Follow The Money
Let's take the Ukraine war from a cynical view.
"You're not talking about a margin. You're talking about a multiplier," Laurent Segalen, an energy investment banker who hosts the Redefining Energy podcast, said about the so-called arbitrage trade.
"All in all, it's insane," he told Insider.
Segalen said companies with gas to sell in the US can fill a large ship and send it across the Atlantic for around $60 million, with the cargo then fetching around $275 million in Europe.
Hmmm. Do you think that energy companies making enormous profits from a war have an effect on our foreign policy? Maybe we should ask Iraq.
The gaping price difference has pushed major companies to ramp up exports from the US to Europe. Just shy of 60% of US liquefied natural gas exports — or 115 kilotons per day — went to Europe in August, according to commodities data company Vortexa. That's up from just 19% — or 35 kilotons a day — in the same month in 2021.
In June, US shipments supplied more gas to Europe than Russian pipeline flows, according to the International Energy Agency.
The surge in global energy prices has been extremely lucrative for the big energy firms. Gunvor, a major trading company headquartered in Switzerland, posted record profits in the first half of the year. Total's profit also hit a record, with the company's trading arm performing strongly.
Hmm. Europe's energy companies are making huge profits from the war as well. Just a coincidence I'm sure. This article was from August.
US fuel now makes up 40% of Europe’s liquefied natural gas imports, and is looking to triple that number by 2030.
The EU has repeatedly failed to cap the price of natural gas, so that it's citizens continue to suffer the burden of high prices of heat.
It's hard to believe, but some people have to audacity to say that the U.S. policy isn't being driven by innocent humanitarianism.
Yet fissures are now beginning to show in the trans-Atlantic alliance as European leaders — especially President Emmanuel Macron of France, who has been visiting Washington this week — blame U.S. energy and climate policy for worsening their energy predicament. These attacks are not only misguided but also risk aiding Mr. Putin in his attempted conquest of Ukraine.In recent remarks to French business leaders, Mr. Macron complained about the cost of U.S. imports of liquefied natural gas and “massive state aid schemes,” referring to the clean energy subsidies in the Inflation Reduction Act. “I think it is not friendly,” he said.
Other European leaders have joined in, using inflammatory rhetoric to blame three aspects of U.S. policy.
Some European officials have accused U.S. companies of war profiteering for selling relatively inexpensive U.S. natural gas at much higher prices in Europe. These accusations are baseless.
Yes. Baseless. Those enormous profits are a mirage. Ignore the man behind the curtain.
Natural gas isn't the only product we need to talk about. There's also oil.
However in 2021 the USA exported just 134.3 mln t, down -2.5% y-o-y. In the first 9 months of 2022, seaborne crude oil exports from the USA surged to 120.1 mln tonnes (excluding cabotage), up by +24.2% yo-y from the 96.7 mln t in the same period of 2021 and an all time record. In the first quarter of 2022, the USA exported 37.6 mln tonnes, which represented an increase of +22.6% yo-y from the 30.7 mln t of 1Q 2021”, the shipbroker said. Banchero Costa also noted that “the second quarter of 2022 saw a further increase to 39.4 mln t, which was up +13.1% y-o-y from 2Q 2021. The third quarter of 2021 saw volumes surging further to 43.0 mln tonnes shipped from the USA, which was up 38.1% y-o-y from 3Q 2021 and by far the best quarter ever....“Overall exports from the USA to the European Union increased by +52.2% y-o-y in the first 9 months of 2022, whilst to the United Kingdom increased by +47.0% y-o-y
It's a good thing that the U.S. government is made up of saints that have no interest in money or power or worldly possessions. Otherwise someone might think that our foreign policy of risking WWIII with Russia is being driven by cynical corporate profiteering.
Comments
Good one.
Any disruption is an opportunity to make more profits, usually by selling less for higher prices. Maybe that's why we have so many disruptions. Look at what gets blamed on covid. Higher prices, it's all covids fault, we're blameless say the companies.Add in way less competition, create a scarcity, and viola! profits. Don't expect much for prices to go down when we get back to normal, this is the new normal.
Profit IS our foreign policy.
And it extends way back, too. "There's plenty of money to be made/ supplying the Army with the tools of its trade..."
“One of the things I love about the American people is that we can hold many thoughts at once” - Kamala Harris
I can remember, way back.
I think it was in 2012, but it might have been earlier, that I came across an article published in an energy business journal, about all these natural gas terminals being built along the Atlantic Coast of the US. My first thought was "Where the hell do they expect to sell it?"
Well, now we know. The new question will be how fearful can NATO/EU keep the boycott on Russian natgas instead of paying the market price.
A clue to our national foreign policy: if it involves our energy company making money, that's our national foreign policy. And there is nothing better for pushing the purchase of natural gas than having your neighbors freezing to death.
LNG terminals along the Gulf
In the same time frame that you read about the natural gas terminals being constructed along the Atlantic, I was watching with mine own eyes the same being built along the Gulf of Mexico. I was able to observe the construction of two of these up close. I drove past them every seven days over the years it took to build them.
The size of these facilities is mind-boggling. The largest one I was around was like a city. The cost must have also been mind-boggling - billions and billions of dollars.
Once they were finished, they just sat there. Occasionally you'd see a transport ship at one, but usually there was nothing. Obviously, the owners of these facilities were idiots ...or they knew something I didn't know. And they did know it. What they knew was Ukraine.
I imagine there's quite limited mooring at these gas terminals these days. Doubtless the transport ships are backed up wait to take on loads.
Interesting observation traveler
Nothing like ones own eyes to open ones own mind.
Makes one wonder whether in reality they were idiots at the time who became ‘lucky’, now that the time has come for them to take advantage of the ongoing disaster of world events (disaster capitalism). Knowingly or not, intended or not, it is beyond shameful.
Looks planned to me
Janis, I think it was all coordinated and planned. I don't recall how many of these LNG terminal facilities sprang up, but I think it was on the order of a dozen to fifteen of them. Further, most of them were announced in a rather close time frame. Bob in Portland mentioned reading of them in an energy publication, and that's how I remember finding out about them as well. Seems they were all announced in about a two year span, but I might be off a mite about that.
I knew of three that were in rather close proximity to my employment sphere (I was involved in petroleum production/exploration transportation support). All of this was in the Gulf of Mexico area. These three facilities came into being at around the same time, which also coincided with the construction of similar facilities on the US Atlantic coast and possibly the Pacific coast.
Somebody, somewhere, knew that there was going to be a market for shipping vast amounts of North American natural gas overseas. They all knew it at about the same time, all received massive financing at about the same time, got approval from the Federal government (and various state governments) at the same time.
I remember reading how much of this infrastructure was going to be utilized to ship LNG to Europe. At the time, I thought "That's crazy, as the Russians can supply natural gas to Europe for a fraction of the price that we can using transport ships." And I was right. Earlier, I mentioned that there were hardly ever ships loading at these terminals. Certainly nothing on the scale needed to make a profit over the extreme building costs, not to mention the vast pipeline systems needed to bring the LNG to the terminals.
Of course, if you take cheap Russian natural gas out of the picture, the situation changes radically. And that's where we are today. I believe I read somewhere just today that you can now fill a LNG transport ship at one of these US LNG terminals for around $60 million and unload it in Europe for over $200 million. That's a nice little mark-up there. I think that's what they were betting on all along.
I don't believe any of the huge corporations involved in any of this LNG business just decided to take a huge risk and decided blindly to start building the pipelines and terminals, nor did the banks who backed those corporations have their eyes closed. In fact, even government regulations regarding the export of LNG had to be changed. And where the rubber hits the road, fracking was allowed in wells all over the USA and even in our offshore waters to facilitate the huge increase in gas recovery. All of this was clearly planned at a very high level ...the highest, in my opinion.
Considering the time it took to get to where we are today, the entire campaign spanned several presidents, several congresses, with both political parties cooperating. I have no doubt that various intelligence agencies were involved and the US military. I'd be more inclined to think that the intelligence agencies had a larger say than did the military, but who knows.
It's all too coordinated to be luck.
I trust your extensive experience in the field traveler,
plus your keen observation and thinking. Thank you for further clarification and understanding.
As tough as it is to think about the sinister concept that it was all arranged, it can’t be denied.