www.nytimes.com/2022/09/19/business/europe-energy-crisis-fac… of Europe’s aluminum and zinc production has been taken offline, according to Eurometaux, Europe’s metals trade association. Eschenbach Porcelain survived Germany’s transition from communism to capitalism after 1989. But when its energy contracts run out at the end of this year, the company will face annual energy bills of €5.5 million, or roughly six times what it is paying now, said Rolf Frowein, its director…
The whirlwind has unnerved the inhabitants of Arques, a town whose fortunes have been tied to glassmaking for more than a century…The site, which consumes as much energy as 200,000 homes, makes “arts de table,” including Luminarc dinner plates and Cristal d’Arques-branded table and barware. All told, Arc produces four million glasses a day…
Even more daunting was the prospect of idling Arcs furnaces. “You can’t just shut down a glass furnace — it would destroy it,” Mr. Hodler said. “If they are powered down gently, they will survive, but then they take more than one month to be reheated.”
[Germany’s] Eschenbach Porcelain… will face annual energy bills of €5.5 million, or roughly six times what it is paying now… Arques [France]… a town whose fortunes have been tied to glassmaking for more than a century… consumes as much energy as 200,000 homes, makes “arts de table,” including Luminarc dinner plates and Cristal d’Arques-branded table and barware. All told, Arc produces four million glasses a day… Even more daunting was the prospect of idling Arcs furnaces. “You can’t just shut down a glass furnace — it would destroy it,” Mr. Hodler said. “If they are powered down gently, they will survive, but then they take more than one month to be reheated.”
Dr Bob,
Almost every country in Europe has some well-known company or another that could face shutdowns, layoffs, or energy-related economic hardship tied to fuel or electricity prices and/or availability. If and when a critical mass of the European populace is affected, the risk of some form of backlash or unrest is increased.
One may reasonably assume that Putin will continue his insane war in the medium-term with the intent of inducing political instability in Europe. Sociopaths like him live for revenge and/or enjoy inflicting pain on others, even to the point of being self-destructive.
Do you know of any Eurocentric economist or academic who has laid out a well-reasoned outline and/or a timeline with the various likely stages of recession, hardship, and/or political implications based on projected energy availability and prices - assuming that Russian energy supplies are permanently offline?
Do you know of any Eurocentric economist or academic who has laid out a well-reasoned outline and/or a timeline with the various likely stages of recession…
This paper by Lan from a couple of months ago focuses on Germany. Of course, there would be many knock-on effects to other European economies.
The Economic Impacts on Germany of a Potential Russian Gas Shutoff www.elibrary.imf.org/view/journals/001/2022/144/article-A001…
Abstract:
We analyze the potential impacts on the German economy of a complete and permanent shutoff of the remaining Russian natural gas supplies to Europe, accounting for the curtailment of flows through Nord Stream 1 that has already taken place. We find that such a scenario could lead to gas shortages of 9 percent of national consumption in the second half of 2022, 10 percent in 2023 and 4 percent in 2024, which would be worse in the winter months, and would likely fall on firms, given legal protections on households. We combine the effects of less gas on production with the consequent effects of reduced supply of intermediate goods and services to downstream firms, and with reduced economic activity due to rising uncertainty.
Together, these three channels reduce German GDP relative to baseline levels by about 1.5 percent in 2022, 2.7 percent in 2023 and 0.4 percent in 2024, with no gains in subsequent years from deferred economic activity. The associated rise in wholesale gas prices could increase inflation by about 2 percentage points on average in 2022 and 2023. Our simulations suggest that the economic impacts can be reduced significantly by having households voluntarily share a small part of the burden, and by rationing gas supplies more to more gas-intensive and downstream firms. We also suggest other ways to enhance German energy security.
San Miguel de Allende, the small city not too far from me, has been a mecca for artists since right afyer WWII. I know sculptors in bronze, glassworkers, ceramacists – all of them trying to figure out how to keep their art alive while enerfy prices go through the rough. The bronze sculptors have it worse as both the tin and copper alloyed together are now well above their prices of a few years ago.
Ouch.
Arts will have to evolve. Electric furnaces can be used, but the inital cost of the type of highly insulated furnaces is daunting. One artist, laughing, told me a client had told him “Never mind about the cost of the bronze, we will simply kidnap some brozne statues of idiots everyone hated and melt them down…,” “Gosh,” I said, “Sounds like a Plan!”
The challenge for the rational is that Europe “declared economic war” on Russia to avoid going to “physical war” with Russia and is losing. Sure, the Russian economy is tottering on the edge of a recession, but due to the porous nature of the sanctions, they have been able to make up much of their loss with higher prices for what they do ship. On the other hand, Europe is looking into a social and economic abyss this winter. Can it survive? Sure, the US survived the Great Depression, London survived the Blitz and Japan survived nuclear weapons, but in each case, those who survived were scarred for life and, in other cases, history is cluttered with those whose fortunes did not survive a siege.
The US is currently openly warning Russia not to use chemical or nuclear weapons to compensate for lack of sufficiently trained troops. Their use could be a game changer if it opens the war to direct conflicts with Europeans.
mandated reductions in carbon emissions require changing to electric furnaces anyway?
Yes! The Ukraine War has foreshadowed some of the changes we must make anyway to cope with GCC. If we ever really do get serious about GCC there will be no question about it, but right now the developed world has just barely become willing to be mildly inconvenienced.
Not just simply lower prices, but the cost of a bbl has dropped from the $140 area to the $76 area. Not sure why a report on Russia’s cash cow two months ago is not forgotten about entirely by now. The Kremlin is missing revenues and running in the red as of this month.