Yesterday Philippe Murer addressed the energy crisis in this article. We’re giving the sequel today.
If France is only 17% dependent on Russia for its gas supplies, Emmanuel Macron has decided to give it to Germany, which is 55% dependent on Russia, in exchange for what appears to be our Germanic neighbor for electricity. Also, Macron Fessenheim has closed and will therefore have 2.5% more French electricity this winter. With electricity prices in late summer, that’s 8 billion euros a year, about three times the construction costs. As the nuclear sector has suffered disinterest and divestment as maintenance “was carried out with available funds”, half of the remaining reactors will be shut down. It seems highly unlikely that EDF will be able to get all nuclear reactors operational again by winter. Imagine (reasonable assumption) that EDF manages to run three quarters of its nuclear reactors this winter. For a number of years, France has been sourcing electricity from other European countries on peak days. France should therefore buy much more, sometimes a quarter of our usual nuclear power production. Since the other countries produce more than 20% of their electricity from gas, which is very likely to run out, they probably won’t be able to sell us electricity! Power outages, perhaps lasting several days, are therefore almost inevitable. This means either the closure of companies and thus their endangerment, or cuts for households and the impossibility for some to heat, for others to cook, for everyone to have access to the Internet, television or even to read. France will not be alone with these difficulties, as the other countries are often very dependent on gas for electricity and energy. It is therefore not surprising that market prices for gas and electricity have been multiplied by a factor of 20 and 12 respectively, even if leaving the European electricity market would have made it possible to regulate these prices and avoid such drift.
Shortages, inflation and high energy costs are therefore very likely. The economy is transformed energy. The perfect storm scenario is emerging. The beginnings are already looking difficult for our industrial fabric. Arc, Ascométal and Duralex have announced that they will “temporarily” close their factories due to excessive energy prices: they lose a lot of money by staying open! System U’s president has announced that his electric bill will be doubled next year. For medium-sized companies such as the foundries in Dechaumont, a quadrupling to six is to be expected or, if the situation persists, ruin for this energy-intensive company. As of today, aluminum and zinc production in Europe has already halved. Arcelor has reduced production at seven sites in France. While they have already had to drastically reduce their activities, producers of zinc, copper, nickel or silicon say their existence is threatened! Fertilizer manufacturers can no longer produce at reasonable prices because gas is too expensive. What about our diet next year? Unless Russian energy flows quickly to Europe, part of our industrial fabric and that of Europe will sink. And it won’t be the startups that will save the day. If the situation can improve a little, the problem could last a little less than five years. And in the last five years energy will be more expensive in Europe than in Asia because it comes from further away and Europe doesn’t have all the choices. Therefore, a future of destruction of our economic and social fabric and inflation awaits us if we do not get the situation under control. At the moment we are watching helplessly some kind of European suicide. Finally, let us remember that our moral sanctions, which are causing energy prices to explode around the world, are having serious repercussions on the economies and the already frail daily lives of residents of poor countries.
How did we get there?
At the risk of shocking beautiful souls, there is a form of cretinization of public life that can be explained in particular by the misuse of communication that has gradually replaced rational analysis. For years, as the European Commission proposes that countries think in more and more areas, European political parties have had to just use this roadmap and repeat it like parrots, slightly changing the reasoning. It’s also advisable if you don’t want to be passed off as an evil nationalist politician. When our President goes to Brussels, he will also be confronted with the European Commission and 26 other countries with different interests. Then it is difficult to say no and be the black sheep blocking the European decision. Thus, more and more decisions contrary to the interests of the country are made without particular difficulties. Alignment with US interests of the European Union is another piece of the puzzle. After all, the major opposition parties, scarcely bold and imaginative, restrained by fear of individual thinking, offer little if not to solve additional problems rather than the main part of the problem. So we almost only hear: “Let’s take care of the purchasing power of the French and everything will be solved” or “It’s the fault of Macron and the socialists, they have reduced the strength of our nuclear power system”. These major opposition parties are in the majority in the National Assembly, but almost no votes are being raised to quickly call for an extraordinary session on the vital issue raised by these anti-Russian sanctions. We should rather say anti-European or anti-French because this year, when France gets poorer, Russia will benefit from these sanctions with 100 billion euros in additional revenue. And in the medium term, its energy customers in Asia are secured. However, it will be necessary to choose between two alternatives: continue like this and wage a long war in the heart of Europe, subject Europe and its peoples to a profound economic and social descent, or seek peace on the continent, negotiate and of course these “penalties” stop or at least mitigate it. War, even if one is not responsible for it, never brings with it anything other than economic ruin.
This mess of mistakes of all kinds sometimes makes us think that we live in an idiocracy. Whatever happens, it is inconceivable that the French would be sacrificed on the altar of absurdity (or a defense of waning American hegemony). It is no longer an economic but a political problem. The worst is never certain, but failing to protect against it is inconceivable. In the meantime, let us prepare to face the storm, barring some miracle before it touches our shores.
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