Energy: no global crisis

12/10/2021

I once did a count of the number of different stories in the wartime Observer, compared with the modern-day paper. Roughly, there were as many on a page in the wartime editions as there are in the entire paper, these days.

As to the number of issues, in times of crisis, there is definitely a tendency in the contemporary media (newspapers and broadcasters alike) to concentrate on one main event, offering saturation coverage to the exclusion of all else. Ironically, in the early days of Ukip, we were often accused of being a single issue party, but now we tend to get a single issue media or, to be more precise, a media that can only deal with one issue at a time.

Where this translates into coverage of the crise du jour, as we have seen of late, this creates something of a problem for our single-item media when there is more than one crisis on the go at a time. The hard-pressed journos are often forced to choose their favoured topic and neglect the rest.

There is, however, an alternative stratagem, which is to link different crises so that they merge into a single blob of disruption and despair, even if the causes and impacts are very different.

We've seen something of this recently when the panic buying on fuel was linked to the HGV driver shortage, the pig logjam and a number of other problems, to present an all-singing, all-dancing, multi-purpose crisis with which to keep us entertained, furnishing endless opportunities for speculation and pontification.

Now, it seems to be the turn of energy. As the story matures and journos feel the need to inject new life into a stagnating agenda, there seem to be distinct efforts in some quarters to break out of the constraints of national reporting and to turn this into a global crisis.

A half-hearted and somewhat incoherent attempt at this is being made by the "reliable and trustworthy" US broadcaster CNN, handicapped by the insistence of American writers to describe liquid fuel as "gas", even where the subject matter also covers the real thing.

Despite attempts to stitch together a global dimension, though, in the eyes on CNN, the crisis is a one-dimensional matter of demand increasing as the world economy reopens after Covid, with supply failing to keep up.

Largely, therefore – apart from some local difficulties – the crisis is seen as a price shock, entirely focused on the costs of competing fossil fuel – coal, oil and natural gas - with no mention of the role of renewables (or even nuclear), the impact of the "green" agenda, or geopolitical aspects, such as the interplay between Putin's Russia and the European Union, or China and Australia.

And, although lip service is paid to the global impact, the article is in fact, determinedly US-centric, especially when it explores the interchangeability between oil and natural gas. "Oil has long been there as a potential substitute for natural gas", the broadcaster says, "except until recently, it didn't make any financial sense".

This is because, for much of the past dozen years, natural gas prices have been very low, making switching to oil uneconomical. But, in Europe, "where natural gas prices have gone from below $2 per million BTU last year to as much as $55 this fall", power plants and factories may increasingly turn to a relatively cheaper fuel source for electricity: crude oil.

Thus, we get the Bank of America warning that a cold winter could boost oil demand by half a million barrels per day, lifting Brent crude to $100 a barrel. That in turn "would cause more sticker shock for American drivers because gas prices are priced off Brent crude". Noting the potential confusion between gas and natural gas, this means that a change from gas to oil could mean an increase in the price of petrol.

Only a marginally better job at exploring the energy crisis in its broader geographical dimensions is done by iNews, although this paper's scope falls short of embracing the entire globe.

Instead, it links just four countries as the headline declares: "Germany, China and India join UK in facing energy crisis over gas, oil and coal shortages and soaring prices". "This winter", the narrative runs, "millions of homes around the world will be faced with little to no power as energy such as coal, gas and oil are in alarmingly low supply".

"The continuing crisis in the UK", we are told, "has left some energy companies going bust and homes and businesses struggling to pay soaring costs and bills". China is rationing electricity in some areas – a measure already seen in India, where the situation could become worse as the country's power plants are close to running out of coal.

These disparate events are thus labelled "the power crunch", which is said to be threatening supply chains and "raising questions about whether the move to renewable energy should happen sooner", whence we are treated to a collection of disparate national accounts which, in the UK, lumps in "the petrol crisis, with drivers queueing for hours at the pumps".

Here, I am not sure the narrative works at all, as there are two very different problems at play. The first – the focus of the CNN report – is the price shock, and the second, at the moment confined to China and India, are supply problems. Europe, including the UK, is not suffering shortfalls as yet, and we in the UK are assured that the lights will stay on this winter – if we can afford them – unless France has other ideas.

If electricity shortages are a measure or crisis, though, in addition of China and India, we can look to places such as South Africa where what is euphemistically called "load shedding" is now so common that it doesn't even feature on the international news agenda, even though users are braced for five years of disruption.

Then there is Brazil, where the energy crisis is so acute that the country is facing a widespread shortage of electricity by the end of 2021. As for Venezuela, blackouts have become a normal feature of life, while Cuba is no stranger to periods of enforced darkness. And closer to home, Lebanon has just suffered a national power outage.

Interestingly, the Financial Times doesn't seem to be looking at the "power crunch" in China and India in doom-laden terms relating to global energy supplies. Rather, it sees the local coal shortages in economic terms, warning that there are "casting a pall over Asia's economic prospects and raising the risk that inflationary pressures may ripple through the region".

Thus, despite attempts at linkage, it seems there are no particularly good grounds for turning the "energy crisis" into a global affair. Each problem area arises through a combination of its own specific circumstances, with very little in common with other areas.

For instance, the causes of China's power shortage include: its boycott of Australian coal imports; local governments restricting coal-fired power generation in order to comply with Beijing’s emission targets; slackening of coal-fired generation as the country transitions to renewable energy; and price caps on electricity which mean that demand is unaffected by increasing costs of coal and other inputs.

India, on the other hand, has been experiencing a sharp uptick in power demand as the economy recovers from the Covid-19, which has coincided with a lower than normal stock accumulation by thermal power plants in the April-June period.

This has been exacerbated by continuous rainfall in coal bearing areas in August and September which led to lower production and fewer despatches of coal from coal mines. Then, there has been a consistent move to reduce imports which, coupled with high international prices of coal, has reduced the supply of coal.

None of these issues bear any similarities with the travails being experienced by the UK, or in Europe. This, while the climate zealots would love there to be a global energy crisis to take with them to COP26, it doesn't seem to exist. What we really have is a series of disparate regional crises, with very little in common between them.

The mess we're in, therefore, is our own mess. It is for our own politicians to solve it.

Also published on Turbulent Times.