Steve Bull's Blog, page 206
July 31, 2022
Why The EU Could End Within A Year
Germany, which has been high-and-mighty within the European Union and has imposed austerity against weaker European economies such as in Greece, Spain, Italy, and Portugal, is now demanding that other EU member nations bail Germans out of what will soon inevitably be an energy-emergency that results from Germany’s having complied with America’s demand to not only join with America’s sanctions against Russia, but to even terminate Germany’s Nord Stream 2 Russian gas pipeline that was supposed to be increasing — instead of (as now will be the case) decreasing — Russia’s natural-gas supplies to Europe. Germany was, until recently, the industrial motor of the EU, and therefore has the most to lose from reduced and far costlier energy-supplies; but this has now happened, and will escalate in the coming winter. As those energy supplies get reduced, energy prices will rise, then soar, and Germany’s economy will get crushed. Germany’s leaders (like in the other EU nations) complied with the American anti-Russia sanctions demands (which are based on faked ‘information’); and, as a result, the German public will soon be freezing, even while Germany will be spending astronomically higher prices for energy than it had previously been paying. The plunging energy supplies from Russia will be replaced by increased supplies from other countries (including America) whose energy is far costlier than Russia’s; and only a small fraction of those reduced supplies from Russia will be able to be replaced at all. Something will have to give, probably the EU itself, because the resultant rapidly escalating internal hostilities between EU nations — especially between Germany and the nations that it now expects to bail it out of this crisis — could blow the EU itself irrevocably apart.
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Israel’s War On Cash Is About To Get More Drastic
Starting Monday, it will be a criminal offense in Israel to pay more than the equivalent of $1,700 in cash to a business or $4,360 in cash to individual, as the government intensifies its ongoing war on tangible money.
It’s a war that began in earnest with the 2018 passage of the Law for the Reduction in the Use of Cash. Israeli businesses and individuals began facing limits on cash transactions in January 2019. However, on Aug 1, those limits are being slashed nearly in half.
“We want the public to reduce the use of cash money,” Tamar Bracha, who’s responsible for carrying out the law for Israel’s Tax Authority, told The Media Line.
“The goal is to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash. By limiting the use of it, criminal activity is much harder to carry out.”
Israel also limits the extent to which cash is used in transactions involving multiple payment methods. If the total transaction value is more than the above thresholds, cash may only be used for 10% of the purchase. Car purchases are given a higher, 50,000 NIS (New Israeli Shekels) limit — about $14,700.
Violators are subject to penalties that can reach 25% of the transaction for individuals and 30% for businesses. According to Israel National News, the government has amassed the equivalent of $5 billion in fines since restrictions began in 2019.
Not all transactions are affected, as The Media Line explains:
There are some exemptions to the new law: charitable institutions, which are most common in ultra-Orthodox society; and trade with Palestinians from the West Bank, who are not citizens of Israel. In the case of the latter, deals including large amounts of cash will be allowed, yet they will require a detailed report to Israel’s Tax Authority.
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July 30, 2022
We Are Going To See Energy Prices Go Absolutely Nuts This Winter Just As We Plunge Into A Horrifying Global Economic Crisis
How would you feel if your power bill went up by 50 percent this winter? How about 100 percent? Unfortunately, these kinds of price increases are already being announced. The world was heading into a major energy crisis even before the war in Ukraine started, and now that conflict threatens to create an extremely severe energy crunch that would have been unimaginable just a couple of years ago. If some sort of a miracle doesn’t happen, it is going to be a really, really cold winter for countless people in the western world.
The Russians have been trying to use energy as leverage, and on Monday they announced that the amount of natural gas flowing through the Nord Stream 1 pipeline will be reduced “to just 20% of its capacity”…
The Biden administration is working furiously behind the scenes to keep European allies united against Russia as Moscow further cuts its energy supplies to the European Union, prompting panic on both sides of the Atlantic over potentially severe gas shortages heading into winter, US officials say.
On Monday, Russia’s state-owned gas company Gazprom said it would cut flows through the Nord Stream 1 pipeline to Germany in half, to just 20% of its capacity. A US official said the move was retaliation for western sanctions, and that it put the West in “unchartered territory” when it comes to whether Europe will have enough gas to get through the winter.
In essence, Vladimir Putin is “turning the screws”, and it may just be a matter of time before he cuts off the gas completely.
The Europeans never should have allowed themselves to become so dependent on Russian energy, and now a major crisis is staring them in the face.
Last Wednesday, a modest rationing plan for the member states of the EU was introduced…
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Gas Levy Could Triple Household Heating Bills In Germany
Germany plans to introduce a levy for all its gas consumers beginning in October as the government looks to avoid a wave of collapsing gas-importing and gas-trading companies amid record-high natural gas prices, a new bill seen by Reuters showed on Thursday.
Russia is further reducing flows via Nord Stream this week, to just 20% of the pipeline’s capacity, days after restarting the link at 40% capacity after regular maintenance.
The German government has already intervened to rescue energy group Uniper, Russia’s single largest gas buyer in Germany. Uniper—and many other German gas traders and suppliers—have been reeling from reduced Russian supply and soaring prices of non-Russian gas. Germany and Uniper agreed last week on a $15 billion bailout package, including the German government taking a 30-percent stake in the company and making more liquidity and credit lines available to the group.
Under the plans of the government, all consumers of gas, including households, will have to pay an additional levy, which will go to support Germany’s gas importing companies, which struggle with a lack of Russian gas and sky-high prices of non-Russian alternatives. The details of the bill are set to be announced next month.
Households and industrial consumers are expected to pay the levy through September 2024, according to the draft Reuters has seen.
“One doesn’t know exactly how much (gas) will cost in November, but the bitter news is that it’s definitely a few hundred euros per household,” German Economy Minister Robert Habeck was quoted by Reuters as saying on Thursday.
Marcel Fratzscher, president of DIW, the German Institute for Economic Research, told Düsseldorf’s Rheinischen Post newspaper that German households should prepare for at least tripled costs of heating on gas. The levy should be accompanied by a relief package for lower-income households, otherwise the new charge could lead to a “social catastrophe,” Fratzscher added.
Back to the Future
“The path of sound credence is through the thick forest of skepticism.” – George Jean Nathan
In the second half of the 16th century, Britain plunged into an energy crisis. At the time, the primary source of energy driving the British economy was heat derived from the burning of wood, and Britain was running out of trees. As the supply of wood dried up and its price began to soar, inflation set in, compounding the problem and spreading it to all corners of the economy. With imports from continental Europe insufficient to close the growing supply gap, the crisis looked set to crush the standard of living of the average British citizen.
And then they discovered coal.
Well, they didn’t exactly discover coal – it had been known for centuries that coal could be a useful fuel – but they did learn that, with a bit of tinkering, coal could replace wood in many important applications. They also recognized that they had a lot of it. With a higher energy density than wood, coal is a superior fuel that ultimately enabled meaningful improvements in the British economy. Trees could be preserved for construction purposes, homes could be more efficiently heated, and companies could leapfrog their competitors – foreign and domestic alike – by retooling to accommodate the new fuel. What followed was a decades-long economic boom.

It is now well understood that the wide adoption of primary fuels with high energy density enables better standards of living. In a popular piece we wrote last year called Where Stuff Comes From, we presented a simplified mental model for understanding the energy density of carbon-based materials using rungs of a theoretical ladder. As a thermodynamic sink, CO2 sits on the ground…
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#Future Talks: Global Energy in 2022 with Vaclav Smil
What Happens If The Fed Doesn’t Capitulate On Interest Rates?
In the past stock markets used to rely on the innovation and profit reports of individual companies, and while there were sometimes all encompassing events that would push equities in one direction or another, in the last decade there has been only one factor that ever really matters: The Federal Reserve.
The central bank has positioned itself as the ultimate arbiter of market rallies and corrections. In fact, most of the world is now placing all their investment bets on a single hope, that the Fed will capitulate on interest rate hikes, ignore the stagflation crisis and ramp up the printing presses once again with wild abandon.
This is the sad state of most markets around the world and American markets in particular. Investors have enjoyed what amounts to a free ride for more than a decade based on the simple premise that the Fed will “never” allow stocks to crash again. This assumption is predicated on the idea that the Fed actually cares about the continued stability of the markets.
After the latest Fed interest rate hike the speculation mills are swirling that the central bank will back off of rates as soon as November and refresh the easy money punch bowl. But we need to consider a question that almost no one is out there asking: What if they stopped caring? What if they never cared and stimulus measures were actually meant to achieve a separate agenda that is now finished? What if the Fed doesn’t capitulate? What is they just keep hiking?
The original rationale given for rate cuts and QE measures was to offset wealth destruction caused by the 2008 credit crash. The scheme was NOT supposed to continue onward with new stimulus every year or every time stocks lost 10%-20%. Yet, that is exactly what happened…
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How much oil remains for the world to produce? Comparing assessment methods, and separating fact from fiction
Abstract
This paper assesses how much oil remains to be produced, and whether this poses a significant constraint to global development. We describe the different categories of oil and related liquid fuels, and show that public-domain by-country and global proved (1P) oil reserves data, such as from the EIA or BP Statistical Review, are very misleading and should not be used. Better data are oil consultancy proved-plus-probable (2P) reserves. These data are generally backdated, i.e. with later changes in a field’s estimated volume being attributed to the date of field discovery. Even some of these data, we suggest, need reduction by some 300 Gb for probable overstatement of Middle East OPEC reserves, and likewise by 100 Gb for overstatement of FSU reserves. The statistic that best assesses ‘how much oil is left to produce’ is a region’s estimated ultimately recoverable resource (URR) for each of its various categories of oil, from which production to-date needs to be subtracted. We use Hubbert linearization to estimate the global URR for four aggregate classes of oil, and show that these range from 2500 Gb for conventional oil to 5000 Gb for ‘all-liquids’. Subtracting oil produced to-date gives estimates of global reserves of conventional oil at about half the EIA estimate. We then use our estimated URR values, combined with the observation that oil production in a region usually reaches one or more maxima when roughly half its URR has been produced, to forecast the expected dates of global resource-limited production maxima of these classes of oil. These dates range from 2019 (i.e., already past) for conventional oil to around 2040 for ‘all-liquids’. These oil production maxima are likely to have significant economic, political and sustainability consequences…
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Why expensive gasoline is here to stay
“Future presidents and administrations are going to be absolutely bedeviled by high gasoline prices.”

The political pain that high gasoline prices have inflicted on President Joe Biden offers a potential warning to future presidents: It’s likely to happen to you, too.
The reason: The United States’ capacity for refining oil into gasoline is declining, a trend that appears irreversible — for reasons that include climate change. But the nation’s appetite for fuel is holding firm, no matter all the predictions of a future filled with electric cars.
The result is a domestic gasoline supply on a hair trigger, making the nation more vulnerable to fuel panics that would resemble last year’s hacker-driven shutdown of the Colonial Pipeline, while feeding inflation and angering voters. Since early 2020, the United States’ fuel-producing capacity has fallen by nearly 1 million barrels per day, or about 5 percent.
“We are going to be operating a shrunken, old and in-need-of-repair refining system a lot harder,” said Bob McNally, head of consulting firm Rapidan Energy and former senior director for international energy on the National Security Council in the George W. Bush administration. “Future presidents and administrations are going to be absolutely bedeviled by high gasoline prices.”
Republicans have pummeled the Biden administration for record high gasoline prices, blaming the jump on the president’s focus on climate change and his promises to reduce the nation’s reliance on fossil fuels. But instead of being a modern outlier, the high prices may signal a new norm that future residents of the White House of either party will have to face down.
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It’s Earth Overshoot Day, and Future Generations Are Calling | Opinion
July 28 is Earth Overshoot Day. As of that day, for the rest of 2022, human economic activity will be using the planet’s resources beyond its capacity to renew them. Humans now consume things like wood, water, and soil at nearly twice the rate the planet can support.

We’re also fast approaching climate overshoot, beyond 1.5 degrees Celsius of warming, by 2030. The Climate Overshoot Commission will meet several times this year to discuss ways to keep that from happening. Meanwhile the World Meteorological Organization calculates a 50 percent chance of touching the 1.5 degree threshold by 2026. Recent intensified storms, fires, floods, and droughts are all symptoms of the fever.
The dominoes are falling. Resource consumption drives climate change, and the biggest driver of consumption is population growth. Strategies for perpetual economic growth demand ever increasing consumption, requiring more and more people, pushing us into overshoot.
National economic growth policies rely on a pyramid scheme—stoking GDP growth with population growth. Population growth brings more people into the economy, and a larger economy creates an illusion of wealth and prosperity, when the reality is there are only a few big winners. Like the classic Ponzi scheme, the originator and those at the head of the line benefit; late entrants get left holding the bag.
In the 1960s, the idea of obvious unsustainability of population growth leading to world famine and a crash in the 1970s and 1980s was known as “The Population Bomb.“…
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