Price caps on residential retail prices have caused bankruptcies and nationalizations of power companies.
Commercial customers are seeing electricity bills go up 5-6 fold.
Energy intensive industries like steel mills are shutting down.
Chemical and fertilizer plants have to shut down because they use natural gas as feedstock.
Governments making the problem worse by subsidizing electricity prices and subsidizing electric cars.
The Russia situation is making the problem worse in Western Europe especially, but the natural gas shortage is basically worldwide and a long time in the making.
Wholesale prices in France and Germany have been spiking snd flirting with $1.25/kwr and look to be above .60 for a long time.
Euro just fell under $1.00 again.
My best recent investment was puts for COIN. 10x in a few months, and after I sold peaked at 30-50x my entry price.
Looking back at why I got that one so right, my reasoning is that the market greatly underestimated the risk of crypto crashing.
I cannot find any obvious and effective way to play the Euro energy market. I have some REP BP and TTE. But extraordinary profits may be siezed in windfall profit taxes.
What the market I believe is again underestimating is the risk that crude oil will have a giant price spike like the world gas market already has. LNG spot has gone from the 10-20 normal range to $60-85 now. At $85 that’s the energy equivalent of nearly $500 per barrel oil.
The incentive to switch to burning oil (very sweet crude directly in some power plants and diesel in generators) is huge.
Normally oil bull markets self-destruct by (1) leading to a rapid production increase (2) tipping oil importers into recession and decreased demand.
Here, there’s a lot of evidence that production is near peak levels and is unlikely to increase unless oil goes above $130. Crude oil is also a much much smaller part of the world economy compared to the 1970s, so the economic hit of prices doubling will be much smaller.
In summary, I will be buying way out of the money Exxon calls.
Nuscale ($SMR). Nuclear energy is the clean energy of the future if we stopped being ‘fraidy cats about it. At least Newsom is seeing sense as far as NOT closing Diablo Canyon prematurely.
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