Thread by @biancoresearch

1/15

A thread to explain the European Energy crisis to non-European Energy experts (aka, everyone).

The bottom line ... Europe is in an intolerable position. And the public is getting angry (and it is not cold out yet!)

zerohedge.com/geopolitical/e…

2/15

Natural gas is used for power (electricity) generation and space heating ... highly seasonal. Storage is filled in the summer and run down in the winter for space heating.

Currently, storage facilities are 81% full, about the middle of the range seen over the last 5 years.

3/15

Too many have pointed to the chart above and proclaimed there is no problem here.

But this neglects the enormous cost it has taken to fill these facilities.

As the next chart shows, European natural gas prices are soaring, even after this week's decline.

4/15

Consequently, the cost of filling storage this year has already cost more than 6.5x to sill storage in any other FULL season (which extends to November 1)!

They have it and paid HUGE for it.

5/15

This extra cost, which has ALREADY happened, will be borne by their population, directly (soaring energy bill) or indirectly, through higher taxation for bailouts.

https://twitter.com/ianmulheirn/status/1563454492695138304?s=20&t=ozHpxgg8dhI0PE_oOF15AQ

6/15

Also, note ... the natural gas storage detailed above only covers about 25% to 30% of winter natural gas needs (seasonal space heating). This percentage might be higher this year given the reductions in usage already implemented and proposed.

energyindustryreview.com/oil-gas/europe….

7/15

So, Europe still needs flows from Russia this winter (and every winter until they have another CHEAP source).

Before the Ukraine war, Germany got about 55% of its gas needs from Russia. This has been lowered somewhat in recent months.

ip-quarterly.com/en/germany-fin…

8/15

But gas flows from Russia are down more than 75% from a normal flow.

Note the largest part of this chart is NordStream (orange). And also, this chart is a rolling 10-day chart.

9/15

I pointed out NordStream above as its flow is now zero (daily chart below).

So the orange part above will go to zero in the coming days, dropping gas already depressed gas flows to Europe by another 50%.

10/15

And make no mistake, Putin knows all of this, which is why he is trolling Europe with "leaks" requiring a shutdown of NordStream for an unspecified period of time.

https://twitter.com/javierblas/status/1565776260269219841?s=12&t=B147xhNvbdVXBOVzc181iA

11/15

None of this should be a surprise, Putin gave a speech in June saying he was going to do this.

In this case, he told us what was coming, and now he's doing it.

https://twitter.com/macroalf/status/1566111781117775872?s=12&t=sxVLJqAQci7kafbC1CZpiA

12/15

So what does this all mean? Europe has all the gas it needs, as long as they drain their bank accounts to pay for it. (akin to Ferrari makes all the supercars the world needs, as long as you have $500k to pay for one.)

13/15

Unfortunately, too many go along with this flawed thinking. It is not about the number of molecules available, but the price of those molecules

(Price is how capitalist systems ration. Soaring prices mean it will cost a lot more to get it.)

https://twitter.com/ianbremmer/status/1563914026110926850?s=20&t=_OwfF1-zDlKhxMEkxOoL-w

14/15

So this is about the cost of energy. And this is critically important for manufacturing. And the costs Europe is now looking at are going to hurt.

bloomberg.com/news/articles/…

15/15

Because the cost has already happened, it cannot be undone.

https://twitter.com/javierblas/status/1565981192335269889?s=12&t=sxVLJqAQci7kafbC1CZpiA