The Great Unravelling

It’s Davos week and it has exceeded all my expectations, turning into a natural fertiliser show of the highest order. The geopolitical spectacle at the WEF team-building event was great fun but since I’m more partial to energy, let’s focus on energy and what happened around the world while everyone was watching the WEF speeches.

While Germany’s chancellor made public admissions about Europe’s over-bureaucratisation, coal power plants in his native country became profitable for the first time in months because the price of carbon permits fell, proving for the umpteenth time that coal-fired power is pretty cheap if left alone and not penalised by saddling its producers with carbon penalties.

This will, of course, be swept under the rug of bombastic statements as our beloved Fatih Birol did the unthinkable and once again chose to spend his panel time in Davos on repeating his usual talking points — even as the IEA walked back its massive oil glut predictions about this year, now expecting demand growth to be stronger than previously expected.

Reuters got so upset about the forecast it forgot its English, covering the news with a headline that read "Global oil demand growth to rise in 2026, IEA says". They later changed it because I mocked them about it on X and obviously they read my post. Alas, the headline in the link to the article appears to be impossible to change.

While Reuters sorted its linguistic problems, Fatih Birol decided to trick everyone by calling EVs a new source of electricity demand. The purpose of the trick eludes me but here’s the quote: “In addition to the traditional drivers, three new factors are pushing consumption: first, artificial intelligence; second, air conditioners, which are a major driver worldwide; and third, electric vehicles. Today, one in four cars sold globally is electric. Meeting this demand will rely primarily on renewables, natural gas, and nuclear power.” One would think EVs are just starting out now and the world’s only now learning about the existence of air-conditioners.

Speaking of air-conditioners, I’d like to take a moment and dispel a myth that appears to be popular among Americans. We have ACs in Europe. Even in Bulgaria (proud poorest EU member for years), you can’t swing a cat, even in a small town, without hitting half a dozen AC-ed shops. Homes have them, too. In the more northern parts of the continent, I gather, ACs don’t make as much sense, though, even for heating. I guess gas heating’s just cheaper. Glad that’s sorted.

While we’re on the subject of Europe and gas, reputable energy columnists are having an epiphany about LNG and import dependence. I’m not modest enough to omit mentioning that I warned about this back in 2022 when everyone was celebrating U.S. LNG — until they saw the bill and Macron cried profiteering. Remember? I do. At the time, the word dependence was mentioned by no one at all from the legacy media. It was a taboo word.

Well, this week we had Reuters’ Bousso gather the courage: “Europe resolved this problem [lost pipeline flows] by trading one dependency for another.” Interesting, isn’t it, how sooner or later you simply have to stop ignoring the truth because it’s too huge and obvious to hide, even if it remains highly inconvenient. And speaking of huge, obvious and inconvenient truths, we have a hands-down joke of the week, courtesy of one of the most cursed at individuals in Big Tech.

Microsoft CEO warns that we must ‘do something useful’ with AI or they’ll lose ‘social permission’ to burn electricity on it, an outlet called PC Gamer reported in a very unflattering story daring to suggest that AI is a bubble and that bubble is about to burst so its desperate blowers have resorted to begging people to keep the bubble swelling.

Nvidia’s CEO said there’s no bubble at all and that “AI is going everywhere, doing everything, all at once.” Perhaps he should tell this to Microsoft’s CEO and, while he’s at it, to OpenAI’s CEO after analysts dared warn that “OpenAI may go bankrupt by mid-2027.” Interesting times for gas companies, I guess, but not half as interesting as the times are for Big AI.

In a further sign that we are witnessing a tentative return to normality, the European Parliament blocked the Mercosur deal, prompting above-quoted Merz to say they’re going to go ahead with it nevertheless, torching any last remnants of the illusion there is anything democratic about how the EU structure operates. With that, he did all of us a big favour. Illusions are dangerous things.

Speaking of illusions, and in a further further sign normality is returning, Germany has taken to building new gas-fired power plants after the European Commission allowed it. As hilariously reported by Reuters, “This is a major step on Germany's path to ensure security of supply in light of the country's ongoing phase-out of coal-fired power capacity” — while newly-profitable lignite power plants ramp up to secure energy supply in the January cold.

As the transition myth unravels despite everyone’s best efforts, we’re in for some delicious twists into knots on the part of the myth-pushers to keep it going. The problem is, no one really cares any longer, so headlines such as “Big US gas producers are methane super emitters, environmental groups’ data shows” are likely to elicit only a shrug and a “So?”