Nigerian Blackouts Ad Infinitum // Dutch Cut Groningen Gas Production // France's Firewood Shortage

Nigerian Blackouts Ad Infinitum 

Nigeria's grid collapsed yet again this week for the fourth time this year. Experts and officials are pinning the blame on technical issues. 

"Nigeria has an installed capacity of 12,500 megawatts but only manages to produce about a quarter of that thus forcing many Nigerians and businesses to rely on diesel-powered generators," reports Oilprice.com. 

And it's not just the grid that's in shambles. The country's entire energy sector looks a mess. Nigeria is Africa's most populous country and was once its most productive oil producer. But now it's losing 200,000 to 400,000 per day to theft at its oil hub in Bonny, after which the country's signature light sweet crude, Bonny Light, is named. 

"Bonny Light has particularly good gasoline yields, which has made it a popular crude for U.S. refiners, particularly on the U.S. East Coast," reports Oilprice.com. Nigeria's output has fallen behind that of Angola, Algeria, and Libya. In July its production slipped to 1.083 barrels per day. 

A single barrel of Bonny Light is worth about $87. Nigeria is losing billions per year to theft. Q1 of this year, for instance, saw a loss of $1 billion. Shell subsidiaries in Nigeria now claim that oil theft poses an "existential threat" to the whole market.

Dutch Cut Groningen Gas Production

The Dutch have cut production to the lowest levels possible while keeping their wells running at their Groningen gas field. 

"Production at Groningen, once one of Europe's major suppliers of natural gas, will be capped at 2.8 billion cubic metres (bcm) in the year starting Oct. 1, the government said, down from 4.5 bcm in the current year," reports Reuters. 

Groningen still has massive reserves. Yet tremors brought on by gas extraction inspired protests that came to a head in 2018 after a surprisingly powerful quake. Afterward, the government committed itself to end production by the fall of next year or by 2024 at the latest.

Needless to say, Europe's winter forecast just got darker. Nordstreams 1 and 2 have sprung incredible leaks, massively damaging Germany and Europe's ability to keep storing up for winter. Secretary of State Anthony Blinken said that the leaks were the result of sabotage but he believes "the leaks will not have a significant impact on Europe's energy resilience." Russia says that can't predict when the leaks will be fixed. Russian gas still flows to Europe through pipelines in Ukraine, a tenuous situation. 

France's Firewood Shortage

The French are running low on wood, so the price of wood is rising. 

"Firewood shortages in France are intensifying and prices have jumped by more than 20% since June due to soaring demand, more people in the market, and fears over the price of other fuel," reports the Connexion. Pellet prices have increased sixfold over the last six months.

"Firewood providers are warning that there will not be enough wood for everyone this winter," the publication added.

France had 7-8 million homes that relied on wood for heat in 2019. The Environment and Energy Management Agency thinks those are rookie numbers and wants to see it increase to 9.5 million next year. 

You read that right--France's environmental agency wants to increase woodburning even though wood is not very energy dense and incredibly carbon intensive. I'm guessing, though I can't confirm this, that the natural fallacy is at play--"burning wood is good because wood is natural."

The French can expect the wood price to climb, sadly. A new law that went into effect at the beginning of the month now "requires wood sellers to offer clients information on their wood, including about the fuel, length, quantity, and humidity levels. From September 2023, logs measuring less than two metre must only be of dry wood."

"This is likely to cause an extra shortage in the future, given that it takes 18-24 months to fully dry firewood," the Connexion concludes.

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Conversation Starters

1. Germany's now considering a price cap to curb the energy crisis. "Unlike the UK cap on prices, and a similar measure introduced in France, the cap in Germany would rather impose a levy on electricity-generating firms that charge more than a certain amount, yet to be determined," reports Oilprice.com. "The money collected from the levy on producers would be later distributed to the operators providing energy to the end users, which would allow for lower power prices for end users."

2. The OECD has cut its 2023 growth prediction from 2.8% to 2.2%. "With the impacts of the COVID-19 pandemic still lingering, the war is dragging down growth and putting additional upward pressure on prices, above all for food and energy. Global GDP stagnated in the second quarter of 2022 and output declined in the G20 economies," the organization said.

3. History hurts:

Crom's Blessing