The combination of pretending to transition to a green energy future combined with dependence on Russian gas and the fallout of the Russo-Ukrainian War has Germany looking at some very tough choices:
“Europeans have chosen to largely remove natural gas from their industrial space, and so we are seeing huge amounts of industrial closures across the entire industrial space.”
“Natural gas isn’t just part of their electricity system, it’s part of their petrochemical system, which is what makes their manufacturing sector possible. So in shutting all this stuff down the Europeans are choosing, maybe not consciously, but they are choosing a general de-industrialization trend for the entire continent.”
“No one is making nitrogen-based fertilizer in Europe anymore. No one is smelting aluminum anymore. A lot of the steel foundries are shutting down.”
And so far it’s a relatively mild winter in Europe. Next year will be worse.
Zeihan talks about how Germany “fudges” some of it’s green energy pledges. (In a previous video he mentioned some bit of legerdemain where they don’t count fossil fuel baseload power that spins up to take over for solar at night.) So exactly what has Germany’s much-vaunted green energy programs accomplished? Not much.
In 2000, Germany obtained 84 percent of its energy from fossil fuels. By 2019, it was 78 percent. As Vaclav Smil pointed out a couple of years ago, at this rate, Germany would still be deriving 70 percent of its energy from fossil fuels by the year 2050.
Sure, Germany hasn’t managed to transition away from fossil fuels, but they have managed to make their energy infrastructure expensive and unreliable…
Democrats flee, lettuce wins, a flood of extra executives, and Musk gets out the hatchet. It’s the Friday LinkSwarm!
People leaving the Democratic Party describe it as cancer:
While Democrat voters have been leaving the party for years, their reasons have become more urgent.
“When people were feeling pushed away years ago, to the point where they were starting to walk away, there was more of a casual tone about it,” former liberal Democrat Brandon Straka, founder of #WalkAway told The Epoch Times.
“People were beginning to feel the effects of leftist, communism, Marxism infiltration into our society, our culture, and our politics.”
Straka founded #WalkAway in 2018 after making his personal decision to leave the party public while inviting others to join him. Since then, thousands of exiting Democrats made social media videos explaining why they were choosing to #WalkAway, giving Straka a window into the minds of these voters.
At that time, people were just noticing changes in the party, he said. They weren’t always identifying what it meant, but they knew they didn’t like how it felt, and quietly left.
“But now, it’s akin to cancer. Cancer doesn’t stop growing and spreading just because people don’t like it. And what’s happening with the left is no different,” Straka said. “Particularly with them getting rid of Trump, installing Biden, and the Democrats taking full control of the government. This is a cancer that’s rapidly growing and spreading now. And it’s becoming not just uncomfortable, but I think intolerable, for a lot of people.”
Drugs dealers openly selling on Broadway. Thinks to mayors Bill de Blasio and Eric Adams, and the feckless actions of Soros-backed DA Alvin Bragg, Democrats have undone not only all the hard-won law-and-order gains of Rudy Giuliani’s broken windows police, but they’ve actually brought NYC back to the nadir of the crime-ridden New York of the 1970s. (Hat tip: Sarah Hoyt at Instapundit.)
Robert Francis “Beto” O’Rourke is heading to his third high-profile defeat in five years. But he and Planned Parenthood have an ace of their sleeve: registering dead voters.
A Texas firearms dealer is suing the Biden administration for weaponizing the Bureau of Alcohol, Tobacco, Firearms, and Explosives to shut down law-abiding gun retailers over paperwork errors discovered during audits.
President Joe Biden ordered the Department of Justice in June of 2021 to enforce “zero tolerance for willful violations of the law by federally licensed firearms dealers that put public safety at risk,” but after a 500 percent increase in federal firearm license revocations for retailers over the last year, it’s clear the Biden administration isn’t just going after gun sellers who intentionally violate the law.
Punishing minor slip-ups, the lawsuit argues, draws on a drastically different interpretation of the law than the definition federal courts have held based on the Gun Control Act of 1968.
The lawsuit, to which the federal government has 60 days to respond, also argues that the Biden administration’s new policy sets an unreasonably high standard that is not applied to any other industry.
That’s why Michael Cargill, owner of Central Texas Gun Works in Austin, chose to bring this case.
Those energy-hostile Democratic Party policies just keep paying dividends: “New England facing natural gas shortages, rolling blackouts this winter.”
The reality is that the normal flow of natural gas into the region is limited and has been unable to keep up with increasing demand levels over the past decade. That means that utility operators have to rely on liquid natural gas (LNG) imports to make up the difference during peak demand periods. During such times, LNG accounts for as much as one-third of the total natural gas used for heating and electricity.
But why is that? You won’t need an ace detective to figure that out. Utility companies in New York, Connecticut, and other New England states projected supply shortfalls more than a decade ago. Fortunately, New York and Pennsylvania sit on some of the richest natural gas resources in the country, found in the Marcellus shale deposits. The companies requested new, higher-volume pipelines to carry natural gas to meet the spiraling demands of New York City, particularly at the furthest end of the gas lines in Long Island. They also urged the development of local gas production to feed those lines. Similar situations were noted all across New England.
Instead of doing that, New York refused to approve new gas lines and passed a moratorium on natural gas drilling in the state. This brings us to the current situation where the same amount of natural gas is being used, but increasing amounts of it come in the form of LNG that has to be imported either from other regions of the country or from overseas. The energy crunch in Europe is eating up a lot of the available LNG, so there may not be enough for New England this winter.
A star reporter for ABC News has been missing since an April 27 FBI raid at his Arlington, Virginia apartment.
Emmy award winner James Gordon Meek – a deep-dive journalist who was also a former senior counterterrorism adviser and investigator for the House Homeland Security Committee, abruptly quit his job of 9 years and “fell off the face of the earth,” after the raid, one of his colleagues told Rolling Stone.
A recent proliferation of phony executive profiles on LinkedIn is creating something of an identity crisis for the business networking site, and for companies that rely on it to hire and screen prospective employees. The fabricated LinkedIn identities — which pair AI-generated profile photos with text lifted from legitimate accounts — are creating major headaches for corporate HR departments and for those managing invite-only LinkedIn groups.
Last week, KrebsOnSecurity examined a flood of inauthentic LinkedIn profiles all claiming Chief Information Security Officer (CISO) roles at various Fortune 500 companies, including Biogen, Chevron, ExxonMobil, and Hewlett Packard.
Since then, the response from LinkedIn users and readers has made clear that these phony profiles are showing up en masse for virtually all executive roles — but particularly for jobs and industries that are adjacent to recent global events and news trends.
Does the Federal Reserve swapping some $6 billion worth of dollars for Swiss Francs with the Swiss National Bank mean a global financial crisis is coming? Boiling down his argument: A.) The Swiss National bank has a weekly dollar auction every Wednesday. 99%+ of the time, no one shows up for them. B.) Last Wednesday, 15 parties (meaning banks) showed up for them to the tune of some $6 billion. C.) The only reason they would do that is if they don’t trust their current repo counterparties, and D.) This is what happened when Flu Manchu hit and before the Subprime Meltdown in 2008. If it’s any consolation, they first started showing up for the latter in December of 2007, so you might have nine months to buy gold, ammunition and canned goods…
“According to the latest campaign finance reports, Republican Alexandra del Moral Mealer has raised a record-setting $4.9 million dollars in support of her campaign for Harris County Judge, outraising Democratic incumbent Lina Hidalgo 4 to 1.”
Related: “Hidalgo Booed Exiting Meeting Where GOP Commissioners Continue Boycott of Tax Increase.”
Woke reporter: Are you just super excited to coach against another black coach? Tampa Bay Buccaneers coach Todd Bowles: “We don’t see color…the minute you guys stop making a big deal about it, everyone else will as well.”
I hope all BattleSwarm readers are safe from the Joe Biden Armageddon thus far. Today’s LinkSwarm features Democrats disdaining the rules followed by the little people, the UN is delusional enough to think they can run the world and defy the laws of economics, and petting dogs is good for you.
UNCTAD, the UN agency dealing with global trade, demanding *all* central banks stop rate hikes and instead switch to price controls. They argue, “policymakers appear to be hoping that a short sharp monetary shock – along the lines, if not of the same magnitude, as that pursued… under Paul Volker – will be sufficient to anchor inflationary expectations without triggering recession. Sifting through the economic entrails of a bygone era is unlikely, however, to provide the forward guidance needed for a softer landing given the deep structural and behavioural changes that have taken place in many economies, particularly those related to financialization, market concentration and labour’s bargaining power.”
I am not playing tennis with them either, but note the radicalism. Indeed, their latest report also argues, “supply-chain disruptions and labour shortages require appropriate industrial policies to increase the supply of key items in the medium term; this must be accompanied by sustained global policy coordination and (liquidity) support to help countries fund and manage these changes.” So, industrial policy. And Fed swap-lines. Expect both ahead.
They also ask why we haven’t regulated shadow-banking, and why we allow speculators in global commodity markets who have nothing to do with underlying trade. On the latter they note, “Market surveillance authorities could be mandated to intervene directly in exchange trading on an occasional basis by buying or selling derivatives contracts with a view to averting price collapses or deflating price bubbles.” I expect nothing but that ahead – and geopolitically driven to boot.
This boils down to: “Hey, we need to institute economic policies proven to fail, because otherwise lots of rich people will lose money!” Wage and price controls were tried in the 1970s and they failed miserably. The longer governments try to defy the market, the more terrible the snapback when those efforts fail.
On Tuesday, the New York Times framed a story circulating on the right over a software company’s connection with the Chinese Communist Party as a “right-wing conspiracy theory.”
“At an invitation-only conference in August at a secret location southeast of Phoenix, a group of election deniers unspooled a new conspiracy theory about the 2020 presidential outcome,” was the Times’ original lede (via the Daily Caller).
In it, the Times wrote that “right-wing” election deniers in Arizona had fabricated a conspiracy theory that election software company Konnech had secret ties to the CCP, and was passing them information on around two million US poll workers.
“In the two years since former President Donald J. Trump lost his re-election bid, conspiracy theorists have subjected election officials and private companies that play a major role in elections to a barrage of outlandish voter fraud claims,” reads the article. “But the attacks on Konnech demonstrate how far-right election deniers are also giving more attention to new and more secondary companies and groups. Their claims often find a receptive online audience, which then uses the assertions to raise doubts about the integrity of American elections.”
The next morning, Konnech executive Eugene Yu was arrested for the alleged theft of poll workers’ personal information.
New Orleans Mayor LaToya Cantrell is facing the threat of a recall election and it’s not just the city’s rising crime that has petition signers enraged.
The two people behind the petition are both Democrats demanding the Democrat mayor leave office for her “failure to put New Orleans first and execute the responsibilities of the position,” according to Fox News.
In 2021, more than 150 officers left the New Orleans Police Department, despite a surge in murders and carjackings. Carjackings so far this year stand at 217, an increase of over 200 percent since 2019, according to the Metropolitan Crime Commission weekly bulletin.
But it’s the mayor’s exorbitant travel spending that has people up in arms.
She traveled to sister cities Ascona, Switzerland, and Juan Antibes-les-Pins on the French Riviera this summer, costing the City of New Orleans close to $45,000, including first-class international airfare with lie-flat seating.
The city’s travel policy requires employees to pay the difference in cost for work-related airfare upgrades, stating “employees are required to purchase the lowest airfare available … employees who choose an upgrade from coach, economy, or business class flights are solely responsible for the difference in cost,” Fox News reported.
But Cantrell hasn’t paid the near $30,000 bill from her first-class international flight upgrades over the summer.
She has claimed the visits are an investment in the city and necessary for her safety.
“My travel accommodations are a matter of safety, not of luxury,” The Times-Picayune/The New Orleans Advocate reported. “As all women know, our health and safety are often disregarded and we are left to navigate alone. As the mother of a young child whom I live for, I am going to protect myself by any reasonable means in order to ensure I am there to see her grow into the strong woman I am raising her to be. Anyone who wants to question how I protect myself just doesn’t understand the world Black women walk in.”
Yes, I’m sure the men and women who walk the streets of New Orleans at night have never know unthinkable fear of having to fly coach to Switzerland.
“Federal Law Does Not Exempt LGBT Employees From Bathroom, Dress Code, Policies, Judge Rules…A U.S. Equal Employment Opportunity Commission (EEOC) policy document from June 2021 overreached in its interpretation of the Supreme Court’s ruling forbidding employment discrimination based on sexual preference and gender identity, Judge Matthew Kacsmaryk of the U.S. District Court for the Northern District of Texas found. Texas sued over the guidance.”
Well, fellas, if you don’t want OPEC+ to be in a position where it can influence U.S. gasoline prices a month before the election, you need policies that minimize the U.S. market’s dependence upon the global oil market. This means maximizing U.S. oil production and expanding U.S. refinery capacity.
It would be a mild exaggeration to declare that the Biden administration hascompletely stopped issuing leases for oil and gas drilling on federal lands and in federal waters, but only a mild one. As the Wall Street Journal reported last month, “President Biden’s Interior Department leased 126,228 acres for drilling through Aug. 20, his first 19 months in office, the analysis found. No other president since Richard Nixon in 1969-70 leased out fewer than 4.4 million acres at this stage in his first term.” It’s not a complete halt, but it’s very close to one. This means that the U.S. is almost entirely dependent upon oil production from private lands.
The good news is that there’s still a lot of oil beneath private lands. As of July, the U.S. was producing 11.8 million barrels per day, an increase from the 11.1 million barrels per day produced in January 2021, the month President Biden took office. But before the pandemic hit in early 2020, the U.S. was producing 12.8 million barrels per day, and it even hit 13 million barrels per day in November 2019. We have the proven ability to produce about 1.2 million more barrels per day than we are, if we want to do so and our public policies encourage it. But right now, they do not.
The Biden administration keeps insisting that it’s doing everything it can to bring gas prices down, including releasing oil from the Strategic Petroleum Reserve — which is now at its lowest level in 40 years. But what’s in the SPR is oil, not gasoline, and oil must still be refined. You can’t just pump the stuff out of the ground and put it in your car.
U.S. refineries are running at full capacity, or just short of full capacity. This is why oil from the Strategic Petroleum Reserve releases got sent to Europe and Asia, because they had the room and equipment to turn it into actual usable fuel. The U.S. currently has no more spare ability to turn the oil from the reserve into stuff that will actually make your car move; yelling at the oil companies isn’t going to change what is fundamentally an engineering problem.
And Democrats absolutely refuse to let anyone build new oil refineries.
Multiple sources have confirmed that Nord 2 was full of natural gas; that it was full for at least months; and that said natural gas had never moved.
It. Just. Sat. There. For — allegedly — months.
During normal operations of a pipeline, you run a pig through fairly regularly. A “pig” is a bit of equipment pushed by the gas flow, and as it moves along it shoves water and hydrate slurry down to where it can be removed; and it scrapes compounds off the inside walls (hydrogen sulphide, I’m looking at you) that might be are probably eating your pipe.
Note the part above where the pigs are pushed by the gas. The gas in Nordstream 2 never moved. That means no pig ever went down the line to shove water out, move hydrate slurry, or stop H2S from corroding the steel of the pipeline.
As I said in the previous post — and I will continue to say — none of this rules out intentional Acts of War. There are idiots enough in that region that sabotage can’t be discounted.
“A lot of folks are running the White House. Joe Biden just isn’t one of them.” “Biden is surrounded with longtime D.C. power players, such as Ron Klain, Susan Rice, Anita Dunn, John Podesta, Gene Sperling – a veritable “who’s who” of Beltway knife fights and insider skullduggery. Throughout their long careers, they’ve never sought credit or voter approval. Just power.”
“NYC Mayor Declares State of Emergency over Influx of Illegal Immigrants. [New York City mayor Eric Adams] said at least 17,000 asylum seekers have arrived in the city by bus from other parts of the country since April.” Oh, a million illegal aliens come over the border into Texas and it’s no big deal, but 17,000 show up in your “sanctuary city” and suddenly it’s a problem!
“NYU Fires Chemistry Professor After Students Launch Petition Claiming His Course is Too Hard.” The lesson here seems to be that businesses shouldn’t hire NYU grads…
British blogger eats on £1 for a single day and has a very tough time of of it, even with foraging and scavenged condiments. Despite the dollar-pound exchange rate being so favorable, I don’t think I could do that on $1 a day shopping at HEB, and even if you made it $1.25, it would have to be three meals of ramen. Also, I don’t think I can even buy a single carrot at HEB (if I had wanted to), spaghetti is considerably more than 23¢ for 500 grams. $5 for $5, that I could do, and $30 for 30 days would be grim but very doable (price, pasta, and beans).
California is (still) broke, Stacey Abrams is (still) not very bright, Joe Biden tried to deal gas to the commies, and the FBI can’t be bothered to investigate such trivia as “sex crimes involving children.” It’s the Friday LinkSwarm!
Remember how the State of Texas came in with record revenues and a $27 billion surplus? Well, the flip side is California, which just saw 11% personal income tax revenue drop. Funny how chasing away productive taxpayers through punitive taxation and insane over-regulation isn’t a recipe for success…
Republicans on the House Oversight and Reform Committee have obtained bombshell documents proving that Joe Biden was deeply involved in the family business of selling American natural gas to the Chinese–while he was planning to run for President. According to multiple whistleblowers, the Biden family made promises to those who worked with them in 2017 and onward that they would “reap the rewards in a future Biden administration.” These explosive revelations “pose national security concerns,” Oversight Republicans proclaimed Tuesday night.
The Biden clan enriched itself by selling the natural resources to a Chinese firm closely affiliated with the Chinese Communist Party (CCP)—just a few years before the cost of gas in the United States hit record highs, the Oversight Republicans stated.
In a letter to United States Treasury Secretary Janet Yellen, Rep. James Comer (R-Ky.), the ranking Republican on the Oversight Committee, alleged that according to whistleblowers, Joe Biden was heavily involved in this treachery.
“This comes to light at a time when the cost of natural gas is at a 14-year high and Americans struggle to pay their energy bills,” Comer wrote in the letter to Yellen. “The President has not only misled the American public about his past foreign business transactions, but he also failed to disclose that he played a critical role in arranging a business deal to sell American natural resources to the Chinese while planning to run for President.”
Comer sent a letter to Yellen in July complaining that the Treasury Department was restricting access to over 150 Suspicious Activity reports (SARs) on Hunter Biden, amid explosive revelations that came out from Biden’s “laptop from Hell,” and iPhone.
On Sept. 2, 2022, the Treasury Department stated in a letter to Committee Republicans, that the SARs may be provided “upon a written request stating the particular information desired, the criminal, tax or regulatory purpose for which the information is sought, and the official need for the information.”
In response, Comer said that “based on the documents provided in this letter, we request all SARs from Biden family transactions, including those involving President Biden, related to transactions with Chinese entities. We are concerned that the President may have compromised national security in his dealings with the country most adverse to U.S. interests—China. These SARs will inform our analysis of this matter.”
Comer said Oversight Republicans have obtained a “presentation” emailed to Hunter Biden’s firm Hudson West III LLC (Hudson West) on December 13, 2017. The document, translated from Mandarin Chinese, is titled, “Overview of the U.S. Natural Gas Industry Chain, and is concerned with selling American natural resources to China.”
“Jiaqi Bao, who created the presentation, was previously an employee of the CCP, and worked for Hunter Biden’s corporate entity Hudson West,” the letter states.
Comer provided Yellen with two maps that were part of a presentation emailed to Hunter Biden. The maps include sophisticated analysis written in Chinese, and show the United States carved up based on natural gas reserves “with particular emphasis on Pennsylvania, Louisiana, Texas, Oklahoma, and Wyoming.”
“The emails that accompany the transmitted maps reveal a plan to sell natural gas reserves to China via the same corporate entity branded on the presentation-Hudson West III LLC (Hudson West)–set up by Hunter Biden with officials from the Chinese company CEFC, at the time, one of the largest oil companies in China,” the letter stated.
I have only skimmed this dog's breakfast of a complaint, but what popped out at me for the parts I looked are were the lack of damages allegations, much less ones against NY, the plaintiff. You cannot sue if you did not suffer a loss. None are pleaded in the parts I looked at. 3/
So, the initial motion to dismiss will not be heard before the midterm – the real mission was accomplished by filing suit in time to influence the election, but not so early that this garbage case could be tossed out before the election.
FBI investigations of child sex abuse claims are no longer a priority with all these conservatives and Trump supporters they need to prosecute for WrongThink…
With Russia shutting down the NordStream gas pipeline for maintenance, Peter Zeihan wonders if the end of Germany’s vaunted economic engine is nigh.
Some takeaways:
NordStream has made Germany “horrendously” dependent on Russia for energy.
Russia is blackmailing Germany to stop supporting Ukraine.
“Four things that the Germans rely upon to be the economic powerhouse that they are:”
That cheap natural gas.
Their economic model it is based on access to large volumes of cheap Russian energy, both in terms of for electricity, and as industrial inputs to power the entire German manufacturing model. So that all by itself could kill the German system almost overnight. Well, not overnight, but within a year.
“The Germans rely on a large, robust, highly skilled workforce, but Germany has one of the fastest aging societies in the world…Germany will hit mass retirement this decade, and so the model was always in danger on demographic grounds.”
Third: “Access to central European labor all the way from Poland to Romania and even further east…but that’s going away too. Because just as the Germans are rapidly aging, the central Europeans are aging even more rapidly…the birth rate in all of these countries is actually lower than it is in Germany, so it’s every bit as terminal.”
Fourth, you need the global economic trading system that is now breaking down and America is backing away from.
His conclusion:
All of this put together suggests that the manufacturing model that has sustained Germany, that has provided the tax base, that has provided economic growth, that has made the population relatively happy with their situation, it’s gone. And it’s going to vanish within the next year. And a Europe that does not have a German motor at its heart is a Europe that all of a sudden needs to find a very very different way to function.
As with a lot of Zeihan’s observations, he has a lot of fundamentals right but his conclusions seem overstated. Germany has the resources to abandon their green delusions and restart coal and nuclear plants, assuming they have the political will. And the degree to which globalization is breaking down is the significant subtraction of China and Russia from it. There’s still a lot of U.S./EU trade to be had, even if it does get a bit more expensive. And Germany, so high up on the value-added foodchain, is well-position to survive.
The labor shortage is a trickier problem to solve, and probably was one of the main reasons Angela Merkel was so intent on raking in Islamic “refugees.” But maybe real refugees from the Russo-Ukrainian War might provide an opportunity. It would be pretty ironic if Ukrainians were to find their lebensraum in the bosom of Germany…
Just because Russia is obviously retreating from Kiev due to getting mauled doesn’t mean there isn’t some truth in the argument that their biggest aims lie in eastern Ukraine. This video suggest three main remaining goals for Russian forces:
Restore and control the flow of water to Crimea (Ukraine dammed up the Dinappa river following the seizure of Crimea, which has put them in a world of hurt).
Gain control of “the Yokosuka Gas Field, which was discovered in 2010 and it has about 42 trillion cubic feet of natural gas, that could threaten Russia’s oil dominance in the region.”
Controlling all Ukraine’s Black Sea ports.
More details on each in the video.
If they can achieve those goals, if Russia can achieve capturing those three goals they will have landlocked and absolutely wrecked Ukraine’s entire economy. So when they say that the main war is in the east, they’re actually, on some level, telling the truth. The problem for Russia, though, is that without having captured Kiev their chances of holding on to those objectives is greatly reduced.
(Between getting my house cleaned, relatives visiting (Yes, those two are related), and tax season, no time to put up a LinkSwarm today. Tomorrow is not looking good either…)
Supply chain problems have gotten so bad that Derek Thompson at The Atlanticdeigns to notice them:
The coronavirus pandemic has snarled global supply chains in several ways. Pandemic checks sent hundreds of billions of dollars to cabin-fevered Americans during a fallow period in the service sector. A lot of that cash has flowed to hard goods, especially home goods such as furniture and home-improvement materials. Many of these materials have to be imported from or travel through East Asia. But that region is dealing with the Delta variant, which has been considerably more deadly than previous iterations of the virus. Delta has caused several shutdowns at semiconductor factories across Asia just as demand for cars and electronics has started to pick up. As a result, these stops along the supply chain are slowing down at the very moment when Americans are demanding that they work in overdrive.
The most dramatic expression of this snarl is the purgatory of loaded cargo containers stacked on ships bobbing off the coast of Los Angeles and Long Beach. Just as a normal traffic jam consists of too many drivers trying to use too few lanes, the traffic jam at California ports has been exacerbated by extravagant consumer demand slamming into a shortage of trucks, truckers, and port workers. Because ships can’t be unloaded, not enough empty containers are in transit to carry all of the stuff that consumers are trying to buy. So the world is getting a lesson in Econ 101: High demand plus limited supply equals prices spiraling to the moon. Before the pandemic, reserving a container that holds roughly 35,000 books cost $2,500. Now it costs $25,000.
The container situation is even weirder than it looks. With demand surging in the United States, shipping a parcel from Shanghai to Los Angeles is currently six times more expensive than shipping one from L.A. to Shanghai. J.P. Morgan’s Michael Cembalest wrote that this has created strong incentives for container owners to ship containers to China—even if they are mostly empty—to expedite the packing and shipping of freights in Shanghai to travel east. But when containers leave Los Angeles and Long Beach empty, American-made goods that were supposed to be sent across the Pacific Ocean end up sitting around in railcars parked at West Coast ports. Since the packed railcars can’t unload their goods, they can’t go back and collect more stuff from filled warehouses in the American interior.
And what about the truckers who are needed to drive materials between warehouses, ports, stores, and houses? They’re dealing with a multidimensional shortage too. Supply-chain woes have backed up orders for parts, such as resin for roof caps and vinyl for seats. But there’s also a crucial lack of people to actually drive the rigs. The Minnesota Trucking Association estimates that the country has a shortage of about 60,000 drivers, due to longtime recruitment issues, early retirements, and COVID-canceled driving-school classes.
In short, supply chains depend on containers, ports, railroads, warehouses, and trucks. Every stage of this international assembly line is breaking down in its own unique way. When the global supply chain works, it’s like a beautifully invisible system of dominoes clicking forward. Today’s omnishambles is a reminder that dominoes can fall backwards too.
However, there are two important words missing from Thompson’s analysis: “vaccine” and “mandate.”
Like other manufacturers, petrochemical companies have been shaken by the pandemic and by how consumers and businesses responded to it. Yet petrochemicals, which are made from oil, have also run into problems all their own, one after another: A freak winter freeze in Texas. A lightning strike in Louisiana. Hurricanes along the Gulf Coast.
All have conspired to disrupt production and raise prices.
“There isn’t one thing wrong,” said Jeremy Pafford, managing editor for the Americas at Independent Commodity Intelligence Services (ICIS), which analyzes energy and chemical markets. “It’s kind of whack-a-mole — something goes wrong, it gets sorted out, then something else happens. And it’s been that way since the pandemic began.’’
The price of polyvinyl chloride or PVC, used for pipes, medical devices, credit cards, vinyl records and more, has rocketed 70%. The price of epoxy resins, used for coatings, adhesives and paints, has soared 170%. Ethylene — arguably the world’s most important chemical, used in everything from food packaging to antifreeze to polyester — has surged 43%, according to ICIS figures.
The root of the problem has become a familiar one in the 18 months since the pandemic ignited a brief but brutal recession: As the economy sank into near-paralysis, petrochemical producers, like manufacturers of all types, slashed production. So they were caught flat-footed when the unexpected happened: The economy swiftly bounced back, and consumers, flush with cash from government relief aid and stockpiles of savings, resumed spending with astonishing speed and vigor.
Suddenly, companies were scrambling to acquire raw materials and parts to meet surging orders. Panic buying worsened the shortages as companies rushed to stock up while they could.
Expecting these problems to be transitory? Dubai’s largest port operator says to expect supply chain problems to extend in 2023.
A global energy crunch caused by weather and a resurgence in demand is getting worse, stirring alarm ahead of the winter, when more energy is needed to light and heat homes. Governments around the world are trying to limit the impact on consumers, but acknowledge they may not be able to prevent bills spiking.
Further complicating the picture is mounting pressure on governments to accelerate the transition to cleaner energy as world leaders prepare for a critical climate summit in November.
Translation: Green energy mandates = blackouts.
In China, rolling blackouts for residents have already begun, while in India power stations are scrambling for coal. Consumer advocates in Europe are calling for a ban on disconnections if customers can’t promptly settle what they owe.
“This price shock is an unexpected crisis at a critical juncture,” EU energy chief Kadri Simson said Wednesday, confirming the bloc will outline its longer-term policy response next week. “The immediate priority should be to mitigate social impacts and protect vulnerable households.”
In Europe, natural gas is now trading at the equivalent of $230 per barrel, in oil terms — up more than 130% since the beginning of September and more than eight times higher than the same point last year, according to data from Independent Commodity Intelligence Services.
In East Asia, the cost of natural gas is up 85% since the start of September, hitting roughly $204 per barrel in oil terms. Prices remain much lower in the United States, a net exporter of natural gas, but still have shot up to their highest levels in 13 years.
Wait, you mean relying on Russian benevolence wasn’t an optimal strategy? Do tell.
There’s also panic buying to secure winter supplies, especially in China, where “the central government there has given state-owned energy companies a directive to secure winter energy supplies at any and all costs.”
Steel, roofing and insulation materials are some of the most difficult products to get right now, said Ken Simonson, chief economist at the Associated General Contractors of America. Bar joists, which are used to frame roofs, can have lead times of anywhere from 10 months to 14 months.
Costs have also soared, with the index for steel mill products rising 123% YoY in August, according to the Bureau of Labor Statistics’ Producer Price Index. Copper and brass mill shapes jumped 45.3% YoY, while plastic construction products saw increases of just under 30% YoY.
A few weeks ago I spoke with several people intimately involved with large companies in my industry and they all agree that we have probably another year of supply chain disruptions and problems. That wasn’t exactly music to my ears as the last year and a half has been an intense marathon trying to keep my buildings full of product that my dealers need. The reasons are everything that you have heard before here and on other media outlets – labor shortages, raw material issues and now, chip problems.
The chip problem could be a really big issue as those chips go into printed circuit boards that control furnaces – and we need furnaces now for Fall.
My one large exception mentioned above is that my inventory levels are absolutely enormous and we are setting new records daily. This is killing my turns and as a result cash, but this is the new model. We simply can’t predict when things will come in so we have to pile in sometimes a full years worth of a widget. We are absolutely bursting at the seams and it is extremely stressful trying to keep everyone happy. We don’t dare cancel any orders as we would go to the back of the line, so it is what it is.
Freight is a major issue right now. We get damage all the time and the LTL lines are all extremely slow and sloppy. Hardly a day goes by where we don’t have a freight problem.
Parts don’t really seem to be an issue. Sure, there are certain things that we have problems with, but in general the parts world is OK so there is that silver lining.
This year, a devastating drought in North American oat fields has resulted in the lowest harvest for the cereal grain in years, pushing prices to record highs, a warning sign that breakfast inflation is imminent.
Scorching heat waves in Candian oat fields slashed production to an 11-year low. Canada, the world’s biggest exporter, ships most of its oats to the US, its largest consumer.
The result so far has been a new record high in oats futures trading on the CME. The sudden spike in prices has yet to ripple through supply chains to affect consumers, though that will be coming.
According to Bloomberg, “the situation for North American farmers was so dire in the summer that many cut their losses and harvested damaged plants to be sold as feed for animals.”
What this means for consumers is that dwindling supplies and record-high prices will soon affect foods like cereals, oatmeal, and granola bars, all popular breakfast items.
Randy Strychar, president of Ag Commodity Research and Oatinformation.com, said Cheerios, the US’ most popular cereal, is made entirely of oats. He said there’s no substitute for the ingredient: “You can’t make a Cheerio out of barley.”
General Mills, the maker of Cheerios and Nature Valley granola bars, nor Quaker Oats Company, the maker of oatmeal, among others, have yet to announce price increase of their oat products, but that could be imminent or at least create an illusion of stable prices through shrinkflation.
Before retailers can make their sales, they need stuff to sell. That’s where the trouble is this year. Container ships are packed, ports are clogged, contracts with carriers are falling to the wayside. And the rush to ship goods for the holidays is only adding traffic to what was already intense congestion.
“There aren’t enough containers. There aren’t enough ships. There aren’t enough trucks or trains. There is more volume now than any part of the supply chain pipe can adequately handle,” Burlington Stores Chief Financial Officer John Crimmins told analysts in late August. Trying to accelerate and pull forward orders “even further increased the pressure on the supply chain, helping to drive even higher rates,” the executive added.
So not only are retailers competing with each other for sales, they are competing just to get cargo space to ship goods into the country. Freight has skyrocketed as a result, and shipments still lag or even fail to materialize. Many of the bottlenecks are tied to the unexpectedly swift surge in consumer demand in the U.S. this year, combined with capacity shortfalls at numerous points along the supply chain.
Greetings, and welcome to the Halloween season! Manchin and Sinema are the only thing that stands in the way of a giant, economy-destroying meteor of leftwing pandering, energy crises ramp up in China and Europe, Biden nominates a commie, and more Flu Manchu shenanigans.
Inflation hits a 30 year high, yet Democrats are furious two of their own party aren’t letting them run even bigger deficits.
West Virginia Democratic Senator Joe Manchin calls the giant runway Porkulus fiscal insanity.
“What I have made clear to the President and Democratic leaders is that spending trillions more on new and expanded government programs, when we can’t even pay for the essential social programs, like Social Security and Medicare, is the definition of fiscal insanity,” Manchin said in a statement Wednesday.
Manchin says that any reconciliation bill must include a Hyde Amendment to bar federal taxpayer funding of abortion. I’m pretty sure Democrats would prefer kicking Manchin out of the party than give compromise on their holy of holies.
‘What if — and hear me out here,” writes Robert Reich, “we stopped letting two corporate Democrats singlehandedly block every single progressive policy we elected Democrats to pass?”
Okay, Robert. But how, exactly? The Democrats have 50 seats in the Senate. To pass a bill through reconciliation, the Democrats need 50 votes in the Senate. Two of the people who hold those 50 seats do not agree with the rest of the party on “every single progressive policy.” If the other 48 senators do agree — which is far from clear — the Democratic Party will have 48 votes for its agenda, two short of what it needs. Those two, not the Robert Reichs of the world, are the ones with the power to “stop” things.
“Should all of this just hinge on those two?” Representative Cori Bush (D., Mo.) asked yesterday. “Absolutely not.” But should doesn’t enter into it. The question is does “all of this” hinge on Sinema and Manchin? The answer is yes. Yes it does. And why? Because, again, “all of this” requires 50 votes in the Senate, and two of those votes aren’t on-board.
Underneath the complaints that Reich and Bush have leveled sits the erroneous implication that, come election time, American voters are obliged to press a button marked “Republican” or “Democrat,” and that, having done so, they are shipped a drone-like representative of the winning team from a central repository in Washington, D.C. Reich complains that “we elected Democrats.” But this is correct only in the aggregate. In fact, 50 different “we”s elected one hundred senators and 435 Representatives, who between them make up our majority and minority parties. There is nothing in this deal that obliges those emissaries to agree with one another.
Senators Manchin and Sinema are not a pair of uninvited interlopers who are unexpectedly gumming up the gears; they, themselves, are among the gears. This being so, the duo cannot be said to be “blocking” the Democrats’ de facto Senate majority so much as they are sustaining the Democrats’ de facto Senate majority. Why? Because their decision to caucus with the Democrats rather than the Republicans is the only reason that majority exists in the first place. To hear progressives talk, one would assume that in order to take one’s place within the firmament one must first swear a blood oath to Dick Durbin. Shockingly enough, one is obliged to do no such thing.
If there’s one thing we know about the looming debt limit crunch and the warnings about the dire consequences of default, it’s this: The government is not going to default.
The recurring brinksmanship over the debt limit and the partisan refusal to get Republican fingerprints on the increase don’t say much for our political class. But the U.S. Treasury isn’t full of stupid people, and they’ve been through this drill before. Back in July 2011, when the debt ceiling of $14.3 trillion was about to be reached, the Washington Post reported:
The Treasury has already decided to save enough cash to cover $29 billion in interest to bondholders, a bill that comes due Aug. 15, according to people familiar with the matter.
You can bet they’re making similar plans today. The difference is that 10 years later the debt ceiling is $28.4 trillion, just about doubled, and we’re about to bump into it again.
Back in that summer of discontent I talked to a journalist who was very concerned about the “dysfunction” in Washington. So am I. But I told her then what’s still true today: that the real problem is not the dysfunctional process that’s getting all the headlines, but the dysfunctional substance of governance. Congress and the president will work out the debt ceiling issue, probably just in the nick of time. The real dysfunction is a federal budget that doubled in 10 years, unprecedented deficits as far as the eye can see, and a national debt (more accurately, gross federal debt) yet again bursting through its statutory limit of $28.4 trillion and soaring past 120 percent of GDP, a level previously reached only during World War II.
The Cornell University law school professor [Saule Omarova]’s radical ideas might make even Bernie Sanders blush. She graduated from Moscow State University in 1989 on the Lenin Personal Academic Scholarship. Thirty years later, she still believes the Soviet economic system was superior, and that U.S. banking should be remade in the Gosbank’s image.
Snip.
Ms. Omarova thinks asset prices, pay scales, capital and credit should be dictated by the federal government. In two papers, she has advocated expanding the Federal Reserve’s mandate to include the price levels of “systemically important financial assets” as well as worker wages. As they like to say at the modern university, from each according to her ability to each according to her needs.
In a recent paper “The People’s Ledger,” she proposed that the Federal Reserve take over consumer bank deposits, “effectively ‘end banking,’ as we know it,” and become “the ultimate public platform for generating, modulating, and allocating financial resources in a modern economy.” She’d also like the U.S. to create a central bank digital currency—as Venezuela and China are doing—to “redesign our financial system & turn Fed’s balance sheet into a true ‘People’s Ledger,’” she tweeted this summer. What could possibly go wrong?
The FBI’s annual report Monday made official what most unfortunately presumed: The United States in 2020 experienced the biggest rise in murders since the start of national record-keeping 60 years ago.
The Uniform Crime Report detailed a murder increase of nearly 30 percent.
The previous largest one-year change was a 12.7 percent increase back in 1968. The national rate of murders per 100,000, however, still remains about one-third below the rate in the early 1990s.
The FBI data show around 21,500 total murders last year, which is 5,000 more murders than in 2019. More than three-fourths of reported murders in 2020 were committed with a firearm, the highest rate ever reported.
Now before you start jumping to conclusions about a correlation between the leftist fever to defund the police and a huge jump in the nation’s murder rate, you should probably be aware of the fact that the Democrats want you to know that there’s no problem at all.
That’s right, the same people who want us all to live in mortal fear of being breathed on by a stranger at Kroeger are trying to poof away a pile of bodies.
Speaking of Flu Manchu, here’s NBA player Jonathan Isaac calmly explaining why he doesn’t feel he needs the vaccine:
This is a calm, intelligent, respectful statement as to why @JJudahIsaac is hesitant about getting the Covid vaccine. Instead of screaming at those who are still figuring it out, listen to his response. pic.twitter.com/Q1xMLw8boX
The Lancet just gives up on trying to determine the origins of Flu Manchu, much like OJ has given up on finding the real killers.
China is trying the classic idiot price controls strategy for its self-inflicted energy crisis:
China is officially panicking.
Now that the global energy crisis has slammed China’s economy, leading to the first contractionary PMI since March 2020 as a result of widespread shutdowns of factory and manufacturing, not to mention hundreds of millions of Chinese residents suffering from periodic blackouts, Bloomberg reports that China’s central government officials “ordered the country’s top state-owned energy companies to secure supplies for this winter at all costs.”
Translation: Beijing is no longer willing to risk social anger and going forward China will be subsidizing coil and nat gas, which will lead to even higher prices, which will lead to even higher prices for other “substitute” commodities such as oil, which is why oil surged on the news.
The news follows a report on Wednesday that China will allow soaring coal prices to be passed on to factories in electricity prices. But prepare for a surge in PPI, which will likely not be allowed to be passed on to CPI due to ‘common prosperity’. Which logically means margin collapse, and shutting down – so even more structural shortages. Unless we get state subsidies of some sort, or differential pricing for the foreign and domestic market. There used to be a name for that kind of economy. Wall Street used to pretend it didn’t like it.
“We don’t want normal,” said activist Earnest Greer. “We want radical change. What if everything goes back to the way it was without us completely dismantling and rebuilding the system?”
Liberals saw the pandemic as an opportunity to get people less clingy to individual freedom and more accepting of government planning significant parts of everyone’s lives. Normal would mean relinquishing that power, which is anathema to the Left.
Residents in three north-east Chinese provinces experienced unannounced power cuts as the electricity shortage which initially hit factories spreads to homes.
People living in Liaoning, Jilin and Heilongjiang provinces complained on social media about the lack of heating, and lifts and traffic lights not working.
Local media in China – which is highly dependent on coal for power – said the cause was a surge in coal prices leading to short supply. As shown in the chart below, Chinese thermal coal futures have more than doubled in price in the past year.
There are several reasons for the surge in thermal coal, among them already extremely tight energy supply globally (that’s already seen chaos engulf markets in Europe); the sharp economic rebound from COVID lockdowns that has boosted demand from households and businesses; a warm summer which led to extreme air condition consumption across China; the escalating trade spat with Australia which had depressed the coal trade and Chinese power companies ramping up power purchases to ensure winter coal supply.
Then there is Beijing’s pursuit of curbing carbon emissions – Xi Jinping wants to ensure blue skies at the Winter Olympics in Beijing next February, showing the international community that he’s serious about de-carbonizing the economy – that has led to artificial bottlenecks in the coal supply chain.
There are over 60 container ships full of import cargo stuck offshore of Los Angeles and Long Beach, but there are more than double that — 154 as of Friday — waiting to load export cargo off Shanghai and Ningbo in China, according to eeSea, a company that analyzes carrier schedules.
The number of container ships anchored off Shanghai and Ningbo has surged over recent weeks. There are now 242 container ships waiting for berths countrywide. Whether it’s due to heavy export volumes, Typhoon Chanthu or COVID, rising congestion in China is yet another wild card for the trans-Pacific trade.
Snip.
A major driver of congestion on both sides of the Pacific Ocean: Landside capacity (terminals, trucking, rail, warehousing) is limited, but the vessel capacity of a single ocean trade lane is highly flexible.
While the number of ships in the world is finite, operators can shift ships to wherever they make the most money. And the trans-Pacific is now a particularly lucrative trade: Spot rates including premiums can top $20,000 per forty-foot equivalent unit (FEU).
“These assets [ships] are super-mobile,” said Sundboell. “What’s happening now is the opposite of what dogged the industry for the past 20 years. Five years ago, people were asking: How can the trans-Pacific rate drop from $2,000 to $1,500 [per FEU] in the space of just six days? It was because you could take a vessel from one place and sail it someplace else, and suddenly there were more ships and a price war and rates dropped.
“Now we’re seeing the opposite,” he said. As ship operators pile more capacity into the trans-Pacific, congestion rises, delays mount, the incentive for shippers to pay premiums is supported, and all-in rates remain at record highs.
Despite the backlog, the busiest U.S. port still shuts down for hours on most days and is closed on Sundays, the Wall Street Journal reports. “Tens of thousands” of containers remain stuck at the ports of Los Angeles and Long Beach. More than 60 ships are lined up to dock, the report says.
More than 25% of all American imports pass through one of the two ports. LA and Long Beach collectively manage 13 private container terminals. Long Beach officials finally said last week they would try operating 24 hours a day between Monday and Thursday. LA says it’s going to keep existing hours and wait for the rest of the supply chain to extend their hours first.
More data points:
The Global Supply Chain is a &#$*ing Mess—in 4 JPM graphs
1. Dozens of containerships stacked up outside LA 2. Shipping rates to the moon 3. Global delivery times at 25-yr highs 4. Our surging demand for WFH and home improvements imports —> wild surge in eastbound freight rates pic.twitter.com/feeEzZKz7U
Finally, the Biden’s Administration’s vaccine mandate is about to make things much worse. “The looming federal mandate on COVID-19 vaccines for large employers could make hiring goals more difficult to reach for warehousing and distribution operations, which are already short on employees, some supply chain experts say.”
Keep in mind: None of the supply chain issues are the result of Flu Manchu, but almost all are the result of government overreaction to it.
I finally had time to finish this postmortem post on the Texas winter storm energy grid crisis. I’ve got a ton of pieces to get through, so let’s dig in.
Here were two problems, one short term and one long term—which exacerbated the short-term one.
The short-term failure came at about 1 a.m. Monday when ERCOT should have seen the loads soaring due to plummeting temperatures, and arranged for more generation.
Texas came very close to having a system-wide outage for the whole state (in the ERCOT area, about 85% of the state) due to not arranging for more generation.
This tripped the grid, knocking some reliable thermal plants (gas and coal) offline. This was a failure of the grid operator (ERCOT) not the power plants.
In the last four to five years, Texas lost a net of 3,000 megawatts of thermal out of a total installed capacity 73,000 megawatts today.
We lost the thermal power because operators couldn’t see a return on investment due to be undercut by wind and solar, which is cheap for two reasons—it’s subsidized and it doesn’t have to pay for the costs of grid reliability by purchasing battery farms or contracting with gas peaker plants to produce power when needed, not when they can.
Meanwhile, Texas has seen a growth of 20,000 megawatts of wind and solar over the same period to a total of 34,000 megawatts of installed capacity statewide, though they rarely perform anywhere close to capacity.
Wind and solar, with state and federal subsidies, have pushed reliable thermal operators out of business or prevented new generation from being built as operators can’t make money off of the market.
Equipment failure turned out to be a big part of the problem.
“Beginning around 11:00 p.m. [Sunday night], multiple generating units began tripping off-line in rapid progression due to the severe cold weather,” said Dan Woodfin, senior director of system operations at ERCOT, the organization that manages the state’s electric grid.
What does that mean? Equipment literally froze in the single digit temperatures and stopped working.
Then, as reserves diminished, ERCOT asked transmission providers to turn off large industrial users that had previously agreed to be shut down. But the situation deteriorated quickly, requiring rotating outages that have lasted hours for many Texans.
Electric generating plants did not properly winterize their equipment, said Dr. David Tuttle in the latest episode of the Y’all-itics political podcast. Tuttle is a research associate with the Energy Institute at the University of Texas at Austin.
“There are things that can be done, but it will cost some money,” he added. “About every decade we have these long-sustained periods. And then, you know weatherization is supposed to happen, and then, it doesn’t because it costs money.”
As Texans reel from ongoing blackouts at the worst possible time, during a nationwide cold snap that has sent temperatures plummeting to single digits, the news has left people in other states wondering: How could this happen in Texas, the nation’s energy powerhouse?
But policy experts have seen this moment coming for years. The only surprise is that the house of cards collapsed in the dead of winter, not the toasty Texas summers that usually shatter peak electricity demand records.
The blackouts, which have left as many as 4 million Texans trapped in the cold, show the numerous chilling consequences of putting too many eggs in the renewable basket.
Snip.
On the whole, Texas is losing reliable generation and counting solely on wind and solar to keep up with its growing electricity demand. I wrote last summer about how ERCOT was failing to account for the increasing likelihood that an event combining record demand with low wind and solar generation would lead to blackouts. The only surprise was that such a situation occurred during a rare winter freeze and not during the predictable Texas summer heat waves.
Yet ERCOT still should not have been surprised by this event, as its own long-term forecasts indicated it was possible, even in the winter. Although many wind turbines did freeze and total wind generation was at 2 percent of installed capacity Monday night, overall wind production at the time the blackouts began was roughly in line with ERCOT forecasts from the previous week.
We knew solar would not produce anything during the night, when demand was peaking. Intermittency is not a technical problem but a fundamental reality when trying to generate electricity from wind and solar. This is a known and predictable problem, but Texas regulators fooled themselves into thinking that the risk of such low wind and solar production at the time it was needed most was not significant.
“By Monday morning, half of Texas’ wind turbines were frozen solid, and wind generation bottomed out at 2 [percent] of installed capacity by Monday night,” said Jason Isaac, director of Life:Powered, a project of Texas Public Policy Foundation and a former state lawmaker.
“Because of this massive gap in wind production and ERCOT’s delay, what should have been a series of brief rolling blackouts—inconvenient but manageable—instead turned into 4 million Texans left in the cold and without answers,” he continued. “To make matters worse, ERCOT shut down power at natural gas substations in the Permian, leading to further shortages.”
Agricultural Commissioner Sid Miller has since said Texas should stop building wind turbines; focus on gas, coal, and oil; and called for the firing of Gov. Greg Abbott’s appointees to the Public Utility Commission—the government body that oversees ERCOT.
But was this crisis foreseeable? Isaac says yes.
“We’ve known for years that a weather event combining low wind and solar production and record demand could lead to blackouts,” he told Texas Scorecard. “This week, that event became a reality as new wind and solar generation failed to produce when it was needed the most, and it appears ERCOT fell asleep at the wheel.”
For years, Texas’ grid operator (ERCOT) has overestimated the ability to maintain a reliable grid without a sufficient supply buffer, known as a “reserve margin.” That margin is the difference between demand for electricity and what the grid can produce. When demand exceeds production, you get blackouts. That buffer has been shrinking because reliable sources of energy have been retired, few reliable plants have been constructed, and the grid is depending more and more on weather-dependent renewable energy that repeatedly fails to perform when we need it most.
When wind and solar production predictably dropped as the winter storm hit, the buffer collapsed. ERCOT needed to execute a series of balancing measures that would have protected the grid. But it did not act soon enough, which caused many more gas and some coal power plants in the system to “trip.” (Think of it as a circuit breaker that triggers to prevent a fire or other emergency at your house when there is a system imbalance.) Other weather-related issues caused problems too but ERCOT’s failure to act sooner was a major factor.
Usually, a system trip wouldn’t last long and we’d have power back in a few hours. But this time, many of the units that were tripped off the system had difficulty coming back online for a variety of reasons, including the fact that some were not designed to be taken off and put back on the system quickly, as well as other cold weather issues that exacerbated the problem.
So when people blame ERCOT for not acting quickly, they’re right. And so are the people who say that both renewable energy and fossil energy plants are not generating what they should. But it doesn’t begin there. Our overdependence on unreliable energy that caused the razor thin reserve margins started the ball rolling years ago.
Here’s the long story.
Keeping the power on is a bit of a guessing game played out every day by the grid operator to make sure we have the right mix of energy getting on to the grid. There’s that buffer, the reserve margin, which ERCOT uses to give it some leeway in making moves. As with anything, the more reliable and predictable the source of energy, the better moves ERCOT can make.
However, the race to add in renewables pushed out more reliable forms of energy and kept new reliable energy from being built. That resulted in the buffer in our electric grid being stripped out—going from more than a 20% surplus years ago to single digits in the last couple of years.
Without that buffer, our system has become much more vulnerable to outages when we see extreme heat or extreme cold. The problem is made worse by the fact that renewables have grown to become a significant percentage of our fleet, making our power grid much more susceptible to weather-related shortages. That is because renewables do not show up when we need power the most (high heat, freezing cold, big storms, etc.)
Here’s an informative thread on how the Texas energy market is set up and how some of the system was offline when the worst hit:
The ERCOT grid is a very complex beast. It can’t call on other grids for support (but that is a bit overrated as typically when you need power so does your adjacent region, but that’s later).
ERCOT is a 501c3 nonprofit that is charged with managing the market, but above all, reliability (keeping the lights on). In my experience some of the smartest people I’ve ever met work there. Wish I could name some of them because they’re absolutely brilliant.
Retail guys, municipalities, and cooperatives are the guys who buy power wholesale and sell it to the end user (residentials, commercials, industrials).
Retail outside of municipal or cooperative areas can shop for a retail provider. 8/
This year, ~20,000MW of (gas and coal) Power plants requested an outage. ERCOT runs an outage study looking at demand and other available resources, and then says yes. (They make sure all the plants in Houston aren’t out for example because that would jack up Houston rates). 12/
If those plants could be back up they would’ve because they want to make big money. So, Feb 11th, we go to bed, wake up to a coating of ice. This ice is thick and persistent. Next day, sun is out, roads are good. Maybe we’re through the worst?
On the night of the 15th, between midnight and 3 am, 8000MW of gas, 1200MW of Nukes, and 2000MW of coal trip off the grid. Culprits are frozen gas pipelines and water for steam. (Note the Big gas drops)
I think here he’s conflating a few different things; it’s unclear how much capacity was taken off line due to insufficient weatherization and how much was caused by ERCOT foolishly inducing blackouts in the gas-producing Permian Basin.
So no water through the pipe, no steam. No gas no gas to heat that water.
That trip caused a lot of the outages and most of the outrage.
So ERCOT’s only options in these situations is: 1) cut off a big chunk of the customers. 2) let the whole system trip and take months to get back to normal.
Last thing. In 2011. We had a bad winter but it was followed by a drought and the worst summer ever. Power plants didn’t have water in their lakes to run the plant. 100 days over 100°. The grid focused on that issue instead of the cold.
Nationally, retail electric sales generated $117 billion in 3Q2022, $10.9 billion in Texas (of which $6.3 billion was residential) and $14.5 billion in California. 2/12
If Texans paid what Californians did for electricity, Texans would have paid $13.2 billion more, or about $508 more per person in the state for those three months in 2020. 4/12
One aspect of Texas’ failure has been the rapid grown of unreliables (wind and solar) subsidized by federal and state policy concurrent with the shedding of reliable power (coal and natural gas). 6/12
We suggest making all electricity producers guarantee dispatchable power for Texas’ grid—this means that the unreliables would have to secure agreements… 8/12
Mitchell Rolling explains: “As you can see, the top three performing energy sources during the energy crisis in Texas were all fuel-based energy sources: nuclear, coal, and natural gas. On average, these three energy sources alone provided over 91 percent of all electricity generated throughout the energy emergency, as the graph below shows. Without these energy sources on the grid providing the bulk of electricity, the situation in Texas would have gone from bad to worse.”
The massive blast of Siberia-like cold that is wreaking havoc across North America is proving that if we humans want to keep surviving frigid winters, we are going to have to keep burning natural gas — and lots of it — for decades to come.
That cold reality contradicts the “electrify everything” scenario that’s being promoted by climate change activists, politicians, and academics. They claim that to avert the possibility of catastrophic climate change, we must stop burning hydrocarbons and convert all of our transportation, residential, commercial, and industrial systems so that they are powered solely on electricity, with most of that juice coming, of course, from forests of wind turbines and oceans of solar panels.
But attempting to electrify everything would concentrate our energy risks on an electricity grid that is already breaking under the surge in demand caused by the crazy cold weather. Across America, countless people don’t have electricity. I’m one of them. Our power here in central Austin went out at about 3 am. I am writing this under a blanket, have multiple layers of clothes on, and am nervously watching my laptop’s battery indicator.
This blizzard proves that attempting to electrify everything would be the opposite of anti-fragile. Rather than make our networks and critical systems more resilient and less vulnerable to disruptions caused by extreme weather, bad actors, falling trees, or simple negligence, electrifying everything would concentrate our dependence on a single network, the electric grid, and in doing so make nearly every aspect of our society prone to catastrophic failure if — or rather, when — a widespread or extended blackout occurs.
One of the most contested issues is the role wind generation has played. Prior to the onset of the storm last week, Texas led the nation in wind power generation and depended on the wind turbines in West-Central and Western Texas, along with a smaller number of turbines along the Gulf Coast, for about 25% of its electricity. As wind power has increased, coal-powered generation plants have been taken offline around the state. Texas has abundant coal, oil, and natural gas, and also has nuclear plants near Dallas and near Houston.
Real-time data from the U.S. Energy Information Administration shows that wind power collapsed as the winter storm swept across the state.
Snip.
As the graph plainly shows, wind generation choked down but natural gas compensated. Coal and even nuclear power generation dipped. Solar generation has been negligible due to cloud cover and several inches of snow and ice.
The cold has created extreme demand across the state. During most winter storms, the Panhandle, West Texas, and even North Texas around Dallas and above toward Paris may get cold but Central and South Texas could remain well above freezing. This has not happened during the current series of storms. The entire state is in a deep freeze, with snow appearing even on Galveston Island’s beach. Galveston averages lows of about 50 degrees and highs in the mid-60s during a typical February. It’s 37 degrees in Galveston as I write this, well below average. Austin has seen single-digit temperatures at night.
To put all of this into some perspective, the storm that dumped more than six inches of ice and snow on Austin Sunday night would, by itself, have been a historic storm. It dropped more snow on the capital than any other storm since 1949. It was preceded by a major cold snap and has been followed by more extreme cold and then another ice and snow storm Tuesday night. Texas has not suffered a single historic winter storm over the past several days, but a series of them without any warming in between…
Add to all of this, when Texas gets winter storms it usually doesn’t just get snow. Snow is fairly easy to deal with. Texas also gets ice, which can snap electric lines and break trees and tree branches, which also can fall on and break power lines. A tree in my yard is bent over by ice to the point that it looks like an invisible hand is holding it down. We can expect the ice to kill off millions of trees around the state. The ice layers also render most roads impassable. All of this is very unusual for Texas, but not unprecedented. The winter of 1836 was notably harsh; Santa Anna reportedly encountered deep snow as he marched his army toward San Antonio.
Most winters, Austin will have a few cold days but no snow. Central Texas is known to go entire winters without anyone having to so much as scrape any frost off their car windshield. Austin has had two significant snowstorms in 2021, with the current one being historic by any measure.
Piecing known information together, the wind turbines in Western Texas froze up starting Friday before the icy snowstorm hit, on Sunday night to Monday morning. This destabilized the Texas grid ahead of the worst of the storm. The storm produced the temperatures and precipitation the forecasts expected, but with weakened power generation and demand skyrocketing to heat millions of homes, homes which for the most part are not insulated against the current level of cold temperatures, the grid was set up to suffer mightily as it’s not hardened against extreme cold such as this once-in-a-century storm series is delivering.
In chart form:
This sums up what you want to know about power shortages in #Texas! Timeline matters. Researchers must start from Feb 9. Have solar & wind failed? YES, starting Feb 9.
Have backup #natgas plants failed? Yes, starting Feb 14. Yet, Natgas generation still way higher than before pic.twitter.com/AKa6M0neZw
Wind’s share has tripled to about 25% since 2010 and accounted for 42% of power last week before the freeze set in. About half of Texans rely on electric pumps for heating, which liberals want to mandate everywhere. But the pumps use a lot of power in frigid weather. So while wind turbines were freezing, demand for power was surging.
California progressives long ago banished coal. But a heat wave last summer strained the state’s power grid as wind flagged and solar ebbed in the evenings. After imposing rolling blackouts, grid regulators resorted to importing coal power from Utah and running diesel emergency generators.
Liberals claim that prices of renewables and fossil fuels are now comparable, which may be true due to subsidies, but they are no free lunch, as this week’s energy emergency shows. The Biden Administration’s plan to banish fossil fuels is a greater existential threat to Americans than climate change.
Decades of taxpayer-funded subsidies that favor unreliable wind power are crowding reliable energy sources out of the market, weakening the grid, and leading directly to the blackouts we experienced last week.
It’s no surprise — in fact, Texas came close to seeing widespread blackouts in August 2019. Our reserve margin, the buffer of extra electricity between what Texans are using and what we can produce, has become steadily smaller in recent years. And without quick action by state leaders, it will only get worse.
We should eliminate subsidies and tax breaks for energy companies — especially unreliable wind— to allow the free market to function smoothly. We must prioritize reliability and affordability in our electricity choices. Unfortunately, that’s not politically popular. But these are steps we can and must take for our state’s future.
Austin’s useless City Council being their usual useless selves: “Austin Energy’s biomass power plant in East Texas, which the city purchased in 2019 for $460 million, sat idle and produced no power during one of the worst winter energy crises in state history.” Well, at least it was providing Austinites jobs? Nope. It’s near Nacogdoches.
