Russian Gas Trap! Europe’s Energy Crisis! | Peter Zeihan

Russian Gas Trap! Europe’s Energy Crisis! | Peter Zeihan

In this insightful analysis, we delve into the complex interplay of environmental policy, energy dependency, and geopolitical shifts impacting Europe’s energy landscape and global agricultural systems. The video explores the consequences of Europe’s shift from nuclear to coal and natural gas, highlighting the German Greens’ role in this transition and its broader implications on environmental progress. We examine the intricate dynamics of Europe’s reliance on Russian natural gas, the challenges of adopting renewable energy sources, and the unforeseen outcomes of dismantling nuclear power plants.

Furthermore, the discussion extends to the alarming ramifications of Russia’s actions on global wheat supply, detailing how Russia’s invasion of Ukraine, both significant wheat exporters, could precipitate a dire food crisis. The video underscores the critical shortage of essential fertilizers due to the war and its potential to trigger widespread famine and agricultural turmoil worldwide.

This comprehensive analysis not only sheds light on the immediate energy and food security concerns but also prompts a reevaluation of global environmental and agricultural strategies in the face of geopolitical tensions and resource scarcity.
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The truth is definitely somewhere in between and if you’re looking for someone to blame I mean if you’re if if that’s what you’re after here uh it’s definitely the German greens uh because they decided that coal was better for the environment than uh nuclear power uh

They they saw it from a nuclear waste point of view rather than a a carbon emission point of view so there are a number of countries in Europe that followed the greens and started dismantling the nuclear power plants which meant that they had to use something and natural gas from Russia

Was the cheap of the options available that wasn’t coal of course the Germans did coal as well uh so yeah we are looking at an un a massive unwinding of ESG issues in boardrooms across Europe and a massive unwinding of environmental progress in general uh Europe is neither

A very sunny nor a very windy place and so they can build all the Sun the turbines they want and they put in all the solar panels they want but in most parts of Europe especially the northern part that is wealthy the only way they’ve been able

To bridge the Gap is with Russian natural gas and now that’s gone so they’re going to try to build more solar and wind and they’re going to realize very quickly that that really isn’t going to solve the problem in most places uh they’re going to try to bring

In LNG from other parts of the world but every shuttle tanker of LG that they take in is one that’s not going somewhere else so somebody has to be left-handed holding the bag it’ll probably be the East Asians and then they’re going to make up the difference

With coal which the Germans have a very big head start on because they already get about a quarter of their fuel from something that’s called lignite which is a soft Brown coal that’s 20% water it is actually more carbon intensive and less energy intensive or and generates less

Energy than wood uh but that’s what they have so we’re we’re going to see a lot of what we thought of his progress uh towards green goals just being Unwound violently over the course of the next several months because the alternative is to have no electricity and that is

Not a viable option well this this is the horrific part if if the energy induced depression didn’t get you down this well all right the last time the Russians interfered with exports from the former Soviet Union it was 20110 and they had had a bad Harvest and a drought

And a lot of fires in Western Siberia where they grow a fair amount of their wheat so they blocked exports for a couple of months that drove Global wheat prices up by a factor of two remember food especially base Commodities like wheat have inelastic demand so it

Doesn’t take much of a disruption in Supply to make prices go bonkers in their primary export markets which are the Middle East prices tripled and that triggered the series of coups and revolts and wars that we now come to know as the Syrian Civil War and the Arab Spring so small amount disrupted

Prices tripled in the Middle East doubled globally big deal we we’re still feeling the effects of that oh this is gonna be so much worse so Russia is the world’s largest wheat exporter and most of their wheat is exported via Novar rois the port that can’t be accessed

Right now and Russia the world’s largest wheat exporter has invaded Ukraine the world’s fifth largest wheat exporter and they are making a drive for the city of adessa which is where the Iranians offload all of their wheat so we’re looking at two of the top five maybe not Vanishing well Ukraine’s Vanishing from

The market Ukraine’s going to be a net importer this year they can’t plant anymore uh but a lot of the Russian production is not going to be able to make it to the global market only if they can rail it to you can you still get it so Iran’s probably okay there’s

Going to be a little bit more maybe going to China and that’s everybody everyone else who replied upon Russian wheat you’re you’re just out of luck and if you played Oni on you’re creating wheat it’s just gone and it’s not coming back this decade that’s all piece one that’s just piece

One we had a phosphate and a nitrogen fertilizer shortage globally when this all started you need natural gas to make nitrogen the European fertilizer manufacturer have already suspended most of their nitrogen fertilizer production because of what’s going on with the Ukraine war and the cost is already it’s

I believe today we’re at $60 per thousand cubic feet in uh in Europe for natural gas versus the United States which is like four and a half so you know there’s no way you can be viable making thatan at that prices and that’s without sanctions and 40% of the world’s

Poach comes from either Russia or bellarus so we now also have a Poes shortage because they can’t get that to Market so all three of the primary components that go into all fertilizers are in shortage globally it takes a minimum of three years to build out the physical

Infrastructure to to bring a new phosphate excuse me to bring a yeah a new phosphate or nitrogen facility online and probably closer to 10 years to get the mine and the mill sit situation in place for potach so this this isn’t a one-year issue this is a

Multi-year issue and we’re going to have a lot of countries around the world particularly on the poorer side that just aren’t going to be able to use fertilizer this year which which means their yields will CR crash the number one importer of Russian fertilizer is Brazil That’s the world’s second largest

Agricultural exporter so at a minimum we’re going to see the prices for their output going up stratospherically this is more than enough to trigger a multi-content famine that starts probably in the third or fourth quarter of this year and then just doesn’t let up for quite some time

Well again let me start with the caveat uh not that I don’t follow this stuff but there’s a lot of other things that go into agricultural Supply chains assuming that the only disruption we have to deal with is what’s going on in China with phosphate which is a separate

Story and what’s going on with potash in the former Soviet Union and what’s going on with nitrogen because of natural gas prices let’s assume that there are no other factors that play into this we probably only have enough fertilizer that’s going to get out there to support a population about six

Billion so that means we’re looking at two billion people entering chronic Mal nutrition over the course of the next 18 months probably uh one of the things we’re going to see is when people realize that they can’t just export Widgets or iron or and then import wheat

Because there’s not enough of it they’re going to have to grow it themselves now luckily wheat is a weed it is very easy to cultivate it grows in a wide variety of climates and under globalization where everyone goes after whatever bit they can earn the most money for wheat

Has been pushed to the margins so you can go into a place like Algeria and grow more wheat and rip up some of your Orchards for example you won’t get as much bang for your buck in terms of income but your people won’t starve that way we’re going to see that

Happen across Africa across Latin America across uh East and Southeast Asia because they’re not going to have much of a choice so either we have two million people in malnutrition or we we have maybe I’m sorry two billion people or we have maybe closer to a billion people in

Malnutrition and the collapse of the global agricultural system that brings us out of season blueberries and avocados uh or somewhere in between uh we are definitely entering a period where it’s going to be a very rough sledding in places like subsaharan Africa and South Asia because they are

The world’s most countries that are the world’s sorry they are the parts of the world that is most dependent either on Direct food imports or on the Imports of the fertilizers that allow them to grow most of the food themselves uh I would actually toss China into that

Bucket as well they’re probably at like an 80% import dependency upon the inputs that allow them to keep the Chinese population alive uh there there’s definitely some parallels to draw upon but let me kind of put that in context so the the primary problem we had in 2007 to 2008

Was that the China boom was huge uh it was just gobbling up any resources they could and American subprime was generating uh an artificial inflation of demand if you will in the United States at the same time that the Iraq War uh was keeping oil off the market in

Venezuela was early in its National Suicide so we had oil prices between 100 and 150 for a prolonged period of time that would contribut to the financial crisis obviously you don’t use oil to make fertilizer uh and in a lot of places natural gas is indexed to oil

Because a lot of times they’re co-produced but they are different Commodities so natural gas was drug up with oil because of that linkage into 2008 and that definitely contribute to a fertilizer problem um but even at its peak in the United States uh natural gas never breached

Seven now in the United States right now courtesy of the shell Revolution we have a lot of excess natural gas that we’ve been gobbling up in the years since we went to six at the end of last year right now we’re below five still I don’t think we’re going to go above seven

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