So I hear Europe has energy problems

A friend asked me recently if Europe has energy problems. Yes, I replied, and for a number of reasons. 

Europa on the back of a bull (Zeus)
From Creative Commons

Off the top of my head:

- Everything including electricity, gas, heating oil, and gasoline is overtaxed and therefore expensive.

- Price inflation is happening everywhere in the world including Europe, particularly in those commodities.

- With the recent price inflation, the EU as a whole and each individual country feel the necessity to help the lower income brackets (e.g., students, the unemployed, low income families) with stipends to cover the increased cost of heating oil and electricity along with everything else.

- Given the Climate Change hysteria, there is great pressure to diminish the use of fossil fuels in everything including heating and cars, which puts more pressure on the electric grid.

- Popular sentiment is still very anti-nuclear, and yet Europe, and most particularly France, is extremely advanced in nuclear technology. France has the most energy input from nuclear in the world, I believe, and could be completely energy independent because of it. But the politicians are dismantling them one by one to please the progressives. Macron is currently trying to persuade the country to develop nuclear energy, but it will be an uphill battle. So far he has faced little blowback. (Do you suppose people are beginning to see the problem?)

- Germany has many coal burning plants, but likewise they are dismantling them to please the progressives. The more this happens, the more expensive and rare energy gets. They will soon be beholden to Russia for their natural gas supply.

Europe has little natural gas and refuses to frack (again, for the progressives). Therefore, a number of other countries will be buying more and more of it from Russia. Most of it comes in through two major pipelines, one through Eastern Europe, and a new one coming in under the Baltic. The US has been trying to stop that pipeline, but obviously Europe doesn’t want to stop it and so they have been kowtowing to Russia. The US was providing lots of natural gas for the past few years, but Biden, by stopping the pipeline construction, has indirectly stopped that.

- The wind mills and solar panels are beginning to irritate the locals, e.g., in the North Sea where it disturbs the fisheries, and across the countryside that is still very populated. Plus these types of energy are really not economical and will not solve the energy needs.

So you think they have problems?

France: Perhaps the Real Canary in the Coal Mine?

I'm living in France at the moment, so what happens here is particularly interesting to me.  The ambiance is a mix of anxiety about the future and cautious hope that things can't be as bad as they seem.

John Mauldin, whose weekly e-mail newsletter is one of my must-reads, puts his finger on the European situation in this week's Thoughts From the Front Line.

A healthy Europe is vital to the future of the U.S., in the sense that our current state of dreamy optimism is fragile.  Our self-confidence is dependent upon things progressing smoothly in other parts of the world, and the slightest hiccup, whether at home or "over there," can have a ripple effect.

John has another column from last year that explains this fragility nicely.  It has to do with complexity theory.  Read here.

But for the Grace of the Almighty Dollar Go We

Anyone who has been watching this European fiasco play itself out might get a kick out of this little cartoon I did today. (Click on the various images until you get the largest size you like.)