosaic—total insanity at a time like this. The price situation is so bad that a farm group has asked Merrick Garland to launch an investigation, but what is he supposed to do, investigate his fellow cabinet members?
Lastly, the fertilizer supply situation in India is looking desperate, there is a natural gas shortage in Pakistan (due to cold weather on the periphery), and China has continued a ban on its phosphate exports, keeping about a quarter of global cross-border sales volume off the market indefinitely. At this point, I should disclose—to keep Brandon’s SEC and Garland off my back—that I am personally invested in the price of fertilizer going way up, although I am not recommending any particular method to bet on that, and in fact, I insist that you don’t try it yourself. I am not selling anything.
The world continues to sleepwalk into a famine situation as of late 2022. (If this is your first time seeing this email chain, please read below to understand the connection between natural gas and nitrogen-based fertilizer.) I’m not sure how it will play out here, other than I expect $5 loaves of Wonder Bread, and a lot of shoplifting, at a minimum. To say that Brandon’s party will be punished by a “wave” election is a gross understatement—it won’t be a wave, it will be more like a giant asteroid knocking half the ocean and half the atmosphere into outer space.
