4 ms·

Why? I don't think one can ever have any certainty in economics...

elzbardico 4y ago
There is an ongoing severe contraction of basic industry, that relies on gas not only as a cheap energy source, but also in the case of fertilizers and other chemicals as an input material. European industrial competitivity requires cheap gas and oil at the moment, salaries are high, the job market is heavily regulated, and there's no way to compete with China and the rest of the world without this. There's no way to come up with the required volumes of LNG to substitute russian gas, there are not enough terminals neither the number of ships for that. And even if there was, LNG shipped from the US or the gulf paid in spot prices is shockingly more expensive than gas transported through pipelines and paid via long term contracts. Due to the situation in Syria, it will take a lot of time to create alternative pipelines coming from the midwest, not to mention the time and capital. And we are not even talking about Siberian Oil (also supplied through pipelines via long-term contracts). Not only transport costs are higher, but changing the oil blend has its own problems, requiring extensive retro-fits on refineries. Green? it takes some time, and also extensive retro-fits on most industries, and does not solve the issue of gas being a material input for a lot of essential chemicals. The supply problems are mind-boggling and difficult, solving them costs a lot of capital and time. The cascading side-effects throughout the whole supply chain can only be superficially understood, the fiscal effects due to the reduced tax income could not come in a worst time, unemployment and bankruptcies are going to play havoc in the derivatives marketing. Things are not simple, whoever says you otherwise is misleaded or misleading. A peaceful solution to conflict must be found, or instead, the NATO needs to be way more aggresive and submit the Russia state by sheer fire power.

There is an ongoing severe contraction of basic industry, that relies on gas not only as a cheap energy source, but also in the case of fertilizers and other chemicals as an input material. European industrial competitivity requires cheap gas and oil at the moment, salaries are high, the job market is heavily regulated, and there's no way to compete with China and the rest of the world without this. There's no way to come up with the required volumes of LNG to substitute russian gas, there are not enough terminals neither the number of ships for that. And even if there was, LNG shipped from the US or the gulf paid in spot prices is shockingly more expensive than gas transported through pipelines and paid via long term contracts. Due to the situation in Syria, it will take a lot of time to create alternative pipelines coming from the midwest, not to mention the time and capital. And we are not even talking about Siberian Oil (also supplied through pipelines via long-term contracts). Not only transport costs are higher, but changing the oil blend has its own problems, requiring extensive retro-fits on refineries. Green? it takes some time, and also extensive retro-fits on most industries, and does not solve the issue of gas being a material input for a lot of essential chemicals. The supply problems are mind-boggling and difficult, solving them costs a lot of capital and time. The cascading side-effects throughout the whole supply chain can only be superficially understood, the fiscal effects due to the reduced tax income could not come in a worst time, unemployment and bankruptcies are going to play havoc in the derivatives marketing. Things are not simple, whoever says you otherwise is misleaded or misleading. A peaceful solution to conflict must be found, or instead, the NATO needs to be way more aggresive and submit the Russia state by sheer fire power.