Europe’s winter energy crunch may already be underway. Two U.S. stocks that
POWER POINT
What I’m hearing from energy insiders
Oil flows through Hormuz are rising, more ships are safely getting through the Strait, and oil prices seem to be coming down — at least for now. Goldman Sachs wrote Wednesday that Persian Gulf exports have “recovered to their 2025 average after doubling in September.” The firm expects Brent crude prices to “moderate” to $85 per barrel by year’s end. That’s good news on oil, and maybe good news for both the United States and China.
My take → I know the term “reopen the Strait of Hormuz” is popular, but I just can’t bring myself to say it. Hormuz is an international waterway, and no one country can “close” it. Yes, Iran — or the Houthis in Yemen — can threaten ships in Hormuz or near the Red Sea, making it more dangerous to pass through. But no country has the power to “open” or “close” a public, international waterway. I get that I’m the outlier in saying that — and I wouldn’t have it any other way.
The not-so-good news involves natural gas and Europe. Despite the improvement around Iran and oil, it could still be a long, expensive winter for our friends in Germany and much of Europe.
For five years, I’ve been highlighting a few of the continent’s major energy challenges: how more and more U.K. families have had to choose between heating and eating — aka “energy poverty”; how rising electricity costs are hurting industrial companies; and how American liquefied natural gas has become a type of “Marshall Plan for energy,” helping make sure the lights can stay on across Europe.
One big worry I highlighted in my reporting was that parts of Europe might face critical natural-gas shortfalls at times during the year. Thankfully, those worries proved wrong. The worst-case scenarios did not happen, largely due to the weather. Much of Europe has enjoyed a multi-year run of fairly benign weather: not too hot, not too cold. That enabled countries to preserve precious natural-gas storage.
Not anymore.
This summer, Western Europe broke the 2003 record for its hottest summer on record. And while much of the continent does not use air conditioning at the same levels as the U.S. or some other countries, cooling does exist — and it’s getting more and more common. So when temperatures climb, companies and consumers want to crank it. A/C is great, but it’s a huge power drain. As power demand rose, natural-gas inventories were drawn down.
The Swiss Federal Office of Energy tracks natural-gas storage levels against the five-year average (for more, click here). The chart below highlights that the European Union’s storage level is at its lowest point in those five years.
As you can see HERE, Germany is in slightly worse shape. France, not shown, is as well.
Despite lower storage levels and higher prices, European leaders remain seemingly unbothered. A group representing the coalition writes that, despite “lower storage levels compared to…
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