Down is Up: Energy Rationing is Coming, Rather Sooner than Later, with the EU Commission Poised to 'take the lead'--like with Covid
Down is Up: Energy Rationing is Coming, Rather Sooner than Later, with the EU Commission Poised to 'take the lead'--like with Covid
It’s been a while since we spoke about ‘other’ things, so here goes: during my morning routine, two pieces put out by Norwegian state broadcaster NRK caught my eyes:
The first piece was a rather peculiar one, as it reported that in Northern Norway, (hydro)electricity producers have opened the floodgates to get rid of too much water. Currently, one KWh of electricity costs about 1 øre (1/10 of 1 cent of US$ or €) on Thursday (7 July); the average price last week was 2 øre.
Hence the article’s title: ‘Water is Passing By the Turbines Without Producing Electricity’—while there’s a veritable crisis brewing in South-East Norway: in the first week of July, according to NRK, the average KWh of electricity costs 230 øre (or about US$ 2.3), which constitutes a differential of 115% in last week’s prices.
The reasons given for this situation are: lots of wind and rainfall in the North (Nordland, Troms, Finnmark) is that there is overcapacity in terms of energy production, which means that taxes and regulatory compliance—costing about 14-15 øre per KWh—renders it too costly to produce electricity.
The situation isn’t as bad in Central Norway, although it is reassuring to know that water magazines are also quite filled (at 82.3% of capacity).
The situation is very different in the country’s South and West, as another piece in NRK informs us. Entitled, ‘Oil and Energy Minister on Possible Rationing’, we learn that the government ‘doesn’t rule out rationing or a cap on energy exports’.
With ‘historically low storage levels’, as per the national energy authority (NVE), it ‘can be necessary to ration electricity next spring’ (my emphases).
‘This is a very demanding situation, right before the snow melts again next winter or spring’, says Oil and Energy Minister Terje Aasland.
In practice, rationing will mean that the electricity can be switched off at certain hours of the day, or that there will be quotas on how much electricity you can use without having to pay sky-high fees.
These measures will be most relevant for businesses, but Aasland will not rule out that it may also apply to individuals.
‘It is too early to say anything concrete about it. There are different methods to do it. We have a rationing regulation, which is then followed and carrier out.’
Authorities are dusting of their contingency plans, yet ‘much depends on the amount of rainfall’. I suppose we could all do rain dances to help out?
Here’s more ‘advice’ (advarsel) from Oil and Energy Minister Aasland:
It is important that we prepare for this situation, and it is important that everyone involved in our energy system is aware of their responsibilities. This means that one must especially keep an eye on regulating capacities of our magazines, which is the crown jewel in the Norwegian energy system.’
This means that energy companies must use the stored water capacity carefully until the winter and next spring. If necessary, the Minister of Energy also keeps the possibility open for the government to step in and limit electricity exports.
‘We have said that we must turn over all stones. For the situation we have been through this winter, and the situation we are in now, we do not want it to be normal in Norway.’
What Mr. Aasland is saying is that the sky-high electricity prices of last winter are not ‘normal’.
What isn’t ‘normal’ either is the thing Mr. Aasland alluded to all but in passing: electricity exports.
We all know why there are currently energy crunches in many EUropean countries: it’s Mr. Putting’s fault, you know (/sarcasm), which has led to sky-high energy prices in countries, such as Germany and the UK, which are connected, via underwater cables, to the Norwegian grid.
One of, if not the, great lie told about these energy worries isn’t even the follies of the EU Commission, in particular what in EU-speak is called ‘unbundling’:
One of the little-known side-shows of the current energy crisis—high energy costs, rising food costs, accelerating inflation—are intimately tied to what, some 15-odd years ago seemed like a swell idea to the EUrocrats: the ‘liberalisation’ of energy markets across the EEC. The key term, which you’ve probably don’t know nearly enough about, is ‘unbundling’, which is EUrocrat-speak for ‘the separation of the activities potentially subject to competition (such as production and supply of energy)’.
Rendered into something approximating plain English, ‘unbundling’ means that companies that produce ‘energy’ (e.g., oil or natural gas) may do so, but they may neither own or operate the transportation infrastructure (pipelines) nor the processing plants (refineries), to say nothing about end-point distribution (e.g., gas stations). This was heralded a while ago by the EU Commission as another stepping-stone in their desire to (neo-) liberalise energy markets.
Please read up on this notion in the below-linked posts:
This is why that second NRK piece quotes NVE director Inga Nordberg explaining the high prices as follows:
‘Because there is high snowmelt at the moment, a lot of hydro power is produced, among other things, which is beyond our control. But it is also due to the fact that we have very high prices in the countries around us, which are driving electricity exports.’
Admitted to in so many words, here’s how this works: Norway exports a lot of ‘clean’ hydroelectric energy, much of it to Denmark, Sweden, and Germany (in 2021). In the first five months of this year, Norway exported 10.6 TWh while 6.1 TWh were imported, mainly to Sweden and Germany while imports came from Sweden, Denmark, and Germany.
In 2021, Norwegian producers exported 25.8 TWh, as opposed to imports totalling 8.2 TWh—a net export of 17.6 TWh, as this piece by the Norwegian Statistics Office (SSB) explains. How big of a deal is this? Well, it’s some 30% more exported energy compared to the five previous years…
And now this entire show comes all but full circle, as the NRK piece explains:
Large parts of Europe are in a tight energy spot. This is affected by the war in Ukraine and the sanctions against Russia. In Germany, there is a real risk of energy rationing. The country’s economy minister has said that gas is in short supply, and he has asked his countrymen to reduce consumption. Other countries may find themselves in similar situations. Then it is not certain that they will export electricity to Norway for the winter, when we get increased demand.
Minister of Oil and Energy Terje Aasland asks Norwegians to prepare for continued sky-high prices in the future: ‘As it looks now, prices will be persistently high throughout the summer and the coming winter.’
So, in a nutshell: sanctions = no more buying of Russian hydrocarbon energy is about to upset Europe’s regional energy balancing acts. In addition, underwater cables to Germany and the UK are driving energy in Norway and, by extension, also in neighbouring countries.
The ‘fall-out’ includes record-high consumer prices everywhere, but at the root there are failed, and failing, energy ‘markets’ across the entire EU/EFTA area. These will not be changed, which means continued pressures on consumers, which will exacerbate the coming economic crash.
Among the more insidious issues, though, I’d argue is the following—ask yourself:
What (else) could go wrong?
As reported a week ago by Austrian state broadcaster ORF, storage capacities for natural gas are one thing, but ownership of these resources is quite another. Consequently, any country’s current storage levels do not indicate energy security as much of the gas stored in country A may belong to countries B or C.
In Austria, much gas is still flowing through the country, but it’s going to Italy and other places; the gas that is stored in the country’s tanks, though, doesn’t belong exclusively to Austria.
Here’s the current state of play, according to the Austro-Covidistan Energy and Climate Ministry (my emphases):
In the past week, there has been significantly less storage in the domestic gas magazines in two days on 28 June and 1 July. In addition to the reduced gas supply volumes from Russia (on average -50% compared to the quantity ordered by OMV), there is also increased gas demand in Italy due to massive drought (less hydropower for electricity generation). On the other days of the past week, domestic magazines continued to be filled. Storage capacity currently stands at 46%, which equates to 43.93 terawatt hours. By European standards, Austria has particularly well-developed storage capacities, which can cover an average domestic annual demand (of around 90 TWh), as they may be filled with gas equivalents of 95.5 TWh.
According to information from OMV and the competent authority E-Control, supply is currently secured. OMV has also announced that it will be supplying additional quantities on the spot market should this become necessary.
While the first paragraph tells the real story—significantly less gas glows, albeit temporarily (so far)—exports, or transports, to other countries (here: Italy) are also mentioned.
The second paragraph ‘hints’ at much-higher future prices, as any amount of energy bought ‘on the spot market’ will be extremely over-priced, which means: even higher consumer prices and/or rationing.
Consequently, some media outlets—the below is from an op-ed that appeared in Der Standard on 7 July 2022—what is demanded now is this (my emphases):
By now, word has spread that a large part of the gas stored in Austrian storage facilities does not belong to Austria, but to customers in other EU states. Energy Minister Leonore Gewessler has rightly made it clear that the government will not access these gas quantities even if Vladimir Putin stops deliveries completely.
Foreign customers, such as Slovenia, store their gas in this country with confidence in the Austrian rule of law—and pay for it. Breaking this trust would be a violation of international treaty law and also highly unwise, for Austria depends on the cooperation of its neighbours, who have ports, pipelines and liquefied natural gas terminals, for its energy supply. If every country only looks to find alternatives to Russian gas, a landlocked country like Austria will lose out.
Where the gas is stored should not play a role. But the question of who owns it should not be decisive either. For the EU to come to terms with Russia’s policy of energy extortion, it must think and act in a pan-European way. Energy control, as is already being considered in many states, must not stop at national borders…
This requires a strong role for the EU Commission, which, similar to the ultimately successful procurement of the Corona vaccines, should take charge of both acquisition and distribution. This would also have the advantage that the states would stop driving up the price of gas by frantically buying it. In doing so, they are only helping Putin and harming themselves. Gabriel Felbermayr, head of [Austria’s leading pro-business think tank] WiFo therefore proposes an EU purchasing cartel that would cap the price and leave Russia no choice but to sell gas more cheaply.
You couldn’t make up this kind of crazy talk. I mean—where to start: a EU Commission-led cartel to safeguard the ‘internal market’? Or shall we talk about the fake history of ‘Russia’s policy of energy extortion’?
Come on, none of this wasn’t foreseeable (and certain anonymous writers have pointed this out last year), yet, the most insidious aspect is the third paragraph.
As I’ve tried to explain last month, all the pieces for a further EU Commission power grab are in place: bespoke regulations have been enacted to grant additional power to the unelected, and unaccountable, EUrocrats in Brussels, on which you may find more information here:
But don’t lose sight of what I consider the most absurd part of this line of thinking:
We should all try to try to solve the energy crisis by doing the same as with Covid?
I mean, seriously? The entire Covid shitshow worked so well—including in particular the systematic ending of constitutional rule, such as it existed, by ‘emergency powers’.
If you wish to believe this BS, well, I think I’ve got a couple of bridges to sell to you, too.
If, however, you need any more proof of the EU’s vicious-ness—and their brown-nosing media camp followers’ utter uselessness, let me know.
We here in Germany and the rest of central Europe got a downgrade to 2nd world. Now we can mock your 1st world problems in Norway... :)
When energy production was a national interest and a strategic asset used to create a beneficial climate for business and entrepreneurs (as well as freeing household income for consumption in their locality rather than creating money for a few thosuands profiteers), it worked a lot better.
The system was built with the people's money (taxes) for the benefit of the people of the nation. The price set to cover the initial investment, cost of keeping it running, investments in r&d, and banking a sum for future expanson and repairs.
For Sweden, this meant that the electrical bill was rarely even 1% of the monthly income per household (using a very rough average). Of course, that was when we had 12 reactors up and running. Not 2½.
The neoliberal market economy that has been the model since the late eighties can only and will always create disaster for a very simple reason: it assumes the purchase of chewing gum and the electrical bill are equivalent economical exchanges of payment for goods/service. Add NPM and the rest of the idiocy based in rational choice theory and here we are: anarcho-tyranny where the corporate state acts as enforcer for capital.
Leaving the people with the choice of knuckling under, becoming vehemently nationalist, or embracing marxism. Again. Why must we repeat the set-up for the two world wars last century?