Back in August, Bloomberg carried a piece titled “welcome to Europe’s dark, cold winter.” It warned that even if countries were able to find gas to fill their storage facilities, it might not prevent a winter filled with blackouts, business closures, and an economy in freefall. That’s because prices were soaring and “replenishing storage and reducing demand still may not be enough.”
That story as just part of a running theme that’s been going on since even before Russia rolled across the border into Ukraine. In 2021, 53% of Germany’s gas supply came from Russia. The Nord Stream 1 pipeline was a powerful economic connection directly tying Berlin to Moscow, and Nord Stream 2 was sitting there ready to open. It wasn’t just Germany. In the 2019 figures, 41% of all the natural gas in Europe came from Russia.
When Vladimir Putin said he was prepared to let Europe freeze at the beginning of September, he was only repeating a threat that had been made many times in the past. That threat has been sufficient to make politicians all over the world treat the Russian dictator with kid gloves, and to have fiscal analysts engaging in dark fantasies of closed factories and Europeans shivering in their frosty homes.
But eight months and one day after Russia began its illegal, unprovoked invasion of Ukraine, the idea that Europe is going to "freeze in the dark" without Russian gas seems laughable. Gas storage facilities in Germany are over 97% full, well ahead of last year's status. That gives the nation a significant buffer against any market disruptions.
Germany’s gas storage this year is much higher than it was at any time last year.
Across the entire E.U. storage facilities are over 90% full. And even as Europe has been topping off its tanks, the actual price for natural gas has continued to fall. On Monday, prices reached a four month low, with the per megawatt hour cost dropping below $100—less than a third of cost on the day Putin made that “let them freeze” threat.
Natural gas prices are heading toward pre-invasion pricing.
Across Europe, gas has simply not proven to be as hard to come by as many speculated at the outside of the invasion. Not only did Russia continue to supply some of this gas, other sources opened up. That includes a rush to build new liquid natural gas facilities to support imports from the U.S. and elsewhere. As S&P Global reports, this has included a number of floating facilities that can be assembled and made ready much quicker than traditional shore facilities. Projects are reported to be “moving forward at unprecedented speed” specifically to address any lack of gas from Russia.
Even as gas has become cheaper and more available, the demand for gas has also been falling sharply. That’s because the major use of natural gas in Europe is generating electricity, and the Russian invasion has helped rush forward initiatives on both conservation and renewables that are cutting into the demand for gas. In fact, the biggest threat to renewable projects right now in Europe is … the plunging price of gas, which is making some of the counties and companies that had jumped onto making a clean break between electrical generation and gas rethink their positions.
Ironically, there’s another factor that’s cutting into the demand for Russian gas: the human-generated climate crisis. Putin should have noticed that, even in Moscow, temperatures have risen sharply in the last decades. Even as Russian politicians, and tankies on Twitter, have been rubbing their hands together contemplating the masses of Europe genuinely huddling for warmth, the fall has been exceptionally mild. So is the winter forecast.
When Russia blew up its own pipeline—an act done purely as a false flag provocation, and which is readily reparable—it shut down one pipeline that had never gone into business and another that hadn’t pumped at a level above 20% capacity in months. That explosion at the end of September was intended to renew European fears around gas and drive global prices up. It worked. For about three days. Then prices continued dropping right past where they had been before the explosion.
Of course, Russia has been selling its gas. It’s switched primarily to selling to China and Southeast Asia. But there’s a problem: Cut off from its biggest market and a pariah in the fiscal world, Russia hasn’t been in a very good position to negotiate pricing. As a result, there are articles like this one on Yahoo News noting that “China has secured Russian gas at a 50% discount until the end of this year.”
They’re not the only ones. Some nations are actually buying more Russian gas than they need, disguising it as gas from other sources (Malaysian production is up something like 200% without drilling any new wells, a miracle) and then reselling it at market prices.
But Russia isn’t getting market prices. It’s getting half of market prices. That might have been enough when those prices were through the roof, but now they’re down everywhere. Russian gas is selling dirt cheap, and without those handy European pipelines, Russia’s transportation and storage costs are up.
When it comes to the export market, Russia is a one-trick pony. Vladimir Putin broke that pony’s leg. Now, with those new LNG facilities and increasing use of renewables for electricity, he’s made sure that Russia will never again enjoy the kind of profits or political leverage it held before invading Ukraine.
For a couple of weeks there, I held out pretty well. Then on Saturday I just grabbed that sinker and sank. Between official statements urging Russian personnel to leave Beryslav, Wagner group’s own Telegram channel fuming over the abandonment of Kherson, and the Ukrainian MOD confirming the evacuation of points along the front line, I went heavy into “If all of this is confirmed, it seems that Russia’s northern line in Kherson is gone” and even “the end of Russian occupation in Kherson isn’t going to be measured in weeks or months. It’s a matter of days.”
Only all those things were not confirmed. Russia did not abandon the front line in northern Kherson. Snihurivika was not liberated. Reports that Russia troops were scrambling to find a spot on a boat were replaced with other reports that Russia was actually brining in new troops to reinforce shaky positions. The dream that Ukraine was going to stroll into Kherson this week on a tidal wave of good feelings and no fighting turned out to be exactly that: a dream.
It’s enough to send me reeling all the way back to … just one day before, when I was saying this:
Take care in buying wholesale into the idea that Russia is going to surrender Kherson without an extended fight. When Ukrainian troops are being cheered along Perekopska Street and accepting flowers in Fountains Park, it’ll be real. Until then … just be cautious about anything that seems too friendly to your own position.
Man. The guy who wrote that stuff actually had some sense. Too bad he took Saturday off.
I’m trying to figure out just where things stand based on current reporting from the Kherson area, but I have a problem. A Bezimenne problem.
What area is still Russian occupied in this area is in question. Open image in another tab for a closer look.
Look just a little southeast of the fortress town of Snihurivka, and you’ll find a small village called Bezimenne. But just 20km to the east, near Sukhyi Stavok, is another Bezimenne. On Tuesday, the Ukrainian general staff confirmed that Ukraine is in control of Bezimenne. It seems reasonable to assume that this is the Bezimenne on the right side of the map, because Ukraine actually liberated the town once before, only to have Russia push them out again. Confirming the liberation of Bezimenne is a very good thing, especially if Ukraine is right about points to the southeast being abandoned by Russia.
However, some military bloggers have insisted that it’s the Bezimenne near Snihurivka that has been liberated, along with another small village in the area. If that’s the case, then it would seem as if Snihurivka is all but encircled, which would be a very significant development.
For the moment, I’m going with the Bezimenne on the east (how do Ukrainian postal employees keep this straight?), but I’m prepared to be wrong.
Kherson wasn’t the only area where Russia sources have been pushing a story that turned out to be less than true. Last week, Russian military bloggers began reporting that Russia had retaken a series of towns west of Kreminna and was “marching on Lyman.” To support this, there were even videos released showing Russian vehicles fighting several kilometers west of locations like Nevske.
As it turns out, those videos were several weeks old and were related to Russia being forced from the area around the time Lyman was liberated. On Monday, the Ukrainian General Staff confirmed Ukraine’s control of a whole string of villages along the road running down from Svatove to Zarichne. They also confirmed from new Ukrainian positions within a dozen kilometers of Svatove.
Ukrainian forces pressing multiple points southwest of Svatove. Open image in another tab for a closer look.
On Tuesday, there are reportedly battles going on at several locations close to Svatove. That includes along the road running northeast from Kovalivka and east of Novovodyane. Additionally, Ukrainian forces are reportedly pushing into the area north of Kreminna and contesting the control of towns along the P66 highway.
The scale of the fighting on Tuesday is said to be significant, with some sources indicating that they expect movement in the next few hours. So keep your fingers crossed.
Who is sitting in the scrap iron throne this week on Game of Drones?
UPDATE: Tuesday, Oct 25, 2022 · 8:08:56 PM +00:00 · Mark Sumner
There have been a lot of statements and even video clips today hinting that Ukraine “is getting closer to Beryslav.” However, I have no geolocation on these reports. So I can’t tell if we’re talking about “past Mylove an cruising down the highway” or still slogging it out around the bridge north of town.
Hopefully we’ll know more soon.
UPDATE: Tuesday, Oct 25, 2022 · 6:52:45 PM +00:00 · Mark Sumner
Something interesting going on to the north — in the same area where those folks in the top picture (one of whom is a doctor and another a PA) are going door to door. Ukraine is cleaning up the small towns and villages up along the border, removing the last vestiges of Russian control in the area, and officially liberating them one at a time.
Ukraine liberating villages north of Kupyansk
Since completing the crossing of the Oskil River at Kupyansk and Dvorichna, Ukraine hasn’t demonstrated a lot of interest in moving to the north. Russia has maintained forces at Tavilzhanka, and twice tried to launch an attack to push Ukrainian forces back over the river. Earlier this week, Russia claimed to recapture Horobivka (the blue dot just SW of Tavilzhanka), but there’s been no photographic or video evidence, so this is probably as reliable as the claims Russia has been making in Luhansk.
Now Ukraine has officially liberated those four small villages up near the Russian border and looks to be pushing on to the east. This could not just help them clean out this last little corner of Kharkiv Oblast, but put them on the P79 highway above Tavilzhanka. That would effectively cut off supply to forces to the south. Russian troops at Tavilzhanka have to know they’re looking at both being trapped by a pincer maneuver, and being cut off from retreat and resupply.
This hasn’t been a major area of concern over the last month, but it’s something that bears watching over the next few days. Those medical folks are at Kamyanka, so they are right in the thick of it.
How should we be reading the 2022 polls, in light of shifting margins and past misses? In this week’s episode of The Downballot Public Policy Polling's Tom Jensen joins us to explain how his firm weights polls to reflect the likely electorate; why Democratic leads in most surveys this year should be treated as smaller than they appear because undecided voters lean heavily anti-Biden; and the surprisingly potent impact abortion has had on moving the needle with voters despite our deep polarization.
