India's Take on the Russian Oil Cap // Europe's Banks Brace for Blackouts // California's Diesel Delight

India's Take on the Russian Oil Cap

Will India adopt the G7's price cap on Russian oil? Indian Petroleum Minister Shri Hardeep Singh Puri didn't mince words when he spoke with CNBC.

The G7 is pursuing this policy to further punish Russia for its aggression against Ukraine. The logic goes like this: punishing Putin by capping the price of oil will frustrate his ability to keep his war machine thrumming.

But some analysts have warned that without getting China and India in on the deal, the plan could fall apart. Both countries have started to gobble up discounted Russian crude since tanks rolled toward Kyiv.

India imports about 5 million barrels per day, mostly from the UAE, Saudi Arabia, Kuwait, and Iraq. Puri pointed out that Russian imports as of the end of March made for about 0.2% of India's oil imports.

When asked what he thought about western criticism of buying Russian oil, Puri had this to say: “I said the Europeans buy more in one afternoon than I do in a quarter. I’d be surprised if that is not the condition still. But yes we will buy from Russia, we will buy from wherever."

Does he see a moral conflict in buying from Russia while it invades another country?

“No, there’s no conflict. I have a moral duty to my consumer. Do I as a democratically elected government want a situation where the petrol pump runs dry? Look at what is happening in countries around India.”

Europe's Banks Brace for Blackouts

Some of the largest European banks are buying backup generators to make it through the winter to ensure the energy crisis doesn't spawn a money crisis.

"As Russia throttles gas supplies to the continent, banks are stress-testing how they can cope with power shortages and lining up alternative sources of energy, such as generators, so that ATMs and online banking don't go dark," reports Reuters.

Given that Europe's financial system is already fragile due to the war in Ukraine, banks have to take extra measures to ensure stability for the hard months ahead.

Despite various efforts by European banks to prepare--consolidating staff into fewer buildings to save energy, turning off hot water, and running simulations--some experts worry that the banks aren't ready for the potential multi-day blackouts ahead.

"This represents a serious gap in resilience planning," Avi Schnurr, CEO of the Electric Infrastructure Security Council, a think-tank that advises on preparing for such hazards, told Reuters.

California's Diesel Delight

The risk of blackouts in California has sparked a hunger for diesel fuel.

"Hospitals, data centers and other major energy consumers are buying up increasingly scarce diesel supplies to prepare for possible power outages, according to local fuel distributors," reports Bloomberg. "That’s likely to push prices for the fuel even higher in the state even as the national average continues to fall."

The scramble for diesel supplies comes at a time when the Golden State's diesel inventories are at their lowest level since November of 2019 and the supplies for the whole West Coast are at their lowest seasonal level in ten years.

Diesel backup in California is experiencing a boom of late, despite the current heatwave. As Robert Bryce wrote in Grid Brief just last month, generator company Generac sees California as prime real estate for sales. Why? Because “increasing use of renewables [is] leading to variability of supply and grid instability.”

The grid is coming apart and that's good for generator salesmen. But that's bad for California air and social solidarity. Services like electricity need to be reliable not just so that businesses, families, schools, etc. can flourish, but so that people know they can trust the society they live in. Trust is a fundamental aspect of freedom.

At the time of writing, CAISO appears likely to make it through the night. But the heatwave doesn't let up until Friday.

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Conversation Starters

1. Federal oil leases are dropping under Biden. "President Biden’s Interior Department leased 126,228 acres for drilling through Aug. 20, his first 19 months in office, the analysis found. No other president since Richard Nixon in 1969-70 leased out fewer than 4.4 million acres at this stage in his first term," the Wall Street Journal reports.

2. South Korea's southeastern refinery complex emerged from Typhoon Hinnamnor unscathed. "Tanker loading and discharge activity was largely put on hold as a precaution prior to the typhoon's landfall in the southern and southeastern regions, while backup power was secured for stable refining operations, plant operation sources at SK Energy and S-Oil Corp.," reports S&P Global. Run rates quickly returned as the typhoon moved away.

3. China claims it can ramp up its nuclear plant expansion. "The national target is six to eight reactors a year, but that could be raised to 10, said the China Nuclear Energy Association. The agency is also advocating bringing more nuclear power inland, including as a backup to China’s massive buildout of wind and solar farms in the west, which can generate power only intermittently," reports Bloomberg.

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