The pipeline explosions I wrote about last week were neither a beginning nor an end to Europe’s economic woes. The “invisible scissors” cutting all ties between Europe and the rest of Eurasia were already active since months — if not years — and did not stop for a minute ever since. However, now they’ve become busier than ever.
It increasingly looks like that the rather cruel metaphor I brought up in April, is now becoming a reality in front of our eyes — in a strictly figurative sense of course. As I wrote back then:
Back in the age of shoguns and samurai, there was a rather bloody way a noble warrior could restore honor for himself or for his family by committing a form of voluntary ritual suicide. What contemporary societies rarely grasp, is that the person in question had to die no matter what. He had to choose between falling into enemy hands (and being tortured — then executed resulting in the loss of his and his family’s honor), or performing this rather painful ritual by himself.
After several decades of magical thinking and self-delusion Europe has now found itself in the same situation. Leaders of this once prosperous peninsula of Eurasia have now decided to severe themselves from Russian fossil fuel supplies: starting with coal in August, then moving on to oil and gas. Lacking its own adequate supplies of energy carriers tough this act will effectively self-terminate the EU economy — an act equivalent to a ritual suicide; a desperate attempt to restore the continent’s lost honor.
To continue with that metaphor: during the course of that ancient Japanese ritual I mentioned above a best friend, or a former ally, stood behind the samurai performing seppuku. As the ritual came to its conclusive end, the friend drew his sword and struck down on his former ally — putting a quick and decisive end to his agony. Do you see that man in black in the image below? He is the one I’m talking about.
With this interesting historical analogue aside, let’s return to the topic of gas supplies to Europe. After the explosions under the Baltic Sea, news broke that the TurkStream pipeline, carrying Russian gas under the the Black Sea, is also threatened to cease operations. According to the article, penned by the West’s beacon of light and advocate of liberal democracy, Radio Free Europe, “Russia claims EU sanctions are preventing TurkStream pipeline maintenance.” The author writes:
Oleg Aksyutin , the director of South Stream Transport B.V. [the Dutch unit of the Russian pipeline operator, Gazprom], sent a note earlier this month to division managers informing them that Netherland’s import and export authority would be revoking its export license as of September 17.
I don’t know about you, Dear Reader, but a European country revoking an export license ahead of winter sounds like an opening move to me… Probably I’m missing something. I guess a reason explaining why the license was revoked could have been helpful.
Nevertheless, as a result Gazprom has suspended “the execution of all contracts related to the technical support of the gas pipeline, including design, manufacture, assembly, testing, repair, maintenance and training.” Mind you, gas deliveries will continue for now, but since the area where the pipelines run is one of the most prone to earthquakes in Europe (this is where Africa pushes up against Eurasia after all), they require constant maintenance and surveillance. This monitoring and repair activity has been put to jeopardy now: all we need is a minor earthquake and the entire route would be shut down for good.
In order to mitigate this potentially explosive situation “[Gazprom’s Dutch subsidiary] South Stream Transport has applied for a new license but it doesn’t know if it will receive it, a company source told RFE/RL.” The ball is in Europe’s court again. Maybe I’m misunderstanding something here, but it looks like the Dutch authorities could probably put an end to this story by accepting Gazprom’s application for a new certificate, or state directly that Europe is now sanctioning gas — which it officially isn’t... A strange situation indeed.
It is worth mentioning here that “TurkStream has the capacity to deliver 31.5 billion cubic meters (bcm) of natural gas a year with half of it destined for Turkey and the other half for the Balkans and Central Europe. Serbia and Hungary are the main European consumers.” Countries, opposing the sanction war most violently — but I’m sure that this just a mere coincidence.
At the same time, over the last weekend, Italy too has been cut off from Russian gas supplies — leaving only one EU member, Hungary, with receiving gas from Gazprom (and as we have seen, that is also up in the air now). Italy is the second biggest economy in the EU after Germany. It has a much higher GDP than Russia, still they used to receive 40% of their natural gas from Gazprom via the Yamal-Europe pipeline that passes through western Ukraine, Slovakia and Austria. Now this route has been shut off as well.
In a statement via its Telegram account, Gazprom said gas transportation through Austria has been suspended due to the refusal of the Austrian operator to confirm transport nominations. The reason is related to “regulatory changes” that took place in Austria late in September, the Russian company said. “Gazprom is working on solving the problem together with Italian buyers,” it added.
I really need to pull up map here. I could swear, up until this point at least, that Austria was not part of Russia, and that Moscow could not possibly impose regulatory changes on Vienna, but now I’m confused. How is it otherwise possible to have a European regulator to come up with a legal change resulting in an European operator refusing to accept transits? Again, no rebuttal, no explanation, no further details provided by the Austrians to help us understand what is really going on.
Sarcasm aside, there is now a visible tendency from European agencies to come up with all sorts of “regulatory changes” resulting in equipment stuck in Canada for months, an export license being revoked, or a transit being refused... Meanwhile loudly proclaiming that there are “no sanctions” on Russian gas deliveries.
So did Gazprom overreact these issues? Sure. Both parties are now deeply engaged in a game of ‘tit for tat’. What is really interesting in these cases though is that their timing, together with Nord Stream’s mysterious sabotage, seems to be curiously centered around mass protests in Germany asking for gas deliveries to be turned back on… Is it possible that Europe has a “man in black” standing behind him, preventing any backslides from happening with his invisible hands?
Whether this is indeed the case, no one can tell for sure. The Genie, however, is now definitely out of the bottle.
Last year Europe (EU27 plus other countries) have imported 167 billion cubic meters of natural gas in total from Russia, according to BP. How does the EU supposed to replace this immense amount of gas? While US Secretary of State Antony Blinken calls this sudden dip in Russian exports a tremendous opportunity, it is a promise not even mighty America can fulfill.
In 2021 LNG imports from the US amounted to 22.2 bcm, which means that in order to fill in the gap the US would have to increase its shipments of Liquefied Natural Gas ninefold (to deliver current quantities plus the missing Russian volumes). Independent from whether they succeed in this or not, however, western shipping companies are already making a killing on Europe’s woes: cashing in $215 million per each LNG spot cargo as pure profit. A tremendous (business) opportunity indeed.
Oil, and natural gas which comes with it, is a finite resource though. It is finite in America, finite in China, finite in Australia, finite in the Middle-East. If you ask me, there is no way on Earth to make up for this lost volume, and with a possibly terminal fossil fuel production decline on the horizon this time window for getting cheap and plentiful energy is now most probably shut close forever for Europe. There will be some gas, for sure, but clearly not as much as the EU economy would need to remain fully functional. And remember: stopping or redirecting ships is much easier than giving up on an expensive pipeline…
Energy is the economy. Contrary to modern economic myths, whatever you do to earn money takes energy. Loosing ten, or even worse: forty percent of it means a similar drop in GDP and will inevitably lead to deindustrialization, falling living standards and widespread poverty. Especially for the rest of the years to come: when we would no longer have the luxury of reservoirs filled up to the brim before the winter.
What remains for us, in this battered peninsula of Asia as a result, is an accelerated — record breaking — decline in energy use. Now, on top of that, the latest round of sanctions “imposes stricter import bans to keep certain Russian products out of the EU market, such as steel, wood pulp, paper, machinery, chemicals, plastic and cigarettes.” For your information: these are the most energy intensive products one can get. Now, that Europe has lost its cheap sources of energy to make these products at home, from whom they are going to buy them, and at what price…? Remember, all this is coming on top of an already decided EU ban on Russian coal from August and on oil from December. If this remains to be the case for the following years, entire industries will leave the continent in the name of cost optimization and re-localization (buying local parts for local products).
Eventually in three, five, perhaps ten years from now a new equilibrium will set in, accommodating lower availability of energy and raw material supplies — but it will not last very long. The global fossil fuel decline — presumably in full swing by then — will slowly chip away all remaining industrial activity, leaving Europe with nothing more than a battered agricultural system. Perhaps, not entirely unintentionally.
Taking a step back from this economic war of attrition, one sees a continent desperately fighting with itself for the last drops and puffs of climate wrecking fossil fuels. While one might think, based on his/her own experience with rooftop solar plus batteries, that we could be just fine if had invested more in them, these solutions cannot be scaled up to meet the level of service required by a modern industrial economy. There is a really good analysis out there from Gail Tverberg, explaining why is that so with all the charts and data elucidating the problem. As I have written in a great many of my essays: industrial societies have little chance to survive the loss of fossil fuels.
What this energy crisis in Europe is also exposing ruthlessly, is that we have been living well beyond our means for quite a few decades, or perhaps centuries now. Europe simply cannot extract neither enough fossil fuels, nor enough metals, or plant nutrients for that matter, to uphold a complex high-tech civilization. The EU is just about to expose itself to be an overpopulated region hopelessly dependent on imports from practically everything.
The first realization of this sobering truth came from Thomas Malthus who has pointed out the impossibility to have unlimited population growth on a finite land mass. The industrialists’ answer was ramping up colonization, inciting hunger on the other half of the planet and later developing artificial fertilizers by utilizing fossil fuels. Now, that colonization is no longer possible, and fossil fuels get choked off (artificially for here and now), the realization that we are in total and absolute overshoot in Europe looms over our heads.
The frightening part for the rest of the world (or at least for those who dare to think about this) is that if such a sudden deprivation of fossil fuels can happen and cause such a turmoil to the birthplace of Western Civilization, then it can happen to any other part of the world. Basically anywhere. It has just happened to Sri Lanka recently. No surprise here, in Europe we have based our civilization on the fundamentals of finite mineral resources — which by definition simply cannot last forever. The rest of the world has just copied this model blindly.
Of course, you are free to believe what you want to believe. The aim of this project — The Honest Sorcerer — however is not to reinforce you in those beliefs. I write this blog to provide you with an explanation, which in my opinion, has the greatest explanatory power over what is going on in the world, and what can come out of all this. One might wish to see, for example, Europe receiving electricity from the Sahara covered in solar panels — but in my opinion this might be a bridge too far.
Instead of dreaming up solutions which have a multitude of drawbacks and hard limits, from resource, environmental, ecological and not least economical perspective, I’ve always recommended my readers to make peace with the fact that Western civilization has entered its terminal decline phase and to make personal preparations accordingly. This is not going to be easy and I have to admit, I’m struggling here myself: being more aware than actually doing, but even the longest journey starts with a single step — as the Buddhists say.
The West’s downfall is neither going to be fair, nor beautiful: I expect to see former allies (continue) backstabbing each others, seemingly indestructible political or military formations breaking up and new alliances born out of need. The rules of the game have changed irreversibly. The the 20th century and the heydays of this civilization with it is now over and done.
…and since we are living on the same planet, with the same limitations, be it climate, ecosystems or resources, readers on the Eastern hemisphere are advised the learn from our downfall and arrange for a softer landing than what we have managed to secure for ourselves here. Pay close attention. Learn from our folly.
Good bye and good luck,