Gas crisis in Europe

In fact, after at the end of last week, gas prices in European markets, after a completely wild volatility, returned to, albeit still prohibitively high, but already seemingly more or less acceptable level of about $ 1000 per 1000 cubic meters of blue fuel according to the index Dutch TTF and remained at about this level - plus or minus - on Monday, only slightly grew up, it seems to us it's time to finally calm down a little and talk about what is happening in earnest.

Without hysterics about both the "Russian trace" and the "Anglo-Saxon conspiracy."

Because the main question now is not even how much the current energy imbalance is manageable and how much the world is now balancing on the brink of not just a global energy deficit, but a full-fledged systemic economic crisis.

The main question is different: what about the vaunted market mechanisms, including numerous forecasting institutions and the exchange trade that regulates everything in general, could not pay attention to the emerging (and more than one day, by the way) global energy imbalance?

Was it impossible to predict explosive economic growth amid the post-like recovery in Southeast Asian markets?

Or was it difficult for someone to add two plus two about the results of the green cutting of atomic and partially coal generation in the countries of Old Europe?

And add to it a sharp drop in its own production?

As well as the fact that any restrictions in the economy, including post-epidemiological ones, come to an end sooner or later and this causes a rapid growth in demand for energy resources ?!

Tell me what an epoch-making discovery, the right word ...

What can I say here: yes, something similar, albeit on a smaller scale, but also quite indicative, has already happened when, before the 2008 crisis, American mortgage companies had the highest ratings of reliability.

And this is just before the collapse of the mortgage bubble.

Then this, of course, with a wink, was explained by an almost random fluctuation.

Like, well, you understand everything.

But to us, after all, from the high tribunes, they still prove with a high degree of persuasiveness that the market always easily regulates such and such issues.

And especially at the level of raw materials - this is where the task is not even for a student, but for a high school student.

It is very easy to count, right word, just physical volumes.

But the market just somehow adjusted it in the wrong direction and calculated it a little wrong.

Even Russian President Vladimir Putin had to, in the usual manual mode, reduce these market European gas prices directly from his Kremlin cabinet in the middle of last week in the most administrative command way and reduce them.

And yes, it was beautiful.

But believe me, even the successful Putin intervention left too many questions, first of all, to the very market mechanisms.

For they, of course, can be theoretically as perfect and ideal as they like, like a democratic horse in a vacuum.

But if they suddenly, no matter for what reasons, stop working, then they are no longer mechanisms, but, excuse me, just some kind of garbage.

Ordinary non-working rubbish, historical rubbish, with which something must be dealt with rather quickly: either repair this market structure, regardless of costs, including those of a moral and ethical nature.

Or throw it out and move on, realizing that there is less one more “sacred market cow” left in the world.

And yes, this world is really getting uncomfortable enough.

But we still need to be able to live in it.

However, let's go in order. Let us remind you that in the last autumn weeks, the European gas market is not just in a fever, but, excuse the slang, is already shaking up in the most natural way. Just note that if at the beginning of August, futures for the supply of fuel were trading slightly above $ 500 (which is also not very cheap for Europe), then by the end of September they more than doubled in price. Well, last week, November futures on the Dutch TTF index (recall, the most liquid European hub) on the exchange recorded a historic maximum - $ 1937 per 1,000 cubic meters. Then, after Putin's speech at a meeting on energy in Moscow, at which we focused a little higher, there was a so-called rollback: prices fell almost twice - below $ 1000. Then they began to slowly grow again: a phenomenon now,against the background of the turbulence that has not disappeared, it is rather natural - the imbalance between spot prices for LNG in Europe and Southeast Asia has not gone anywhere.

But this, too, is still, alas, not all.

Towards the end of last week, Bank of America experts quite sarcastically noted that, despite the spread of the pages of all world media outlets about Putin's possible increase in supplies, the global gas market continues to experience a shortage, and not only in Europe.

And this is quite natural: for many reasons, the volumes on the gas markets of Europe are simply not compensated for by the Russian Gazprom.

Even in spite of the possibility of increasing production, it should be remembered that this process is at least inertial, it cannot be solved in one day or even in one month, which means that it is still very far from the recovery from the crisis.

Even if the recently completed Nord Stream 2 gas pipeline is certified quickly enough, these volumes will still not be enough to meet European demand.

That is, it will probably be possible to extinguish the acute phase, but, judging by the current trends, the certified Nord Stream 2 will not help to solve the problem at a fundamental level, judging by the current trends. And this will additionally mean a certain regional split. It is no coincidence that the European Commission started talking about consolidated gas purchases, which in the context of a scarce market raises only one question: at whose expense, excuse me, are the people going to the banquet? If at the expense of the Germans or, say, the Hungarians, then, apparently, they somehow do not quite agree.

Just as an example: it is very successful here on October 8, on Friday, Gazprom updated its forecast for the average price of its gas exports in 2021 to the European non-CIS countries from $ 270 to $ 295-330 per 1,000 cubic meters.

And these are exactly the prices at which (plus or minus, of course) those European consumers who are worried about these long contracts will receive gas under long contracts, through the oil price formula with correlated amendments to the exchange - a little expensive, of course, especially in comparison with last year.

But compare with the Dutch TTF prices and you can feel the difference.

But this is not only warmth in the houses of burghers, it is the energy component of European industry, which now, if it wants to remain competitive, will simply have to learn to live in conditions of a large energy imbalance.

And he will learn, there is no doubt about it.

We doubt it will be easy though.

But a crisis is always a very good teacher, but we are still slowly getting involved in it, and, apparently, systemic upheavals cannot be avoided.

And the question here is precisely how much controllability of these processes can be maintained.

It is in the world of "big oil", thank God, that there are sane international regulatory mechanisms, such as OPEC +, which are now successfully proving their rather high efficiency.

Unfortunately, it was not possible to create a gas OPEC, the idea of ​​which was recently proposed by Russia.

And the mechanisms of civilized exchange trading just drove the spot markets into the very interesting position in which they are now.

Yes, they do not like it very actively there.

But blaming the Russians for what is happening is not just ridiculous, but in the current circumstances, it is somewhat counterproductive: Russians already sacredly fulfill all existing contracts.

And if you ask them to increase supplies, then, believe me, this is done a little differently.

But let us emphasize again: this is not the main thing in what is happening.

The gas crisis in Europe, which began as a rather local and not very important phenomenon, besides, it is also ideological, associated with the opposition to the "undemocratic Russian gas", unexpectedly became a trigger to launch very serious processes.

Which, at best, will lead to what the smart books call "a situation of great uncertainty", at least in the real sector of the economy.

First in the energy sector, then in almost the entire lineup in the markets for goods and services: it is naive to assume that the cost of energy will not be reflected on store shelves and on the wallets of ordinary people, with all that is called, arising.

In a word, we seem to have quite funny times ahead.

And in these times it will be very interesting, although, most likely, quite anxious to live.

The point of view of the author may not coincide with the position of the editorial board.