This Year It's Fuel, Next Year It's Food

Welcome to the working week. Here's what we're looking at today: the coming food crisis, US visits Maduro for oil, minerals for "energy transition" caught in Ukraine crossfire, IAEA issues appeal after Ukrainian nuclear plant attacked, California's green energy plans look to hike electricity prices.

Headlines

• Russia's military chief promised quick victory in Ukraine, but now faces a potential quagmire. (WSJ)

• Food crisis looms as Ukrainian wheat shipments grind to a halt. (FT)

• Rising prices threaten Modi's hold on India's most crucial state. (BBG)

• US to begin review of tariffs on $300 billion of China imports. (BBG)

• Ukraine invasion nudges Germany towards new security mindset. (FT)

Fossil

• Analysts of $150 crude if the West bans Russian crude. (OP)

• Energy crisis in Europe worsens as natural gas prices double in a week. (OP)

• Europe turns to South Africa for coal as it shuns Russia. (OP)

• US officials to meet with regime in Venezuela, to discuss oil exports to replace Russia's. (WSJ)

• Biden caught between inflation and calls to ban Russian oil. (WSJ)

Renewables

• Chinese PV industry brief: more glass capacity and a 5GW module factory under construction. (PVM)

• Minerals crucial to clean energy transition among ripple effects of war in Ukraine. (POWER)

• Why the US is taking on China's dominance in clean energy supply chain. (SCMP)

• Australian state targets 9GW of offshore wind by 2040, first power in 2028. (OSW)

• Foundation installation to begin at 342MW German offshore wind farm. (OSW)

Nuclear

• Mayor re-elected in Japanese village eyes for nuclear waste storage site. (TAS)

• Fire at Ukraine nuclear power plant pushes commodity prices higher. (OP)

• Koeberg 2 steam generator replacement postponed. (WNN)

• IAEA appeal after shelling and fire at Zaprozhe. (WNN)

• Nuclear Regulatory Commission releases proposed decommissioning rule for public comment. (ANS)

Grid

• California's green energy prices electricity like luxury good. (CAG)

• Grid operators' 'seam' study paves the way for more renewables. (E&E)

• Grid generation declines as AEDC apologises to customers over epileptic power supply. (NT)

• DC circuit court upholds transmission cost allocation in PJM. (RTOI)

• FERC endorses massive Klamath dam removal decades in the making. (E&E)

This Year It's Fuel, Next Year It's Food

Before I sat down to write this, a friend in New Mexico told me gas is breaking the $4/gallon mark. It broke the $6 mark here in Los Angeles. There's no quick fix to this energy crisis. Scott Sheffield of Pioneer Natural Resources, the biggest shale oil operator in America, recently said the US can't replace Russian imports with any speed because "even if somebody adds a [drilling] rig . . . it takes six to eight months to get first production. There’s labour shortages, there’s frack fleet shortages, there’s rig shortages, there’s sand shortages.”

Given this, it looks like we're approaching a substantial shift in our expectations about the future. Doomberg, in a recent Substack post, calls it the "economic singularity." They argue that the knock-on effects of the conflict in Russia and the western response to that conflict--regardless of what political positions we take on either of these--permit a grim outlook on the future. 

And Doomberg's looking where I'm looking: food. Yes, today the fuel crisis is worrying.  But don't forget, our fertilizers are made with hydrocarbons. Things looked tight in the agriculture sector before the invasion of Ukraine, but now it looks worse. 

Ukraine and Russia supply a third of the world's wheat exports. The conflict is already ramping up wheat prices. By late this year and early next, we're could see these two sectors collide--along with another supply chain crisis brought about by fuel prices and political turmoil--into what I've been calling The Black Cascade.

It's already underway. Xi just said that China can't rely on the world market for food security. Modi's grip on power's getting weaker as food prices have already started to increase. A commenter on my latest interview with Robert Bryce had this to say:

A lot of leaders are about to lose elections or get overthrown if things stay on-trend. We're about to watch an untold amount of conventional wisdom get chucked out the window as we exit stability. I'm not looking forward to it. 

Crom's Blessing

Construction of nuclear reactors in France, 1970s.