Tag Archives: energy prices

Gas exports halted by Russia to Poland and Bulgaria sending fuel prices through the roof

Revelations 6:3-4 “when he opened the second seal, I heard the second living creature say, “Come!” 4 And out came another horse, bright red. Its rider was permitted to take peace from the earth, so that people should slay one another, and he was given a great sword.

Important Takeaways:

  • ‘Blackmail’: Russia Shuts off Gas to EU States Poland, Bulgaria, Energy Prices Soar on News
  • The Russian government has halted all gas exports to Poland and Bulgaria after, they say, a deadline passed for the nations to pay for gas in Russian rubles rather than western currency.
  • The European Union has called the suspension of gas deliveries “blackmail”
  • The report further noted that this is not the first time Russia has cut Poland off from gas supplies as a punishment, claiming seven suspensions lasting from a few days to six months over the past 18 years. A notable period of such cuts was during the last Russian invasion of Ukraine in 2014.
  • Germany, the largest importer of Russian gas in Europe, has been the most hesitant to back any halting of gas supplies, with some suggesting the German economy could face a major recession if supplies were cut off.

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Largest Commodity Shock since the 70’s World Bank warns

Economy Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Ukraine war to cause biggest price shock in 50 years – World Bank
  • The war in Ukraine is set to cause the “largest commodity shock” since the 1970s, the World Bank has warned.
  • Energy prices are set to increase more than 50%, pushing up bills for households and businesses, the World Bank says.
  • The biggest rise will be in the price of natural gas in Europe, which is set to more than double in cost. Prices are forecast to fall next year and in 2024, but even then will remain 15% higher than they were last year.
  • Wheat is forecast to increase 42.7% and reach new record highs in dollar terms.
  • 3% for barley, 20% for soybeans and 29.8% for oils and 41.8% for chicken.

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25.9% Largest spike in energy prices since 1949

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • German producer prices jump by record 25.9%
  • The jump in factory gate costs, considered a leading indicator for consumer prices, was the biggest since 1949, the statistics office said.
  • February’s producer prices did not take into account the effects of Russia’s attack on Ukraine.
  • Energy prices were up 68% from February 2021, the statistics office said. Stripping out energy prices, producer prices rose 12.4% year on year.

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As energy prices soar, supply chain snags threaten U.S. oil output gains

By Liz Hampton

DENVER (Reuters) – U.S. oil producers are struggling to find enough crews, vehicles and equipment to take advantage of rising global demand and a seven-year high in crude prices, say executives at oilfield service firms.

The problems are preventing the world’s top oil producer and consumer, the United States, from responding to higher prices and could mean it takes longer for global output to match demand recovering from the coronavirus pandemic. That would result in oil firms draining inventories and in turn contribute to higher prices.

Higher energy prices are fueling consumer inflation, which last month hit 6.2%, the highest in 30 years. The Biden administration has urged oil producers to pump more oil, signaling it might release U.S. emergency stockpiles if prices keep rising.

The drillers and service firms that bring new oil and gas to market are confronting shortages and delays in everything from trucks, electronics, pumps and skilled workers. Workarounds so far have kept a crunch at bay, but shortages are hitting oilfield service results and could short-circuit U.S. production gains early next year, they said.

Logistics snags have cut access to specialized steel, submersible pumps that boost well pressures, and pickups that ferry workers and equipment. U.S. oil production figures show output remains 1.8 million barrels per day (bpd) below the peak reached nearly two years ago while global demand is forecast to exceed pre-pandemic levels by June.

Nearly two-thirds of Texas business executives polled by the Dallas Federal Reserve Bank recently disclosed difficulties getting needed supplies, with nearly half saying problems have become worse. It could take seven to 12 months to ease, said roughly half, with 18% expecting shortages to last more than a year.

‘GETTING WORSE’

“We’ll come to a point where we can’t handle additional work with existing inventory,” said Brad James, chief executive of driller Enterprise Offshore Drilling. “The problems we’re seeing are going to get worse,” he predicted.

Pressure on supplies is not as bad as it might have been because many shale oil producers have pledged to restrain new spending for output and instead use cash generated by high prices to pay dividends and reduce debt.

Oil services firms are struggling, however, even though many producers are standing pat. Requests for some orders to supply oil companies have gone unanswered, said James, and lead-times for certain drilling equipment are so far out that Enterprise has resorted to cannibalizing rigs idled off the Louisiana coast to keep existing rigs running.

“Without significant additional investment, land contract drillers are at their limit with the rigs they can deploy to satisfy the requirements of today’s multiple-well, very long-lateral drilling,” said Richard Spears, vice president of oilfield consultancy Spears & Associates.

Equipment shortages and lengthy delays are driving up prices for what is available. Denver, Colorado-based oil service firm Liberty Oilfield Services took a $12 million hit to third quarter earnings because costs rose faster than it was able to raised prices, its CEO said.

SIX MONTHS FOR A TRUCK

Fredrick Klaveness, CEO of NLB Water LLC, which developed a membrane-driven technology to treat and recycle wastewater from oil and gas production, has been waiting since June for $200,000 worth of orders that have not shipped because suppliers are also waiting on certain components.

“One small piece of the puzzle stops everything,” said Klaveness. If the ordered membrane modules are not received in time, NLB may lose an important contract. “Parts probably worth less than $5,000 are holding up the entire order. Those parts are not microchips or something fancy, but basic components made out of materials like stainless steel and titanium.”

A heavy duty Dodge Ram pickup he ordered in June took five months to arrive, Klaveness said. His workarounds to keep business flowing include buying supplies from Canada and at one point, picking up galvanized steel from several Home Depot stores in Colorado and hauling it to West Texas where it was not available.

RIPPLE EFFECT

The electronic components shortage hurting the auto and computer industry is troubling renewable energy as well as oil and gas. That is affecting companies digitalizing operations and adding renewable power to lower greenhouse gas emissions.

Firms that convert pipeline compressor stations to run on electric motors instead of natural gas are finding parts in short supply, said energy consultant Spears.

Ru Schaefferkoetter, CEO of solar pump firm Trido Solutions, said basic materials such as steel and aluminum can be hard to find. She worries that supplies could get tighter as the Biden administration incentivizes solar development.

President Joe Biden’s Infrastructure Bill, which could be signed into law on Monday, includes funding to upgrade power infrastructure and expand renewable energy through a new Grid Authority.

“There are a growing number of people laid off on solar projects because there are no panels,” said John Berger, CEO of Sunnova, at a recent Kansas City Federal Reserve Conference. An “extreme shortage of electricians,” is another concern, he said.

(Reporting by Liz Hampton in Denver; Editing by Marguerita Choy)

World Bank sees ‘significant’ inflation risk from high energy prices

By Andrea Shalal

WASHINGTON (Reuters) -Energy prices are expected to inch up in 2022 after surging more than 80% in 2021, fueling significant near-term risks to global inflation in many developing countries, the World Bank said in its latest Commodity Markets Outlook on Thursday.

The multilateral development bank said energy prices should start to decline in the second half of 2022 as supply constraints ease, with non-energy prices such as agriculture and metals also expected to ease after strong gains in 2021.

“The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries,” said Ayhan Kose, chief economist and director of the World Bank’s Prospects Group, which produces the Outlook report.

“The sharp rebound in commodity prices is turning out to be more pronounced than previously projected. Recent volatility in prices may complicate policy choices as countries recover from last year’s global recession.”

The International Monetary Fund, in a separate blog, said it expected energy prices to revert to “more normal levels” early next year when heating demand ebbs and supplies adjust. But it warned that uncertainty remained high and small demand shocks could trigger fresh price spikes.

The World Bank noted that some commodity prices rose to or exceeded levels in 2021 not seen since a spike a decade earlier.

Natural gas and coal prices, for instance, reached record highs amid supply constraints and rebounding demand for electricity, although they are expected to decline in 2022 as demand eases and supply improves, the bank said.

It warned that further price spikes could occur in the near-term given current low inventories and persistent supply bottlenecks. Other risk factors included extreme weather events, the uneven COVID-19 recovery and the threat of more outbreaks, along with supply-chain disruptions and environmental policies.

Higher food prices were also driving up food-price inflation and raising questions about food security in several developing countries, it said.

The bank projected crude oil prices would reach $74/bbl in 2022, buoyed by strengthening demand from a projected $70/bbl in 2021, before easing to $65/bbl in 2023.

The use of crude oil as a substitute for natural gas presented a major upside risk to the demand outlook, although higher energy prices may start to weigh on global growth.

The bank forecast a 5% drop in metals prices in 2022 after a 48% increase in 2021. It said agricultural prices were expected to decline modestly next year after jumping 22% this year.

It warned that changing weather patterns due to climate change also posed a growing risk to energy markets, potentially affecting both demand and supply.

It said countries could benefit by accelerating installation of renewable energy sources and by cutting their dependency on fossil fuels.

(Reporting by Andrea Shalal; editing by Diane Craft)