I was listening to the All In Pod this morning and @DavidSacks briefly mentioned the impacts to the German economy due to their dependence on natural gas from Russia
I've been obsessed with the chemicals industry since I was a kid and the story here is crazier than you'd think
Before starting, I want to say that I'm a techno optimist and I believe that Germany's decision to shut down their nuclear facilities was one of the stupidest political decisions in history
Most of their economy is based on turning energy into chemicals
Woke economic seppuku
The chemicals industry is absolutely massive, doing about $5T year in revenue
More than oil and gas!
Energy+chemicals are the yin&yang that form the bedrock of the global economy
The modern chemical industry effectively started in Germany
BASF alone did $92B in rev last year
This list blows my mind every time
It's the 50 biggest chemical companies by revenue
#10, Petrochina did $38.3B in 2022
#20, Shin-Etsu, $21.4B
#30, Sumitomo, $16.9B
#40, Westlake, $11B
#50, PTT Global, $9.7B
50 companies doing ~$10B+/yr rev!! 🤯
cen.acs.org/business/finan…
Industrial scale catalysis usually requires high temperature, high pressure, or both
This requires insane amounts of energy
BASF alone uses about as much energy as Costa Rica or Estonia
This is not a criticism -- BASF is an unbelievable company that everyone else depends on
BASF's corporate campus is effectively an entire city, in Ludwigshafen, Germany
The campus is more than 10 square kilometers and operates its own bus network to get employees around
This complex is primarily powered by natural gas, consuming way more natural gas than Denmark and about as much as Switzerland
report.basf.com/2022/en/manage…
BASF basically invented using natural gas to power industry. This is where things get crazy
In 1969, BASF took over a company called Wintershall which was Germany's largest oil&gas producer
Wintershall partnered with Gazprom in '90 and played a key role in both Nordstream 1 & 2
BASF pioneered a production method called "Verbund" where basically everything they do is integrated
Natural gas flow in, gets mixed with precursor materials and outputs flow from system to system to system like Willy Wonka's factory creating everything imaginable along the way
BASF warned 18 months ago that if its gas supply got cut in half, they'd need to shut down all production at Ludwigshafen
Excerpt from the economist
economist.com/business/2022/…
Germany has so far been able to avoid the worst as their gas reserves were full at the start of the War
But I couldn't help myself from sharing this quirk of history
The Nordstream pipelines literally wouldn't exist without BASF
The global economy is absurdly interconnected
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