New Energy Weekly – German Chancellor Olaf Scholz is in a bind
The Bloomberg headline screamed: Scholz Defends Massive Borrowing Plan to Tackle Energy Crisis.
German Chancellor Olaf Scholz is in a bind.
He knows that this winter, Germany and its peers in the European Union will struggle with high energy prices. His government plans to borrow €200 billion to fight the higher prices.
Other countries seem to fear the plan will distort energy markets and drive up the cost of energy for everyone. I’m not an economist, but I know there are ways to use that money that won’t make a bad problem worse. And make no mistake, this will be a bad winter. Natural gas prices will be at a premium.
Keisuke Sadamori, Director of Energy Markets and Security for the International Energy Agency said:
“Russia’s invasion of Ukraine and sharp reductions in natural gas supplies to Europe are causing significant harm to consumers, businesses and entire economies – not just in Europe but also in emerging and developing economies.
“The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. But all the signs point to markets remaining very tight well into 2023.”
I suspect that in five years, we will look back and point to this winter as a pivotal moment in European energy history. The situation highlights the problems with sourcing vital energy supplies from antagonistic countries like Russia.
The solution is to find alternative supplies of energy. And those will come in the form of renewables and nuclear power. That’s great news for us.
We didn’t create this problem. But we can identify the track that Europe will likely take in its wake.
Russia uses its energy supplies like a bludgeon. And that’s a road map for other energy exporting countries to follow. It’s attractive because it gives outsized power to the producers. But it is a destabilizing force that few governments can afford to ignore.
The result should be renewed focus on domestic energy sources within the European Union. And the largest available are nuclear power plants.
I intend to do a deep dive into the emerging nuclear power industry over the next few months. I believe we can find some strategic investments now that will see great returns over the next few years.
I’d be interested in your thoughts on this as well. How do you feel about nuclear power? What questions should I look to answer in my research? As always, you can send your questions and comments to WeCare@MangroveInvestor.com.
I’m headed to New Orleans next week for the big New Orleans Investment Conference. I won’t be speaking, but I will meet with a lot of companies. This means the weekly update will come out on Sunday, when I get home.