Energy Security

[Dayuhan]

My worry is that the NATO allies might not uphold their obligation if Putin turns their gas off.

Putin can't cut the gas off. He needs the money. At this point Putin is just as concerned with overdependence on Europe as a buyer as Europe is with overdependence on Russia as a seller.

Russia is dependent on pipelines for exports. That makes them vulnerable: a pipeline is not a tanker; it can't be diverted to another destination. It only goes to one place, which means Putin sells to Europe or to nobody. He can't sell to nobody, because his government depends almost entirely on energy revenue. Europe would hurt if the energy trade with Russia stops, but Russia will hurt more.

The Russians are pursuing new pipelines that will allow them to send more gas and oil to Asia, but it will be years before they are ready. Europe will probably be able to diversify supply faster than Russia can develop new outlets, but for now, Russia and Europe are stuck with each other.

[Maeda Toshiie]

Putin can't cut the gas off. He needs the money. At this point Putin is just as concerned with overdependence on Europe as a buyer as Europe is with overdependence on Russia as a seller.

Russia is dependent on pipelines for exports. That makes them vulnerable: a pipeline is not a tanker; it can't be diverted to another destination. It only goes to one place, which means Putin sells to Europe or to nobody. He can't sell to nobody, because his government depends almost entirely on energy revenue. Europe would hurt if the energy trade with Russia stops, but Russia will hurt more.

The Russians are pursuing new pipelines that will allow them to send more gas and oil to Asia, but it will be years before they are ready. Europe will probably be able to diversify supply faster than Russia can develop new outlets, but for now, Russia and Europe are stuck with each other.

I don't really want to derail this thread into one on energy, but there are claims that the US can replace Russia with gas from fracking to supply Europe. Do calculations actually bear out? (If this has been discussed before, link(s) to relevant thread(s) is/are appreciated)

[davidbfpo]

Maeda asked:

I don't really want to derail this thread into one on energy, but there are claims that the US can replace Russia with gas from fracking to supply Europe. Do calculations actually bear out? (If this has been discussed before, link(s) to relevant thread(s) is/are appreciated)

I thought Firn (our resident economics guru) had posted on this, but a search found fracking has been mentioned - though not an answer to your question.

What I have read elsewhere suggests that there is no capacity in the USA to export such amounts as Europe would require, nor the capacity to bring it ashore either.

There are threads on Energy Security and the economic aspects of the Ukrainian crisis, which have various posts on European reliance on Russian gas supplies.

[Dayuhan]

I don't really want to derail this thread into one on energy, but there are claims that the US can replace Russia with gas from fracking to supply Europe. Do calculations actually bear out? (If this has been discussed before, link(s) to relevant thread(s) is/are appreciated)

Simple answer: no. There is a surplus, but it's not that large, and the US has no gas export facilities. There are several under construction but their output is already committed to Asian buyers (prices in Asia are much higher).

The real impact of US gas independence on Europe is in displacement: as the US becomes self sufficient, the considerable amount of gas that the US used to import becomes available for others, like Europe, to buy. Again, though, this is tanker-transported LNG, and Europe would need to build more regasification terminals in order to exploit it. Just as Russia needs to invest time and money in infrastructure in order to redirect its current European exports to Asia, Europe needs time and money to build the infrastructure to replace pipeline-delivered Russian gas and oil with tanker-delivered imports from other sources.

Not meaning to turn it into an energy thread, but the energy relationship is an integral part of EU-Russian relations and it's always going to be part of the discussion.

[Rick M]

"the considerable amount of gas that the US used to import becomes available for others"

Not really, for the same reasons that you gave re. inability of US to export its gas surplus overseas.
USA gas imports come almost exclusively from Canada via pipeline. These volumes have decreased during the past 8 years as US shale gas has swamped their market.

Continentally, there is a surplus, but Canada is no better equipped than USA to export large volumes of gas or oil overseas.

Returning to the issue of Russian leverage re. oil & gas 'weapon' I believe that Russia is better positioned to bear the pain of reduced exports than Ukraine, etc are able to cope with constricted supplies, esp. re. gas during the 4 winter months (Dec. 1 -March 31st). My guess is that Ukrainians are very worried about their ability to stay warm this winter.

[Firn]

Ulenspiegel and I discussed the issue of coal vs NG before. To some extent the European LNG terminals are already there as simple container ports which handle goal.





Some companies want already to reduce the competivness of coal.

A shale boom in the U.S. led to a collapse in gas prices that’s helped consumers and stimulated industries, forcing cheaper, more-polluting coal to be shipped to Europe for use in power stations. The U.S. doesn’t have environmental obligations placed on companies, unlike in Europe, where staying competitive is a concern.

[Firn]

....those container ports handle of course coal, not goals.

I have followed intermittentdly the market for electric vehicles of all sort. As written before in quantitative terms of electric bike demand, pedal-assisted or not, China is absolutely dominating the world market The growth there has been spectacular, aided in part by laws aimed at curbing the massive emission problem in Chinese cities.

In Vietnam eBikes have greatly increased their market share, by the looks and the facts.

You’d have to be living under a rock not to notice the rising number of electric bicycles now zipping their way around Vietnam’s bustling streets, particularly in Hanoi. With the post-Tet buying stampede now in full flow, bike dealers are lining the pavements with the latest imports from around Asia. What follows is the inside word on the e-bike craze.

Everybody who has been recently in the region knows that bikes with ICE keep a large part of it's economy moving. Gas is relatively expensive which can be observed by the special type of tank used there. Quite a few people take it home so that nobody gets any strange ideas

On average, one electric bike rider who commute urban distance is estimated to pay only 50,000 Vietnamese dong (nearly 2.4 U.S. dollars) more in their monthly electricity bill.

Meanwhile, a scooter will cost around 500,000 Vietnamese dong ( 24 U.S. dollars).

...


In a recent interview with online newspaper VTC News, Nguyen Trong Thai, chief of the National Traffic Safety Committee, said that the number of electric bikes in Vietnam increased sharply in 2013 and 2014.

With IIRC around 80% of the world's production of motorbikes going to Asia trends there will have a huge impact on the global market.

[Firn]

As one can see to some degree from my recent posts I became interested into electric mobility both from a technological point and in relations to the topic of 'energy security'. I also had a blast on ebike tours, so in that case the theoretical research was matched by practical experience.

e-mobility is increasingly making inroads into fields formerly occupied by ICE*, think bikes or drones, transforming them considerably in some cases. So while an electric scooter substitutes almost perfectly an ICE one a modern pedelec is a new, far lighter hybrid form. Arguably the biggest hurdle for many applications of e-mobility, for example larger vehicles are the weight and cost of the battery. Nobody knows how quickly the technology will progress
but it is good to take the past trends into account:





Still a very long way to go to achieve density parity, even if in other areas of the powertrain electric vehicles weight considerably less.



The Price per Watt has also gone down considerably. I'm not that sure about the break-even point of the total ownership costs but it gives a good perspective.



Once again the past development is no (sure) guide for the future but it offers a perspective on the present. Today the research into battery technology is a massive topic because there is just so much of importance which gets powered by them. The economies of scales in some industries are truly gigantic with knock-off effects into smaller fields. For example small drone technology was driven to a large extent by the increasingly more capable cheaper and smaller sensors employed by smartphones. In the case of batteries the tech spread was so far quicker and wider.

*internal combustion engine

[Dayuhan]

Ulenspiegel and I discussed the issue of coal vs NG before. To some extent the European LNG terminals are already there as simple container ports which handle coal.

Container ports don't handle coal, they handle containers. Coal would move through a bulk cargo terminal, which uses very different equipment. Coal ports are typically specialized and associated with specific power plants.

The days when a port was a port are long gone... the basic need to bring ship into proximity with shore remains, but the infrastructure for handling different cargo is very different. A good example is the US and its gas terminals. The US has a number of regasifacation terminals, which are designed to receive LNG, convert it back to gas, and feed it into a distribution grid. As the US no longer imports gas, these facilities are largely useless. The US cannot export gas at this time because despite a surplus of gas, none of the terminals are equipped with the infrastructure needed to liquify gas and load it onto ships. They can take it off, but they can't put it on. The industrial plant required for liquification is completely different from that used for regasification.

Gas import or export facilities are single-purpose dedicated installations that require large investments of time and money to build. They cannot be flipped from one purpose to another, something which is occasionally overlooked in discussions.

[Firn]

Container ports don't handle coal, they handle containers. Coal would move through a bulk cargo terminal, which uses very different equipment. Coal ports are typically specialized and associated with specific power plants.

....

Gas import or export facilities are single-purpose dedicated installations that require large investments of time and money to build. They cannot be flipped from one purpose to another, something which is occasionally overlooked in discussions.

Thanks for catching that error, what was I thinking? As I stated before coal imports can substitute natural gas imports and indeed they do to some degree. Obviously in the short-term is limited by the existing infrastructure along along chain, but it is very important to state the obvious, as I often do. Things get more elastic with time of course...



Demand:





Supply:








Of course part of those coal imports are, especially in the eastern European countries, from the same sources as the NG and oil....