Heat waves are only a preview of crisis to come
Stay cool, New Yorkers! (And protect your iPhones. If you're hot, they're hot.) As London cools off after a record-breaking heat wave, New York is sweating in humid temperatures in the mid-90s — and may reach new temperature highs, too. But while the heat waves have reminded everyone, rightfully, of the growing danger of unabated climate breakdown, political leaders are also worrying about what happens this winter, when we're all likely to be shivering in cold homes in order to conserve energy.
It's the "nonsynchronous logic of 2022," as Andreas Kluth calls it. For example, Robert Habeck, Germany's energy and commerce minister, wants to get rid of coal but is currently having to fire up dirty coal power plants to get through the winter. The alternative — power outages and a potentially huge recession — doesn't feel like much of an option. Electricity prices in Germany have already rocketed, and Vladimir Putin could make things a lot worse, very quickly:
Meanwhile, oil could also soon pose more problems for the global economy.
For years, there's been no real clue as to Saudi Arabia's hard oil production ceiling. Well, Crown Prince Mohammed bin Salman just casually dropped a bombshell: He announced an increase in production capacity to 13 million barrels per day, "after which the kingdom will not have any additional capacity to increase production."
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That's a lot lower than everyone thought it would be and, as you can see, daily production levels are kinda close to that already:
It's an issue because, despite talk about peak oil demand and the burning need to move away from fossil fuels, oil consumption is still growing:
Javier Blas explains that with a hard limit now set, oil demand will have to peak — because there won't be additional supply. Ultimately, there are only two routes to that outcome: "Voluntarily, by shifting to low-carbon sources of energy such as nuclear power or wind; or by compulsion, via much higher oil prices, faster inflation and slower economic growth." That first path seems a lot more desirable, if we can make it happen quickly enough.
In order to prepare for the coming winter (and beyond: Javier writes that the gas market is flashing danger well through 2023 and into 2024), it's crucial that energy stockpiles are conserved now. Only a couple of politicians — Emmanuel Macron of France and Olaf Scholz of Germany — seem to have fully grasped the magnitude of the coming crisis and its costs.
In his plea to France, Macron sold energy reduction as a joint response to the two biggest challenges facing the continent: the war in Ukraine and the climate crisis. Maria Tadeo believes that — alongside placing the blame squarely on Putin — is the right tone.
But, in order to have the best shot at making it through the winter, the European Union is going to have to work together by cutting demand and sharing what little gas they do have. The European Commission floated a logical plan for an initially voluntary 15% cut in natural gas use by member states, but Lionel Laurent warns this could erode unity rather than strengthen it.
That's because reliance on Russian gas varies greatly by country. Spanish Energy Minister Teresa Ribera has already rejected the plans, saying: "Contrary to other countries, Spain hasn't been living beyond its means in energy terms." The situation is reminiscent of the euro-zone debt crisis, except this time it is the Mediterranean nations unwilling to throw Germany a bone.
Lara Williams is a social media editor for Bloomberg Opinion. @lararhiannonw
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.
