NEW – July 2, 2022
Russia stops all four lines of Nord Stream1 and Nord Stream 2 from July 11 to 21 for scheduled maintenance (there are two lines in each stream, i.e. pipes). The Germans’ fears that the service may take a very long time are absolutely not groundless. Or, to put it bluntly, the Germans have nothing to count on.
It is believed that the cost of gas in Europe can grow to more than $3000 and even $5000 per 1,000 m3. But money is not a universal solution, as I wrote earlier. Money is only a tool that guides people to this or that activity, in itself they are not a magic wand that changes the laws of physics. Without creating new capacities for the extraction, transportation, reception and liquefaction of LNG, it will be impossible to replace Russian gas.
In March, at the peak, prices were already rising to $3,500, but already at this level, many productions become uncompetitive. That is, I do not expect an endless shocking increase in gas prices, there will simply be significant changes in European employment, trade and balance of payments – so negative that I have little idea how, with the already inflated post-liquid money supply, it will be possible to maintain the manageability of economies.
The way out will eventually be found in a new balance of prices for industrial products, labour, energy resources and other raw materials. Then Russia will also be able to revise the methods of calculating long-term contacts in the direction of actualisation and, in fact, the higher cost of gas supplied.
Resources have been underestimated for a very long time and this period is just ending. If we talk about oil, many have forgotten that its peak value was in 2008 – $147.5 per barrel, and since then a lot of water has flowed away, all the world’s reserve currencies have depreciated. The tendency to overestimate resources without Russia’s current actions has been fully realised since last year. At the trading session on October 6, 2021, the cost of 1,000 m3 already reached $1969.2.
Once upon a time, the Indians valued the resources they possessed very little and exchanged them for glass beads. I was just saying this by the way, but now is the time to think about what we ourselves need from the world, and from the West in particular. We definitely do not need the import of monetised air.
Dmitry Belsky
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