Грядет волна критики нарушения прав человека в Катаре на фоне жеребьевки ЧМ 2022

 В западных газетах, особенно в странах, которые не вышли в финал ЧМ 2022 в Катаре, поднимается волна критики в адрес организаторов.  Не было еще случая, чтобы страны незападного посола не испытывали на себе давление так называемых свободных (от морали) западных стран при организации больших спортивных мероприятий вроде олимпиады и ЧМ. Миллионы убитых ими людей в странах, географически близких к Катару, включая невинных детей не являются нарушение прав человека. Человеки живут только в странах западной цивилизации, а в остальных это нарушители прав человека и их жертвы. И все терпят, как это не странно. Хотя давно известно, что " Когда пришли за коммунистами, я не протестовал. Я не коммунист. Когда пришли за евреями, я не протестовал, ведь я не еврей. А когда пришли за мной, некому было протестовать."

Electricity generation in the UK: green energy has negligible input today

Today is likely a cloudy day in the UK and almost no wind. Green energy generation is even lower than yesterday. The figure below presents the split of energy generation by sources. Gas is leading  - more than a half of generation. Nuclear energy is stable and gives 15% at all times. Import (Norway) varies to match the demand. Solar energy today is low and wind has been gaining speed since early morning but did not reach its cruise speed. Overall, the last week was poor and gas was the remedy. New green energy facilities would not help this week. If double the green energy share  - an enormous investment - its input will be still negligible compared to gas. To estimate the cost to double windmill power (~20 GW) - $1.3 million per MW - one obtains (20 GW/0.001 GW) 20,000,000,000,000 British pounds. 

Новые данные в Великобритании показывают, что колебания производства энергии ветра могут достигать двух порядков.

С 1 марта 2022 года я наблюдаю за изменениями в производстве энергии ветра в Великобритании на основе опубликованных здесь наблюдений. Моя предыдущая оценка амплитуды колебаний выработки электроэнергии составляла 30 раз. Сегодня я обнаружил, что ветер может упасть еще ниже, как показано на рисунке ниже. Текущий уровень составляет 0,311 ГВт (позже обнаружил величину 0.189 ГВт), тогда как несколько недель назад он составлял около 20 ГВт. Не будет преувеличением предположить, что диапазон изменения энергии ветра составляет около двух порядков величины. Предыдущая неделя была очень плохой для ветроэнергетики Великобритании, и за предыдущие 48 часов возобновляемые источники энергии (включая импорт из Норвегии) дали только 14,5%. 

Планы развития ветроэнергетики должны включать возможность практически полного отсутствие ветра. Иными словами, нужно вырабатывать всю необходимую стране энергию, используя альтернативные возобновляемым источникам способы генерации электричества. Иронично, но это генерация на основе невозобновляемых источников типа газа и угля. В результате в стране должно существовать две параллельные системы генерации полностью обеспечивающие спрос на электричество. При этом в каждый момент времени работать будет только одна из них. Экономическая эффективность снижается в два раза. Эта положение сохранится до тех пор, пока энергия возобновляемых источников не будет запасаться в необходимых количествах. И батареи тут не помогут ввиду крайне низкой плотности энергии.

New data in the UK shows that variations in wind energy production may reach two orders of magnitude

Since March 1, 2022, I have been watching variations in wind energy production in the UK based on the observations published here. My previous estimate of the variation amplitude was a factor of 30. Today I found that wind may fall even lower as the figure below shows. The current level is 0.311 GW while a few weeks ago it was around 20 GW. It would not be an exaggeration to assume that the range of wind energy variation is around two orders of magnitude.  The previous week was very poor for the UK wind energy generation and during the previous 48 h renewables (including imported from Norway) gave only 14.5%.

Germany should not accept roubles as the payment currency for Russian natural gas

1. The shortage in the natural gas supply will increase the natural gas price: half will cost as a whole and Germany selling half of the imported Russian gas will gain

2. However, this price increase will suppress the production of metals and plastic and thus the whole industrial production 

3. The fall in energy supply and industrial production will decelerate building new green energy facilities which need a lot of energy and materials

4. The natural gas price increase will prohibit the production of fertilizers and heating of the greenhouses

5. Oil and thus diesel price rise will suppress transportation of goods and suppliers to industry and retailers

6. Agriculture without diesel and fertilizers will stop food production starting with the upcoming sowing 

7. Underground gas storage will be empty and house heating will cost too much during the next winter 

Wind energy production is still extremely low in the UK: green energy transition will suffocate the economy

 Good weather in the UK is accompanied by low wind speed resulting in a drop in wind energy production to a negligible level. The next week will be rainy and cloudy with low solar energy production but likely with a significant increase in wind energy. 

Considering the current low green energy share in the total electricity balance one can evaluate the plan for an expedited increase in renewables. During the best days in 2022, renewables may give more than 50% of electricity. This means that one should not increase the current stock of solar panels and windmills by more than a factor of 2. Excessive electricity production is not yet matched by effective storage capabilities like batteries or hydrogen. The latter is the most preferable storage means because hydrogen has the largest energy density among all non-nuclear materials (see figure 2 below). However, when doubled, the renewables still give 30% of electricity during poor days of anti-cyclons. This means that fossils will still be needed at the same level as now before hydrogen batteries will be available to store enough green energy.

The expedited transition to renewables has another negative effect -  the biggest players in energy production have to accelerate the transition to green energy and stop investment, drilling, extraction, and exploration (bad time for oil service companies). This is a kind of stock market panic - the last leaving the market pays full price. As a result, fossil prices will be growing in response to the famous supply-demand equation. The panic wave is at a low start right now and we will see the real fight for energy resources in the months to come. 

Figure 1. Electricity production

Figure 2. Source - https://upload.wikimedia.org/wikipedia/commons/c/c6/Energy_density.svg

Another catastrophic day for wind energy in the UK

 In my previous post on variations in green energy production in the UK, I referred to a wonderful website collecting energy production data including "embedded sources", i.e. individual production. Wise planning of the country-wide electricity supply must include the scattering of green energy production for various time periods - from hours (energy production based on hydro-resources and natural gas can be changed within a few hours, but nuclear energy is less flexible) to years. Meanwhile, one has to match sudden drops in renewables over days and weeks. The figure below is borrowed from the aforementioned website and demonstrates that wind production is less than 3% of the total during the previous three days. Natural gas is the current answer to this challenge: all renewables, including those in imported electricity from Norway and biomass (whatever it is) during the last 48 hours made only 15.5% of the total. Planning of the energy supply has to include such low-wind (anti-cyclons) periods and also low insolation ( cyclons) periods to come. The available electricity production facilities based on natural gas have to be ready to replace green energy. The figure below shows that the fossil sources have essentially to cover the whole energy balance. 

As a result, the current plan to replace fossils with renewables implies that the UK will have to duplicate electricity sources. The fossil-based sources have to be able to fully cover the absence of green energy (nuclear energy is a specific issue but it was not considered green before). Climate change may produce more anti-cyclons in the future and also increase electricity demand during extremely hot days in summer - there were several days last year with temperatures close to +40C. around. Interesting.

How poor days look like for wind energy in the UK

 There is a website presenting electricity production in the UK on a half-hour frequency. This is a good site to understand variations in the production of green energy. There are good time periods when wind produces 30% of the whole electricity. But there are also poor periods when no-wind conditions drop the energy production by a factor of 30. Below is a graph obtained at 14:45 cet today. The input of wind is extremely low and natural gas  + nuclear energy gives 80% when solar energy is available. Renewable energy is just a few percent overnight. One can see that this is not a short period of time - the last 48 hours are quiet. I'll keep watching the evolution of the wind conditions. It is important how long this low-wind period will last this time. In 2021, the generation of wind energy was below the average and the natural gas price hike was produced by "no-wind". 

To declare the terms of transition to green energy is insane

It is obvious that the free market uses all information on every time horizon and digests it into the prices of stocks and commodities. If any (crazy) market agent declares transition to a new product(s) and the corresponding timeline everyone wants: 1) to get the highest profit, 2) to avoid any losses, 3) to force other players, including the crazy agent, to lose as much as possible. This is the framework to analyze the green energy transition as well. One can easily analyze this situation personally and I also have some simple thoughts:

1) The transition to new energy generation needs money, technologies, and commodities to build the corresponding facilities. Money is wisely taken from the population (higher tariffs) and transferred to the companies investing in green energy production. In some countries like Spain, money is not transferred to the green energy dealers because of the energy crisis. The beneficiary of green energy may lose their extremely high profits any time soon. 

2) Oil and gas companies have adjusted their production plans to the new energy as well and reduced their investments into fossil energy. This turn is irreversible and the decay in oil/natural gas production goes faster than the green energy growth because the faster is the transition from fossils to renewables the lower are the losses of the companies. It is a kind of market panic. It is counterproductive to blame oil producers for effective adjustment to the new era. 

3) Oil dollar is in danger. The biggest world producers adjust their plans as well. The US oil import was the driving force of the oil dollar. Currently, the oil price is high and it seems wise to sell as much as possible. But at a mid-term horizon, it is clear that the oil dollar will disappear. It seems to be late already to use US dollars and its subsidiaries like Euro as a payment currency. It is wise to change to the currencies of the future importers - China and India. Arab countries and Russia started this unstoppable transition. The US and Europe markets are already in the past and of no interest in the long run.

4) Energy renewables are highly vulnerable. The scattering of daily, weekly, and monthly wind speed and insolation is so high that quick compensation of sudden drops in renewable energy production will be a large challenge and thus will cost a lot. Speculations will be higher than the current ones observed in natural gas trades.

5) The need for commodities to build green energy facilities (e.g., lithium, steel, copper, etc.) will be increasing with time according to the supply/demand economic rule. This will result in increasing renewable energy prices. Without oil dollars and in the absence of appropriate resources it will be costly for the countries in transition. 

China, India, and Russia will do everything to make this transition as painful as possible and to get the maximum profit (e.g. money, political and financial power, strategic positions) from the situation. That's the reason Russia has started the expansion and China backs these efforts.  The countries in transition are the most vulnerable. It is time to strike. 

PPI of chemicals and metals are likely driving CPI

In the previous post, we showed that the CPI has been following the PPI since 2000 with a reduction factor of 4.4 and a constant of .067, i.e. that the CPI/PPI regression shows that if to multiply the change in CPI by 4.4 and subtract 0.067 one obtains the PPI with the coefficient of determination of Rsq=0.83. 

The PPI (of commodities) has many components and we have chosen Chemicals (06) and Metals (10) as most relevant to the dramatic changes in the commodities supply. Fuels were also analyzed in the previous post. Figure 1 compares the inflation rate (m/m on a yearly basis) of the PPI and Chemicals. One can see that the overall PPI practically coincides with the Chemicals PPI over the whole period after 2000. Chemicals have a weak reaction to the economic slack in 2020 and extraordinary reaction to the changes in natural gas and other energy sources in 2021. The rate of PPI inflation reaches 24% as well as the rate of Chemicals PPI inflation. A small drop at the end of 2021 might be a trend or tern to the growth depending on political and economic events.

Figure 1. PPI and Chemicals PPI inflation rate after 2000

The PPI of metals is more sensitive to economic and political forces. Figure 2 shows that the inflation rate if the PPI of metals is approximately 2 times higher than that of the overall (commodities)  PPI. Figure 3 illustrates the fit between the curves when the PPI of metals is divided by 2. The resulting fit is the same as in Figure 1.  

With the increasing price of natural gas and electricity, the PPI of metals will likely suppress metal production of all kinds. The PPI inflation will grow and then lead to the CPI growth at an accelerated rate. All these factors will likely result in a deep recession.

Figure 2. PPI and Metals PPI inflation rate after 2000

Figure 3. PPI and corrected Metals PPI inflation rate after 2000

CPI and PPI inflation in the USA. Energy prices

The BLS publishes the CPI and PPI (commodity data) estimates at a monthly basis. One can estimate the inflation rate on a monthly basis as well using the monthly estimates separated by one year period. For example, the rate of inflation in December 2022 can be obtained as the difference between the CPIs published in December 2022 and December 2021 divided by the CPI in December 2021. This is a standard definition of inflation. Figure 1 presents the rate of CPI and PPI inflation in the USA since 1967. One can see that in the past the PPI and CPI inflation rates were approximately the same. Essentially, they were practically equal between 1975 and 1982. The reason they started to deviate is a dramatic change in their definitions around 1980. The CPI inflation now looks much lower than the PPI.

Figure 1. CPI and PPI inflation rate

To understand the current link between the CPI and PPI one can apply simple regression analysis and obtain regression coefficients which make both curves closer to each other in the sense of RMS distance. Figure 2 depicts the original PPI curve and the corrected CPI_C curve, where

                                            CPI_C = 4.4*CPI-0.067

The regression equation was obtained for data between 2000 and 2022. It means that the PPI is 4.4 times the CPI, but there is a constant in the equation which defines some permanent difference between the CPI and PPI. 

Figure 2. PPI and  CPI infation rate. The latter is corrected to match both curved after 2000

Figure 3 illustrates the most recent period after 2006. One can see that the curves are extremely well correlated (Rsq=0.83) and practically synchronous. The latter observation is important because the change in the prices of commodities has an immediate impact on consumer prices. 

Figure 3. Same as in Figure 2 for the period after 2006

It is clear that the PPI curve demonstrates some pivot to the downward move in December 2021 and January 2022. The growth rate of commodity prices decelerates after it reached the peak of 25% per year. The CPI curve will likely change the direction any time soon in case the PPI growth will continue the deceleration path. 

The same analysis is helpful in the comparison of energy prices. Figure 4 presents the PPI of "Fuels, related products and power"  and the energy CPI after 1967. The CPI is corrected by a factor of 1.55 in order to fit the curves after 2000. One can see a dramatic difference in the curves match compared to Figure 2, where two periods before and after 1983 are quite different. For energy, the curves have an excellent match in both periods. This means that the definition of energy-related CPI and PPI did not change much around 1980.

Figure 4. The PPI of "Fuels, related products and power" and the corrected energy CPI 

Figure 5 illustrates the period after 2000 and demonstrates that the price change in energy-related commodities is reduced by a factor of 1.55 before it comes to the consumers. The most recent period shows the rates of PPI inflation from  -40% to +55%. This is similar to the period between 2007 and 2009. The fuels PPI shows some signs of decline since the end of 2021. The current inflation rate came from the economic recovery processes in 2021 and was also driven by money printing. More money printed and injected into the US economy will reverse the current downward trend in the fuels  PPPI and energy CPI.  If to stop the money printing process the energy price will drop dramatically and one can expect a long deflationary period. The extended supply of extra expensive goods and services will not match the demand without extra money injection. This is the main cause of the recession.

Figure 5. same as in Figure 4 for the period after 2000