I did not realise that Russia has such leverage on natural gas relative to oil:
> Russia’s oil sales are 30% of the country’s revenues, but the gas market is only 6% of the state’s budget. A total loss of Russian volumes into Europe would be catastrophic. As in - industrial shutdowns, blackouts, hypothermia catastrophic.
> The one-sided balance of power with respect to natural gas leads us to expect that Europe will not sanction gas, but Russia will hold its volumes as a sword of Damocles over the continent to extract maximum value from its position. Just like it did last Monday.
That's certainly illuminating, and, from the point of view of geopolitical mercantilism, alarming!
The German natural gas dependency is going to be the strategic blunder of the decade, though there is an argument that it was done in part because Germany believed that strong trade ties were a good impediment to war.
What it does distinctly reveal is that ultimately there's no reasonable negotiations with dictatorships: if the other party can't be easily replaced internally due to outcomes for their people, then you don't have the leverage you think you do.
The lesson here should be globally that we should start to expect the same thing from China: Xi's position is too unassailable right now to think that things can't get substantially worse before he'd be in any real danger of being replaced.
There was a frightfully insightful recent twitter thread making rounds, saying that extractive industries are perfect to be headed/owned by mob bosses, because the more complex the industry the more leverage the technical employees have. I.e. in extractive industries they have close to none, in manufacturing they have a solid measure of respect, while in tech industries they get to dictate the culture of the company.
Which means a mob leadership (we're not pretending anymore Russia doesn't have one of those, right?) will favor extractive industries over everything else, not just because they're much easier to own and exploit, but because allowing other types of companies to grow creates power centers outside of their control. They actively prefer to outsource services abroad, even if they are more expensive and create reliance on foreign partners.
Which means Germany's bet was wrong on two counts:
1. It propped exactly the kind of industries where the money goes in mob's pockets
2. It was unnecessary, because Russia was making itself incredibly vulnerable to sanctions all by itself by avoiding to develop anything more complex than a well or a mine (normally I'd say defense excluded, but seeing the quality of their current armed forces, it's more like an argument that even defense is included).
The natural question here is if the blunder is an honest mistake... but honest mistakes and motivated reasoning go suspiciously well together, and by all accounts the German elites more than occasionally gained from trade with Russia.
Sure that's true for any nation having huge stock of natural resources (i.e Nigeria, UAE). But still, the west wants cheap oil and other resources. Mistake is perhaps, from the power play perspective, not to have tighter relationship with the government.
Sadly, regular people always suffer in these kind of situations...
I'm impressed, for once the label "frightfully insightful" was, if anything, under-selling the linked content. Fascinating, thanks for mentioning it :)
> The German natural gas dependency is going to be the strategic blunder of the decade, though there is an argument that it was done in part because Germany believed that strong trade ties were a good impediment to war.
It worked; Germany is unwilling to wage war upon a trading partner its developed a dependency on.
The problem is Russia didn't develop a dependency on outside trade, so it's less concerned about maintaining trade.
I believe one could make a compelling argument that Russians themselves are more prepared to endure hardship for politico-economic reasons. They're just so used to it...
I am not sure it is a matter of being "prepared" to suffer rather than a defeatist cultural attitude about the ability to effect change. It's not hard to understand where that attitude comes from: for the past century, any hint of dissention was rapidly repaid with a one way ticket to a gulag in one form or another. This isn't to say that e.g. there isn't genuine support for the regime; there certainly is, but there's also low inclination toward the kind of activism that changes hearts and minds, and consequently state propaganda has an outsize influence on political opinions.
Meanwhile in the West, we are of the belief that if we complain loudly enough about things, they will get better. That attitude is correct a surprisingly large amount of the time!
So next time you want to complain about people complaining about stuff that complaining about won't fix, remember it's (usually) a good thing that we're culturally wired to be difficult to please.
....And yet, there are still thousands and thousands of people protesting this war in Russia. Despite knowing that they will almost certainly be arrested, and may never again see the light of day.
Yeah, I think that's a fair assessment. The value that Russian civic culture places on protests, demonstrations and complaints of all kinds is, as you say, rather different.
Hard for me to say. But my point was this: where a Western government would be seriously imperiled by so much as inconveniencing its consumers in a substantial way for a prolonged period, that is certainly not true in Russia.
Yeah. It's important to remember that Mao killed between 15 and 55 million of his own people during the GLF and he still managed to claw his way back to power with the Cultural Revolution a few years later.
This is not specific to Mao. Even in democracies, the people often vote against their own interests or often compromise on fundamentally important issues for the sake of luxury beliefs or in-group approval.
Russia has no way of winning this conflict. Their military is facing huge losses (increasing their demographic problems), there is no way they can keep Ukraine occupied and they have given up on regime change. The Russian economy is in shambles because of the sanctions (which hit a lot harder because of strong ties with western markets) and will never recover. Europe has accelerated its departure from fossil fuels.
Putin has fired some generals and placed the head of the FSB's foreign intelligence branch under house arrest.
How can this be seen other then a total strategic blunder of Putin? Do you really think Xi is looking at this mess and be like "Yeah, give me one of those, too."?
I would like to be as optimistic as you but this seems contrary to the article and the comments in that thread suggesting the sanctions on oil still have not shown their effects, and it has just started to make Europe question its Gas dependency. Departure will take at least a decade if chosen. As stated until then Europe will not be able to really sanction Russia.
That is if you see sanctions as an all or nothing approach. For Europe the approach will have to be to reduce consumption step by step. This is not as glorious as stopping all imports in one day, but it will hurt Russia nevertheless.
Also this process already started before the current crisis. In Germany heat pump sales have been exploding : https://www.waermepumpe.de/fileadmin/_processed_/2/4/csm_Dia... . In Norway the share of electric cars in new cars is at 85% and 16% of the existing fleet is already electric. This starts to become visible in oil consumption for traffic as well: https://www.ssb.no/en/energi-og-industri/olje-og-gass/statis... (although the economic recovery after Covid masks this somewhat).
In all of Europe 10% of all new cars are electric and that share will increase fast.
The article only looks at the supply side of things, but long term the more important part is demand.
These changes won't effect the outcome of the current crisis, but for Russia the coming decade will show what foolish decision this invasion was and future leaders will hopefully think twice about destroying their own country.
> The German natural gas dependency is going to be the strategic blunder of the decade
This has been a problem for decades, plural:
> The year: 1987. The president: Ronald Reagan. The dilemma: What to do about the new gas pipeline that Europe was building to Russia, one of America’s key foreign policy rivals. Blinken’s first book, Ally Versus Ally: America, Europe, and the Siberian Pipeline Crisis, was published by a then-unknown young writer in 1987. But the dilemma it explores bears remarkable similarities to the challenges the Biden administration is about to face when it takes office. In fact, looking at Blinken’s analysis of U.S. foreign policy during the 1980s provides some tantalizing clues as to how he plans to guide American diplomacy if he is confirmed as Biden’s secretary of state.
> The “Siberian pipeline crisis” that formed the subject of Ally Versus Ally has been forgotten by all but specialists.
Yeah, I would agree with that. In my limited observational capacity as a Russian, I would also add that Western notions of Putin being toppled in a popular coup are, while adorable, profoundly facile; the repressive capacity of an autocratic siloviki state is greatly underestimated in this fairy tale. You ain't seen _nothin_ yet.
Whenever I have seen the analysts making hypothesis about a possible coup in Russia, it always was not a popular coup but a 'palace coup' or one orchestrated by some part of siloviki. Popular protests can prevent the state from taking some action, but a full coup seems unlikely, as you state.
Putin until now had managed to carefully play the Russian opinion to be mostly favorable to him, and I just don't see how this can possibly continue once the reality of what is currently happening in Ukraine to their friends and family filters through the propaganda. His own glorification of WW2 over the last decades is going to play against him here, as the pictures of bombed cities are going to raise immediate associations putting in question just who are the real "Nazis" here.
This leaves the repressive option... but this would require levels of repression not seen since Stalin, and we're living in a completely different mediatic landscape.
No way that this doesn't end up in a revolution.
Nor I believe that attempts of going full North Korea with almost completely cut off media and communications would be accepted by the population, or even feasible in practice.
The only thing going for Putin is the indiscriminate nature of economic sanctions, strengthening his "the West wants to destroy Russia" line.
> No way that this doesn't end up in a revolution.
I think you grossly underestimate the sophistication of autocracies, both in their repressive capacity and in their ability to effectively BS their people about the causes of their misery.
Yeah, there's going to be some technoratti in the cities that tune into Western news via VPNs and Telegram or whatever. Who cares? They don't have much say in the setup of modern Russia, or most petro-states.
I agree that's there's no chance of a popular coup anytime soon. Russian intelligence services were able to influence the results of the US election just by buying Facebook ads, leaking hacked DNC emails to WikiLeaks and funding a few extremist voices. Now imagine what they could do by controlling every single media outlet in a country for the two decades Putin has been in power.
There’s no evidence that the rallies scheduled in October 2016 for Philadelphia, Pittsburgh, Allentown, Wilkes-Barre, and Erie ever took place. There were no permit applications filed for the day of the Philly rally, either.
Russia through 100k in facebook ads, and got the typical results, nothing much. Even if they were the best FB ad optimizers in the world how much impact is 100k in an election where the spending was estimated at $2.65 billion dollars?
So you’re saying enough people to swing 20 electors, who weren’t already planning to vote for Trump, went to a Trump rally organized by Russian proxies, and were convinced to vote for him because of this rally?
China is autocratic, but maybe not a dictatorship like Russia. I had the feeling that the CCP has some leverage over Xi, whereas Putin’s power is more concentrated on himself.
Any inner circle of political elites has some leverage over the individual leader, but Putin didn't stay in power for 22 years by failing to understand how to maintain delicate balance among these forces, play them off one another, and in general route all plots and intrigue around himself.
It's wishful thinking to imagine that a lone disgruntled civil servant with a gun is all it takes. If it were that easy, it would have happened a long time ago; autocrats, by their very nature, are always in peril, in that in any given moment there's no shortage of people who ahem, wish them ill.
That's what makes my skin crawl about assessments of other global autocrats in Western media as irrational. This childish way of looking at things makes them into some kind of cartoon villains; the "Mad Mullahs" who run Iran, "Crazy" Kim Jong-un...
These people may be distasteful, however, they are _anything_ but irrational. They are the most eminently rational and sophisticated calculators and political operators on the planet. They wouldn't last two seconds in power if they weren't.
It's the distinction that autocrats are all whining, pathetic losers - they torture their political enemies because they feel justified doing so - but it doesn't make them less dangerous.
On one hand he wanted to "break up nato" and on the other he wanted nato to collectively spend 100s of billions every year to militarize. Broken clocks and politicians who take every side of every argument are right every so often.
Those positions are not mutually exclusive. Rather, it's more of an ultimatum. "Spend more on our collective defense and reduce your dependence on our adversaries, or we'll no longer be allies."
Yeah, exactly. Trump's position on NATO was, as his position on damn near anything else, unintelligible gibberish. There was no constant except a pervasive affectation--colouring his rhetorical posture on everything he ever discussed--that the US was, in some ineffable but profound way, being "screwed".
The only thing I can figure is that it was Tillerson's input as Secretary of State that Trump was passing along. Tillerson, being affiliated with US energy interests, may have wanted to encourage Germany to import more from us or our Middle Eastern allies.
Trouble is, the summit took place in July 2018 and Tillerson was fired by Trump in March. (From Tillerson's Wikipedia article: "... Trump allegedly suggested a tenfold increase in the U.S. nuclear arsenal, which would cost trillions and take centuries. These reports were denied by White House officials and by Trump after which individuals familiar with the meeting told journalists that Tillerson either called Trump a "moron" or a "fucking moron.")
It's not clear why Pompeo would have pushed this particular agenda item, only that Trump likely didn't come up with it on his own.
Russian gas makes up about 10% of Europe’s energy imports. That’s quite a bit, and there are regional and sectoral hotspots. But it’s not impossible to replace.
Plus Russia continues to have an interest in selling he stuff. With all other sources of revenue being cut, it becomes even more important. What may have been 6 % of the budget will easily be 15 %, soon, and they will need every cent to avoid a complete economic collapse.
> Russian gas makes up about 10% of Europe’s energy imports.
But 40% of actual gas imports. Europe can't rebuild all infra overnight to consume other sources of energy instead of gas for many industries, homes heating etc.
I don't think you need much new infra to switch to electrical resistance heating.
Where to get this energy? Turn off bitcoin mining (200 TWh/year) and you probably get enough energy to replace the heat lost from stopping German imports of Russian natural gas (40 billion cubic meters/year, 10 kWH per cubic meter = 40 TWh). Don't know how much mining is on the European grid though.
As a bonus electrical resistance heating can work in a single room at a time.
You'd really want to replace the gas heating with heat pump systems rather than resistive heating elements. Resistive heating is ~100% efficient at converting electricity into heat, but a heat pump can do a trick to get above 100% efficiency by not actually trying to convert electricity directly into heat, but instead to move heat around so it stays on one side of a loop.
In nordic countries heat pumps (and good insulation) are more common for heating than gas.
To echo the sibling comment, cold weather air heat pumps work, they get efficiency over resistive heating down to about -25 or -30C, and are widely used in colder climates.
There are also ground and water heat pumps that exploit the
higher ground/water temperature in the winter. There are also utility scale versions of these used in district heating plants.
Yes, but you can build tens of millions of resistance heaters much faster than tens of millions of heat pumps. They're also trivial to install. I was trying to propose something possible, not something ideal.
It is simply not possible with the state of the grid and the electric generation capacity available, you'd have blackouts/brownouts and not enough electricity to actually keep people warm due to the higher power requirements.
Now, you'd still have that problem with heat pumps, because our grid is simply under-sized for it, but just not quite to the same extent.
BitCoin mining seems like a real problem. I was recently in Macedonia, and apparently it’s common there to steal electricity to mine crypto. They are heavily dependent on energy imports, and much of the energy they do have is being siphoned off to crypto. It’s not a good situation.
With average household electricity price in the EU at €0.2134/KWHr (second half 2021), I really wonder how much Bitcoin mining goes on there. The average cost in the US is less than half that, less in many of the southern states.
Switching to electrical heating (even with heat pumps, not resistive) can create considerably different flows on the electricity grid. Considering all the time I hear complaints about electricity being blocked as means for heating in at least some places in Germany, I wonder if they simply haven't found out that their grid can't take it under current setup.
Electric heating is almost immoral in environmental terms. Instead of getting close to 100 % efficiency by burning fossil fuel in place, it is burned in a power plant at 30 % efficiency.
This is changing with increasing solar and wind power, and heating is a flexible load that is useful to stabilize the grid. It as of now it‘s net-negative.
Interestingly, apparently the further the Energiewende goes, the less approval there is for electric heating, including attempts to force removal of storage heaters.
You're vastly underestimating the amount of heat energy produced by this gas. Last I checked, even the most efficient (heat pump) method of producing an equivalent amount of heat just for Germany would require 7x more electrical production than all of Germany's entire grid right now.
So Russia is supplying Germany with approximately 300TWh of thermal energy/yr. Total natural gas usage is in the peta watt hour/yr range for them.
Resistive hearing is (not quite) 100% efficient at the point source, but when adding in transmission losses it’s often more like 90%. High efficiency natural gas heaters are similarly efficient.
Heat pumps can go over unity, so assuming 3x efficiency is not bad. Capex is high though. And if burning natural gas to generate the power, efficiencies aren’t great end to end. Not much better than just burning the gas directly on site.
What makes it worse is that much of this energy needs to be released during winter months when renewables have the toughest time, and if it isn’t available people will freeze to death.
So it needs a high capacity safety multiple, and needs a decent amount of storage. It wouldn’t be a good idea to only have a day or two capacity stored for instance, since a unusual storm or quiet period could mean unexpected emergencies with little time to prepare.
Burning it to convert for electricity isn’t ideal either, as even burning it in a turbine and using very efficient heat pumps has roughly the same end to end efficiency (not counting storage) as just burning it on-site for heat, but dramatically higher capex.
Yes, looking at my comment again I see I wrote 40 x 10 = 40, rather than 400. That's closer to the total energy use of all proof-of-work cryptocurrencies, and not a fifth of Bitcoin alone as I suggested.
Why turn it off (mining)? It is literally electrical resistance heating. Sorry for being glib but maybe it could actually help subsidize the electricity cost.
Because mining rigs aren’t heating houses, they’re heating datacenters. Even if you did want to heat a house with a mining rig, they’re generally going to be mounted on a rack and providing a lot of heat to one room. And making a ton of noise while they do it.
The point of getting off Russian gas is to stop subsidizing genocide. So why support a currency whose main purpose is international money laundering? (Secondary purpose: asset bubbles) It would be counterproductive to the goal to give Russia a bigger way to participate in the global economy through crypto.
Note I mean purpose of cryptocurrency itself from a systems perspective, not the purpose of those who made it.
It has been baffling to me since long before the Russian invasion that Europe would allow itself to be at the mercy of a single man like this. I just don’t understand how this could have been allowed to happen. Now Europe finds itself a party to genocide.
It's not such a mystery. A lot of the policies were decided from a combination of shorter-term political calculus and a rather optimistic view about the harmonising effects of the liberal economic order, globalism, free trade, democracy, interdependence, peace dividends, and other Thomas Friedman things.
It's easy to forget now after a few years of erratic Trump and populist protectionism talk, but it was not long ago at all that was basically conventional wisdom in the US, too.
I’m can buy a certain amount of “liberal economic order” for things like household goods or perhaps putting your energy supply in the hands of a democratic nation, but putting your oil supply in the hands of a dictatorship seemed foolish well before Putin invaded Ukraine.
Trump warned them, and the German delegation laughed in his face. He claims he gave a gift of a white flag to Merkel to waive in surrender to the Russians after negotiations to block the Nord pipeline fell through.
But, Trump wasn't alone in thinking this way. In the 2012 election, Romney called Russia the USA's number 1 geopolitical foe, and Obama laughed it off.
Meanwhile, several high profile poisonings, siding with Assad in Syria, behind the scenes antagonising in Iran, etc. all made one thing abundantly clear: Putin is no friend of "Western liberal economic order", and the uneasy truce was not in any way guaranteed to last. If nothing else, putting all of your eggs in one basket and hoping he played nicely with your natural gas supply was the sort of foolishness that shouldn't be given positions of power.
Eastern Europe already knew about this - hence one of the first LNG terminals in the world, conversion from burning oil to biomass for heating, power links to nordics. So much resistance and criticism back then, quiet now.
That’s a wild gamble with the lives of your populace. It’s one thing to build an interdependence on a democratic country and quite another to put the fate of a continent in the hands of a single dictator.
Isn't that similar to what the US did with China? The interdependence is maybe not at the same strategic level but it is still significant, wouldn't overnight interruption of any import from China be very painful both to US consumers and industries?
The “strategic” bit is key. The US doesn’t get food or energy from China (although our economy is deeply intertwined at this point), but it does provide a lot of food to China. Even still, I wish the US did less to aid and abet China.
The supply chain situation was global and for Americans it largely amounted to an inconvenience. People weren’t freezing for lack of energy to heat their homes. America should do more to decouple itself from China, but it isn’t the same as Europe’s dependence on Russia.
Edit: I don't mean for this to sound ad hominem or overly pointed, but I've been shocked a lot lately--in the context of all these boycott discussions and so forth--by a widespread lack of basic energy density literacy.
I'm no physicist myself, but I think the world could use a fast lesson in just how much energy is stored in oil and gas, and in concepts like EROEI. Without it, it's very hard to put the relative quantities in perspective and understand why it's so difficult to eliminate, substitute or reduce fossil fuel use, or why ramping up production or retooling for different inputs is something that happens more in decade time-scales than weeks or months...
As sibling comments have intimated, the amount of power required even for a midsize city vs. what a small nuclear reactor on an aircraft carrier could provide is just stupefying. It's a microscopic contribution. Moreover, the energy in a single 42 gal barrel of refined oil (~5.8 million BTUs) is enormous. Matching that in any kind of reasonable way is not impossible, but it's an insanely difficult problem with no quick or easy solutions.
They could, but not in enough to help the continent as a whole. A nuke carrier could power a small city, but there are only 11 of them, and most of them are kinda tied up right now…
Also, powering 11 small port cities wouldn’t make a dent in the overall energy needs for an entire continent.
tl;dr about 5%, if you take very conservative values.
I decided to do the maths at a very basic level. Nimitz class carriers produce about 1100MWth between their two reactors. Gerald R. Ford classes put out about 1400. There's 10 of the former and 1 of the latter. This gives a total generation of 12400MWth accross them all, assuming you could some how take their entire thermal generation and make it offboarded electricity.
1 Barrel of Oil Equivalent is 1.7MWh, thus you need 14.12 barrels per day to generate 1MW constantly. According to the OP article, Russian exports to OECD Europe are about 3 million barrels per day, or about 212500 MW/day.
> Russia’s oil sales are 30% of the country’s revenues, but the gas market is only 6% of the state’s budget. A total loss of Russian volumes into Europe would be catastrophic. As in - industrial shutdowns, blackouts, hypothermia catastrophic.
> The one-sided balance of power with respect to natural gas leads us to expect that Europe will not sanction gas, but Russia will hold its volumes as a sword of Damocles over the continent to extract maximum value from its position. Just like it did last Monday.
That's certainly illuminating, and, from the point of view of geopolitical mercantilism, alarming!