European Energy Chaos - It's hard to comprehend how f*cked the energy situation is across the pond right now.
While the EU rations its energy, Putin's Gazprom is literally burning off millions of dollars in gas every day that it used to send westward to Europe. Not for heat or energy. Just flaring it out, pouring huge amounts of CO2 into the atmosphere. For context, the daily emissions from this flaring equal those from over 1,000 American homes for a whole damn year.
You'd think that wasting a valuable commodity would hurt Russia's bottom line, but persistently high oil prices are keeping Putin and his war afloat. He'd rather watch Europe shiver than keep the pipelines flowing at full capacity.
Even though they just got back from August vacations, EU leaders are freaking out about winter. These countries have been trying to wean themselves off of Russian gas for a while now, but they're still hooked.
The full story of how we got here is beyond the scope of Macro Monkey Says, but the seeds were planted long before the war in Ukraine.
A focus on building out virtuous renewable capacity at the expense of sinful coal and natural gas production left Europe vulnerable to these types of shocks. Renewables have come a long way but still face intermittency issues that prevent them from fully replacing fossil fuels just yet.
Since the war started, it's only gotten worse. EU members thought they could cut Putin at the knees by collectively agreeing to limit Russian gas imports, theoretically denting a huge source of government revenue.
Then the boomerang came back and smacked them upside the head. Russia hit back with significant cuts to westward flows in the almighty Nord Stream, forcing Europe to install energy rations to avoid disaster.
Germany is especially vulnerable. The biggest economy in the EU slurps up Russian oil and gas at a huge clip and is scraping together alternative energy sources to survive the winter. However, starting up old coal plants, investing in future LNG capacity, and doubling down on renewables will all take time to go live.
In the meantime, Putin is the captain now.