The Global Energy Crisis Just Escalated To An Entirely New Level, And This Is Just The Beginning… by for The Economic Collapse Blog
GNN Note – If you think gas is high now, just wait until this time next year when it the average cost in the U.S. will be well north of $5/gallon. / END
Now we are being told that we are all going to “have costs” for the crisis in Ukraine. More specifically, the global energy crisis just took a dramatic turn for the worse, and so that means that all of us will soon be hit by dramatically higher energy prices. It is going to be much more expensive to fill up your vehicle, it is going to be much more expensive to heat your home, and increasing costs to transport the goods that we buy will make the overall rate of inflation even worse. Up to this point, a large chunk of the U.S. population really didn’t have much interest in following the conflict in Ukraine, but now it is going to have a huge impact on every single one of us.
In response to the Russians moving forces into Donetsk and Luhansk on Monday, the Germans decided on Tuesday to put the Nord Stream 2 pipeline on hold indefinitely…
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Germany on Tuesday halted the Nord Stream 2 Baltic Sea gas pipeline project, designed to double the flow of Russian gas direct to Germany, after Russia formally recognised two breakaway regions in eastern Ukraine.
Europe’s most divisive energy project, worth $11 billion, was finished in September, but has stood idle pending certification by Germany and the European Union.
Will this hurt Russia?
Of course it will.
But it is also going to hurt Europe. Following Germany’s announcement, the price of natural gas in Europe shot up by about 10 percent…
But on Tuesday the European benchmark gas price, currently the Dutch March contract, was up 9.8% at 78.95 euros per megawatt hour (MWh) at 1607 GMT, much like the price for the fourth quarter, when Nord Stream 2 had been expected to start.
And this is likely just the beginning of another natural gas price shock in Europe. Dmitry Medvedev is warning that Europeans “are very soon going to pay €2.000 for 1.000 cubic meters of natural gas”…
German Chancellor Olaf Scholz has issued an order to halt the process of certifying the Nord Stream 2 gas pipeline. Well. Welcome to the brave new world where Europeans are very soon going to pay €2.000 for 1.000 cubic meters of natural gas!
If the price of natural gas actually gets that high, it will be completely and utterly devastating for Europe.
The Europeans never should have allowed themselves to become so dependent on natural gas from Russia, and now a tremendous amount of pain is ahead.
Meanwhile, the price of crude oil surged once again on Tuesday and has now almost reached 100 dollars a barrel…
U.S. crude surged more than 3% at one point to a high of $96. The contract ended the session 1.4% higher at $92.35 per barrel. Brent traded as high as $99.50, before settling at $96.84 per barrel for a gain of 1.52%.
It won’t be too long before the global price of oil goes well beyond the $100 per barrel threshold.
Needless to say, that won’t be good for the global economy at all.
On Tuesday, JPMorgan specifically warned about what an “energy price shock”could mean…
As oil rapidly approaches $100 a barrel, JPMorgan warned Tuesday that a spike in energy prices and other ripple effects from the Russia-Ukraine crisis could hurt both the stock market and the economic recovery.
“An energy price shock amidst an aggressive central bank pivot focused on inflation could further dampen investor sentiment and growth outlook,” JPMorgan strategists wrote in a note to clients.
But Joe Biden says that all of the bad things that are about to happen are necessary because we are “defending freedom”…
“Defending freedom will have costs, for us as well, and here at home,” he said during a speech at the White House. “We need to be honest about that.”
The president specifically warned of higher gas prices as a result of the sanctions but promised he would use “every tool” possible to reduce gas and energy prices.
“I want to limit the pain the American people are feeling at the gas pump,” he said.
Of course higher energy prices won’t cause much pain for Joe Biden and Kamala Harris because they are both multi-millionaires.
What Biden should have admitted is that you will be paying the price for his administration’s horrific foreign policy decisions.