Taking a short break - no post this week

I'm taking a short break this week and expect to post again on Sunday, October 23.

Dutch dilemma: What is Europe willing to do for more natural gas?

Modern global society is steeped in the idea of trade-offs, the notion that one must suffer losses to obtain desired gains. This prepares the way for disingenuous leaders to explain why sacrifices are necessary to reach supposedly exalted goals. Usually those sacrifices are made by the powerless in society; they are certainly not made by the leaders who call for sacrifices nor by the wealthy and powerful who benefit from them.*

This coming fateful winter season in Europe is likely to include a lively debate about whether the Dutch should make a perilous trade-off on behalf of an energy-starved Europe. So far, the Dutch have been firm about closing one of the world's largest natural gas fields, Groningen, no later than 2024—even in the face of severe European gas shortages resulting from the loss of gas from Russian pipelines.

The reason for that firmness has to do with the damage earthquakes are inflicting on the buildings located above and around the field, earthquakes related directly to withdrawal of Groningen's gas. In the northeastern part of the country, some 1200 earthquakes have severely damaged 27,000 buildings to the point that they are uninhabitable. About 3,300 structures have been demolished. A 2015 study reported that 152,000 homes need to be reinforced. As a result the government has been reducing gas withdrawals to mitigate the problem with an eye toward closing the field. Closing the field also comports with the government's greenhouse gas reduction goals.

But, will the Dutch be able to withstand calls for increasing production from Groningen as the European winter arrives?

Ukraine, Russia and the blindness of war

Some things are easy to predict, the orbit of planets, for example. They adhere to well-established physical laws not subject to alterations by the whim of humans.

But any forecast that has to do with humans and the complex systems within which they live is bound to be problematic if not downright wrong. When humans engage in billions of daily interactions with other humans and the physical world, they become surprisingly unpredictable, especially when novel or unexpected interruptions interfere with the smooth operation of those interactions.

It might be simpler to say that peace is more predictable than war, and that would capture most of what global society is feeling today in the wake of the Russia-Ukraine conflict. Each side in the conflict—and we must now include NATO countries on the side of Ukraine against Russia—has made decisions based on expectations that proved to be utterly mistaken. Each side assumed that we live in something like a billiard-ball world in which a single action has a precise and foreseeable reaction.

In extremis: The world at the edge of a cliff

Geopolitical risk took center stage last week when Russia announced it would annex the Ukrainian territory it has seized—after holding "referendums," of course, in those areas. Any attack on what would now become Russian territory would be met by all means necessary including nuclear weapons. Presaging this development, I wrote the following in a piece from March entitled, "World War III is here, but it's not what we expected":

[I]f Russia ultimately feels backed into a corner, the Russian leadership may see no alternative but to draw its main competitors into a wider war with the hope of instilling enough fear of a nuclear confrontation that both sides relent and a political settlement and security guarantees follow that include an agreement to end all economic warfare.

It is in just such circumstances that both sides may miscalculate or may misconstrue the words of the other and choose to escalate the conflict in a way that will make prophets out of all the screenwriters and novelists who depicted World War III as the end of civilization.

It seems "such circumstances" have arrived and both sides are choosing escalation. I am not predicting "the end of civilization." But I'm more worried than I was a week ago.

Europe's real-time experiment in energy contraction

European society is currently undergoing a real-time experiment in energy contraction. Sanctions imposed on Russia in the wake of the Russia-Ukraine conflict have led to a dramatic reduction in imports of Russian oil and natural gas. The Europeans are still receiving some Russian oil via pipeline though that flow was reduced last month. The reasons for the decline in natural gas deliveries from Russia—deliveries not prevented by Western sanctions—are disputed with each side accusing the other of being the cause.

Those of us who have been warning about the coming energy stringency believed that it would result from the rising cost of extracting hydrocarbons—and the inability to bring new production online faster than production is declining from existing wells. In Europe, we are getting an early preview of what such a future looks like when a society is unprepared for a sudden decline in the availability of oil and natural gas.

The loss of Russian natural gas imports is shaping up to be nothing less than catastrophic for Europe. Just two years ago the price of gas at the Dutch Title Transfer Facility, Europe's most liquid natural gas market, was hovering around €11 per megawatt hour. At the close last Friday the price was almost 17 times higher at just under €188. At one point in late August the price spiked to €349. In the decade prior to the outbreak of the pandemic, the highest price ever seen for the TTF was a little over €29.

Why we worship waste

The ability to waste resources without the need to be concerned for one's well-being or future has always been a sign of wealth and power.

Thorstein Veblen coined the phrase "conspicuous consumption" in his famous 1899 treatise The Theory of the Leisure Class. The point, of course, for the wealthy is to be conspicuous so as to attract the attention, praise and deference of their fellow citizens. Veblen explained that wealthy people also often communicate their power to others by having a group of attendants around them who do little or nothing. He dubbed this "vicarious leisure." Since there are only 24 hours in a day, one person, however wealthy and powerful, can only enjoy so much leisure. Vicarious leisure made possible by the excess wealth of an individual is an unmistakable sign that a person is important.

The seemingly relentless drive of commercial enterprises to reduce waste and economize may appear to run counter to this. But that drive is only meant to produce more wealth for what Veblen calls the leisure class by which he means the power elite of society.

Taking a holiday break - no post this week

I'm taking a holiday break this week and expect to post again on Sunday, September 11.

Failed states: Coming to a country near you

As I was reading a story about a Mexican drug cartel enforcing price controls on tortilla vendors—something that if done is normally done by governments—I was reminded of a scene from the film "Casablanca."

It's 1940 and Nazi officers are visiting Casablanca which at this stage of World War II is controlled by the German puppet regime in France called Vichy France. In their attempts to apprehend "an enemy of the Reich," the German officers meet with and question Richard Blain, the American owner of the eponymous Rick's Cafe, a nightclub and illicit casino.

As they discuss German aspirations in the war, one of the German officers asks Rick (played by Humphrey Bogart) what he thinks of the Germans occupying his "beloved Paris." He answers, "It's not particularly my beloved Paris."

Another German officer then asks if Rick can imagine Germans occupying London. Rick again deflects saying, "When you get there, ask me." But when a German major asks Rick about invading New York City, Rick fires back: "There are certain sections of New York, major, that I wouldn't advise you to try to invade."

Europe's disappearing rivers illustrate multiple converging catastrophes

When I was teenager, I took a week-long cruise with my family up the Rhine River. The voyage started in Amsterdam. With stops at various cities, the ship sailed all the way to Basel, Switzerland, hundreds of miles inland and about 800 feet higher in elevation than Amsterdam.

That trip would be more perilous today as the levels of Europe's major rivers decline in the face of an extreme drought that has resulted in almost no rain for the last two months across much of Europe. The Rhine, the Loire, the Danube and the Po have all been hard hit. The fate of these rivers is intimately linked to Europe's energy, food, and transportation security. And the fate of both the rivers and the daily needs of Europeans are intimately bound up with the trajectory of climate change and resource depletion, especially of water and energy.

For the Rhine, freight transportation has been curtailed as barges are unable to carry their maximum weight without scraping the bottom of the river in some places. The Rhine is a central artery for the transportation of food and fuel. Just as Europe needs more coal in the right places to generate electricity as Russian natural gas supplies have been curtailed, the cheapest way of moving coal has now become impaired. Trucks and trains are now being forced to carry more freight than normal, straining an already strained supply chain.

Taking a short break - no post this week

I'm taking a short break this week and expect to post again on Sunday, August 21.