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Europe's Energy Costs See Biggest Two Month Jump Ever

Tyler Durden's picture




 

Between a weaker EUR and Middle-East tensions, Europe faces a very significant (and real) drag on its economic performance. Forget the 'grow our way out of it' or 'believe-me' memes, the crude reality (that we warned about last week) is that the cost of buying spot Brent Crude in Euros is very close to record highs, above 2008 highs and most worryingly, has seen the biggest rise on record in the last two months. For those wondering what the trade-off is to Mario Monti's pointless blustering and scorched-earth hostage tactics at the June 29 Summit, just look at the 'Total' line item, the next time you gas up.

 

Spot Brent crude priced in Euros - record two-month rise (lower pane) and very near-record high overall...

 

Charts: Bloomberg

 

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Thu, 08/16/2012 - 11:31 | 2710692 Capitalist
Capitalist's picture

Who is John Galt?

Thu, 08/16/2012 - 11:54 | 2710816 Enslavethechild...
EnslavethechildrenforBen's picture

Do any of you actually believe that we still have any petroleum reserves left?

Thu, 08/16/2012 - 12:48 | 2711019 smiler03
smiler03's picture

So how long do you think we can keep the lights on for?

Thu, 08/16/2012 - 12:54 | 2711043 Flakmeister
Flakmeister's picture

Considering that a very small fraction of electricity is generated with oil in NA, I would say quite a while....

Thu, 08/16/2012 - 11:55 | 2710818 camaro68ss
camaro68ss's picture

oil? All i need is a shovel and i can dig it out of the ground for $10. hahaha

 

Olde but goode

Thu, 08/16/2012 - 13:31 | 2711166 SRSrocco
SRSrocco's picture

CHEAP OIL IS OVER... THIS SPELLS BAD NEWS FOR THE GOLD MINERS

Well, it looks like AVAILABLE NET OIL EXPORTS peaked in 2005... and we just go downhill from here.  Even though overall global liquid production may be at a current peak, net exports only decline further from here.

According to Jeffrey Brown, calculating a mere 1% annual decline rate in global oil production until 2020, AVAILABLE NET OIL EXPORTS (minus China & India) decline from 35mbd in 2010 to 16-17 mbd by 2020.  It doesn't get more SOBERING than that.

THIS IS BAD NEWS FOR THE BIG GOLD MINERS

I am currently doing research on the fuel (diesel) consumption of the top 8 gold miners, and let me tell you.... the overall trend is a DOUBLE IN DIESEL CONSUMPTION PER GALLON PER OUNCE OF GOLD in the past 6 years:

For example:

BARRICK 2005 gallons of diesel per oz of gold = 15.4 gallons / oz

BARRICK 2012 gallons of diesel per oz of gold = 29.0 gallons / oz

Most of the other top gold miners have either doubled or increased their diesel consumption significantly per oz of gold production in the past 6 years.

ARTICLE TO BE OUT IN SEPT

Thu, 08/16/2012 - 13:57 | 2711307 midtowng
midtowng's picture

But the price of gold has more than doubled since 2005 as well.

Thu, 08/16/2012 - 11:34 | 2710707 101 years and c...
101 years and counting's picture

europeeons are broker and broker, courteous of your friendly, local madman....errrr, central liar.  central printer.  central fuck.  central pig.  central douchebag. you pick.

Thu, 08/16/2012 - 11:35 | 2710714 Bastiat009
Bastiat009's picture

Politicians (when they're not on vacation which makes problems go away by the way) and pundits love to explain that a weak currency makes people rich ... well, except when you have to pay for things.

Thu, 08/16/2012 - 11:35 | 2710715 bnbdnb
bnbdnb's picture

Bye bye temporary GDP recovery.

Thu, 08/16/2012 - 11:36 | 2710718 NEOSERF
NEOSERF's picture

Luckily most citizens in Europe can walk from one side of their country to the other in 4 hours...

Thu, 08/16/2012 - 11:38 | 2710739 CrashisOptimistic
CrashisOptimistic's picture

True, but they can't carry food for millions on their backs.

Trucks feed cities, and they burn oil.

Until they can't get enough to burn.  Then the cities aren't fed.

Thu, 08/16/2012 - 12:28 | 2710948 css1971
css1971's picture

Trains, trams, canals.

Then there are new technologies like UltraPRT starting to appear.

Most European cities are pre-automobile. Which becomes blindingly obvious when you try to drive through one.

 

Thu, 08/16/2012 - 11:41 | 2710747 bank guy in Brussels
bank guy in Brussels's picture

And seriously, cars here are more 'toys', with our superb and quite cheap public transport

In Belgium it is extremely inexpensive to have monthly or yearly free passes where you ride all means of public transport in the region for free, without limit

We have long had what Americans see as $8 or $10 per gallon gasoline ... using litres and euros here of course ... but this is decades-old policy to keep cities livable, discourage suburban sprawl and incentivise use of public transport

And it works very well, even supporting democracy ... people live together in cities and towns and can get together to demonstrate and riot on short notice

Thu, 08/16/2012 - 11:56 | 2710817 Precious
Precious's picture

STFU - you NATO occupied troll.

Thu, 08/16/2012 - 12:06 | 2710846 Ghordius
Ghordius's picture

either he is a troll - then junk and ignore - or you have a point to make, in which case I'm waiting, my precioussssssss... <need a fight, need a fight>

Thu, 08/16/2012 - 12:13 | 2710872 Precious
Precious's picture

Tell me why you would get it, Ghordius Van Damme? 

Brussels Guy and you probably work out at the same Eurofag gym in matching bike tights.

Thu, 08/16/2012 - 12:16 | 2710900 Ghordius
Ghordius's picture

LOL, that made my day, thanks - I was thinking more about a fight here, perhaps about urban sprawl or something

I find Brussels extremely boring and dull, you could not hold me there. And I agree, Brussels Guy has a "feminine touch" when he talks about his city... harharhar

Thu, 08/16/2012 - 12:22 | 2710917 Precious
Precious's picture

If the dude gets any more full of himself, he won't fit through the bank door.

Thu, 08/16/2012 - 12:23 | 2710929 Ghordius
Ghordius's picture

...now you owe me a keyboard...

Thu, 08/16/2012 - 11:55 | 2710752 Abraxas
Abraxas's picture

@NEOSERF:

Well, that'll change soon, when all of Europe becomes one country, under one leadership and one currency. Ein Volk, Ein Reich und Ein Fuhrer! Sieg Heil! (a wave of epileptic convulsions going through the rabid masses)

Thu, 08/16/2012 - 11:58 | 2710832 Ghordius
Ghordius's picture

and your evidence for this trend is...? do you have a timeline?

Thu, 08/16/2012 - 12:01 | 2710844 Abraxas
Abraxas's picture

Me? No man, I have no evidence. I'm just messin' around. What the hell do I know.

Thu, 08/16/2012 - 12:05 | 2710865 Ghordius
Ghordius's picture

you mean I know nuffin', gov'nor? there was an English joke about that...

Thu, 08/16/2012 - 11:37 | 2710725 AG BCN
AG BCN's picture

Yup, just drove past a Repsol garage 20 minutes ago and was surprised to see Diesel at Euro 1.50/litre 

In early 2007 it was 1.00/litre. 

Spain is in deeeep caca.

Thu, 08/16/2012 - 11:38 | 2710726 AG BCN
AG BCN's picture

 

.

 

Thu, 08/16/2012 - 11:37 | 2710727 scatterbrains
scatterbrains's picture

See if they would only print faster they could get out ahead of these little blibs in energy prices before anyone even notices.

Thu, 08/16/2012 - 11:39 | 2710733 Pretorian
Pretorian's picture

They will ban Oil SHORT selling if they dont like it . Oh no they will ban all LONG positions....lol

 

 

 

 

Thu, 08/16/2012 - 11:38 | 2710735 DavidC
DavidC's picture

Is this why stocks are up today? I don't understand...

DavidC

Thu, 08/16/2012 - 11:40 | 2710745 CrashisOptimistic
CrashisOptimistic's picture

Stocks are up because the world hasn't caught up to realizing that there is no longer a market.

Just ignore it.  Buy farmland.  It's the only thing that will still have value in 5-10 yrs.

Thu, 08/16/2012 - 11:42 | 2710757 tahoebumsmith
tahoebumsmith's picture

Austerity+Inflation=<GDP> They might just as well start handing out the pills because the pain has only just begun...

Thu, 08/16/2012 - 11:43 | 2710760 Jack Burton
Jack Burton's picture

Energy hits Europeans harder now than it once did, they adopted a love affair with the automobile and have not looked back for decades.

The UK for example was paved over in great leaps, as was Sweden. People used to rely on public transport, now as many as possible drive instead.

Fill up your car in the UK or Sweden, Ouch! But at least the drive distances are shorter than in the USA. ANd cars tend to get good milage. In Sweden I drove a little VW and yes it was expensive to fill, but once full I drove for weeks before another fill up!

Just filled my RAV4 here in the USA, it was pretty steep expense and my driving distances here are pretty long. 25 miles to a decent store, the same for Doc and dentists.

Thu, 08/16/2012 - 11:43 | 2710762 diogeneslaertius
diogeneslaertius's picture

NeoFeudalism

Thu, 08/16/2012 - 12:04 | 2710857 Abraxas
Abraxas's picture

Neoconservativism, neo liberalism, neofashism, neocommunism ... just different names for the same thing.

Thu, 08/16/2012 - 11:44 | 2710763 LawsofPhysics
LawsofPhysics's picture

Redundant, all fiats are losing value.  What is oil priced in gold, bitchez.

Thu, 08/16/2012 - 11:44 | 2710765 diogeneslaertius
diogeneslaertius's picture

the new world order is the old world order

 

kleptocratic plutocracy, now with borg velociraptors drones, and extra liquidity!

Thu, 08/16/2012 - 11:45 | 2710773 -1Delta
-1Delta's picture

and the energy value of corn.... talk about a tight spot when USDA estimating sub mandated levels of ethanol usage with ethanol at discount to RBOB...

 

http://commodmarkets.com/2012/08/14/corn-rationing/

 

Thu, 08/16/2012 - 11:51 | 2710801 Hype Alert
Hype Alert's picture

Money printing will get you inflation.  Success!   The people should be happy.  It was all done to save them you know.

Thu, 08/16/2012 - 11:56 | 2710822 orangegeek
orangegeek's picture

WTI Oil is retracing - has some upside around $98 per barrel. Wave 3 down will likely follow.

 

http://bullandbearmash.com/chart/spot-wti-oil-daily-august-15-2012/

Thu, 08/16/2012 - 12:01 | 2710849 ekm
ekm's picture

Finally. Thx ZH.

The only thing that actually matters is the crude oil price.

Crude oil price higher, economy goes shit

Crude oil price lower, economy rebounds.

 

Why is this so difficult to understand?

Thu, 08/16/2012 - 12:14 | 2710893 Flakmeister
Flakmeister's picture

When people believe crap like that there is a trillion barrels of oil off limits in the US, it is amazing what they can come up with when trying to rationalize things....

Thu, 08/16/2012 - 12:02 | 2710856 etresoi
etresoi's picture

There is plenty of oil available in Iran and the sanctions hurt the European economies more than they hurt the Iranian.

Thu, 08/16/2012 - 12:25 | 2710889 Flakmeister
Flakmeister's picture

 

Hey. I thought the (pick one)

a) Saudis

b) Iraqis

c) Little Green Men on Titan

d) All of the above

was going to replace those Iranian exports?

Whocoudanode???

Thu, 08/16/2012 - 12:40 | 2710987 ekm
ekm's picture

There's two kinds of demand:

1) Consumption

2) Storage

 

Everybody knows number 1 has been going lower and lower, hence number 2 remains until everybody's storage is full and they have to unload. No different from 2008-2009.

Iran's ground storage is full and offshore storage is half full based on what I read recently.

China is storing and storing and storing.

Cushing is almost spilling over.

The time will come, guaranteed.

Thu, 08/16/2012 - 13:00 | 2711061 Flakmeister
Flakmeister's picture

Here is Cushing

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPC0_SAX_YCUOK_MBBL&f=W

And is the total stocks excluding the SPR

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTESTUS1&f=W

Cushing is about 4%.....

Ummm.....  Do you want to rephrase what you said?

Thu, 08/16/2012 - 13:05 | 2711070 ekm
ekm's picture

Ok, there's more space. I am at work and can't focus on the charts you linked.

How long can they continue like this?

(I did NOT down you, below).

Thu, 08/16/2012 - 13:09 | 2711097 Flakmeister
Flakmeister's picture

Would you like me to post links to the OECD stocks as well?

Your claim about 2008 is dead wrong....

How long can they continue what exactly??

----

(PS I don;t give a flying fuck about up or down arrows...)

Thu, 08/16/2012 - 13:21 | 2711117 ekm
ekm's picture

Ah ok. OECD data!

This is like data from China or from BLS. Random data generator. Even Cushing data is just by WH order.

How can there be drops in storage when the demand is lower?

A private crude oil trader can store at Cushing maintaing ownership of the crude oil. Only when the ownership is transferred, is the data reported as increase of crude storage.

Thu, 08/16/2012 - 13:22 | 2711139 Flakmeister
Flakmeister's picture

Umm... do you know where the OECD data comes from?

Hey, if Cushing is just what the WH says it is, why didn't W. step in duing '08???

You can have drops in storage if supply drops greater than demand...

Or did you think that oil production can only increase????

Did you also know that the amount of crude on the market is down ~10% since 2005? 

Thu, 08/16/2012 - 13:26 | 2711154 ekm
ekm's picture

Oh I see where is the disagreement.

I believe no data, none whatsoever. Data is out there in order to mislead to lure suckers.

I always check that data with feedback from other sources on the internet.

But again, if your investing is based on that data, it's your choice.

Thu, 08/16/2012 - 13:30 | 2711175 ekm
ekm's picture

Ok. Thx for the debate. Very enjoyable.

Thu, 08/16/2012 - 13:21 | 2711137 ekm
ekm's picture

What do you think happened in 2008?

Thu, 08/16/2012 - 13:28 | 2711169 Flakmeister
Flakmeister's picture

There some clues here (notice the dates):

http://gregor.us/oecd/days-of-our-supply/

http://gregor.us/iea/demand-noise-fresh-oil-data-from-iea-paris/

To make a long story short, in 07 to early 08, the worlds economy was running on a drawdown of stocks, i.e. oil was being consumed faster than it was being produced...

Thats all, I gotta run...

Thu, 08/16/2012 - 13:38 | 2711207 ekm
ekm's picture

Thx for the debate. Very enjoyable.

Thu, 08/16/2012 - 12:25 | 2710939 Flakmeister
Flakmeister's picture

While not Brent related, here is an awesome article on the BHP takeover of Petrohawk and an overview of CHK

Shale Gas Assets: Overpriced or a Liquid Turn for Mining Giant BHP?

http://www.theoildrum.com/node/9397 

I guess that sometimes things aren't always what they were fracked up to be??

Thu, 08/16/2012 - 12:36 | 2710969 Venerability
Venerability's picture

It's really VERY easy - and what WILL happen, especially when a Eurozone-wide Tobin Tax is firmly in place:

Japan no longer wishes the Yen to be the "funding currency."

Europe wants the Euro to be the "funding currency."

And the US needs to become a major energy exporter again - and one way or the other, it will.

Energy becomes THE bargaining chip for smart conservatives in the (inevitable) second Obama administration. Yes, we need - and will get - relief on investment-oriented taxes, too. But it is Energy on which we should push hard, against the childish and Elitist Ultra-greens, who are brothers and sisters under the skin to the most Elitist and obstructive supply-siders.

Energy growth.

Infrastructure growth.

Both.

Compromises from the intransigent Elitists on both the Left and Right.

And BIG compromises from the Currency World.

 

 

 

 

 

 

 

Thu, 08/16/2012 - 12:45 | 2711012 Flakmeister
Flakmeister's picture

Yo Ven...

Learn to edit out your whitespace...

The US has zero chance of becoming a net energy exporter.... Zilch

Thu, 08/16/2012 - 13:10 | 2711099 Venerability
Venerability's picture

Improvements in ability to export LNG plus substitution of CNG for gasoline throughout US economy - and much more, not less, high-speed rail and other infrastructure to lure Americans out of their cars! Yes, of course, it is possible.

Transportation is one area in which the US desperately needs to be more like Europe and most of the rest of the world - not the opposite.

Think of your last European trip. Did you drive at all? I didn't. And soon, you won't need to in China, India, or any number of other places.

Thu, 08/16/2012 - 14:56 | 2711171 Flakmeister
Flakmeister's picture

Gotta run... will reply later

I'm back, 2 basic questions:

Is the US currently a Net Importer or Exporter of NG???

Replacing 10% of domestic oil use would require increasing NG production by how much??

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