"There's no bailout coming" for Europe

Where we live, summers are dry. A short shower might cool the earth a little occasionally but mostly, for three months, the sun reigns supreme. Once autumn comes around, the rains begin, and not just rains, but lightning storms and even hail. It seems that this sort of autumn is coming to Europe after quite a long warm, dry, problem-free summer.

Last week, the president of the European Commission, Ursula von der Leyen, announced a range of measures aimed at tackling sky-high utility bills for European consumers — and businesses — and sky-high profits for some luckier power generators. The latter are proposed to be skimmed to the total tune of 140 billion euro, to be used to help households and less fortunate businesses.

So far so good, and remind me to tell you about the EC’s ideas about media freedom, but one thing missing from the plans seems to be oil and gas supply during the winter. It’s a pertinent question because, yes, it’s an overused cliche but it is coming in less than three months and the EU embargo on Russian oil kicks in come December.

The IEA has estimated the embargo could cut Russian oil exports by a fifth. U.S. Treasury Secretary Janet Yellen said the situation “could cause a spike in oil prices,” and let me just say how much I love when someone says “could” when they mean “will”. Because U.S. producers can’t step in and replace the lost supply.

This punch must have really hurt or, rather, it will hurt when Europe realises it has been punched by a piece of reality yet again. The latest piece: U.S. drillers warning they cannot possibly increase their oil or gas production fast enough to secure Europe’s winter energy needs.

“It’s not like the US can pump a bunch more. Our production is what it is,” Quantum Energy Partners chief Wil VanLoh told the FT, adding “There’s no bailout coming. Not on the oil side, not on the gas side.”