Britain’s two-headed energy crisis
Britons are praying for a warm winter. There is a natural gas shortage, further complicated by renewables not kicking in their share. Britain relies on wind power for 20% of its power. This summer the wind didn’t blow. Britain has been forced to re-start coal fired plants to supply electricity.
It is a complex problem On the natural gas front, some smaller suppliers have gone broke. They promised a fixed rate but buy their natural gas on the open market where prices have soared.
The second crisis is more immediate. A shortage of truck (lorry) drivers means gas stations (forecourts) are running out of gasoline (petrol) and diesel, no translation needed. Prime Minister Boris Johnson moved to allow foreign drivers to work in Britain, something most of them could have done before Brexit. Boris also called for a raise for truck drivers.
BP (British Petroleum)) rationed fuel and closed some outlets. The government told people there was no fuel shortage and urged them not to panic. Of course they did, panic that is.
So why not drive electric?
There are only 300,000 all-electric cars in Britain out of a total of 31.7-million cars. The Royal Automobile Club says there are 1.5-million Ford Fiestas on the road in Britain alone. Survey find people think electric vehicles are too expensive and don’t have enough range, Britain will ban the sale of gasoline powered cars in 2030.
One assumes that will include PHEV, hybrids that mix electric with gas or diesel.
Range at a price
The Lucid electric vehicle has an EPA (environmental Protection Agency) rated range of 520 miles, or about 840 kilometres. That is better than the best Tesla by around 160 kilometres. There’s a catch.
The hyper-range is in Lucid’s top model, the Air Dream. It costs $169,000. Cheaper models have less range.
Europe is also facing a natural gas price spike
This week’s Economist points out: Last September in Europe it cost €119 ($139) to buy enough gas to heat the average home for a year and the continent’s gas-storage facilities were brimming. Today it costs €738 and stocks are scarce.
The big supplier is Russia which feeds natural gas to Europe.
Green polices have not helped. Two examples from two very different countries.
Germany plans to close all of its nuclear plants over the next decade. Wind and solar provide almost 40% of Germany’s energy needs but they are not always reliable. Nuclear power is always on. Germany too is running dirty coal-fired plants.
Canada could be selling liquified natural gas to an energy hungry world but the green minded Liberal government blocked a natural gas pipeline to Prince Rupert, British Columbia.
It’s official: cryptocurrencies are illegal in China
On Friday the People’s Bank of China made it against the law to deal in digital coins. It said this earlier this year but now it expanded the ban to include people trying to get around the rules.
The People’s Bank of China’s message: “Recently, cryptocurrency speculation has increased, disturbing economic and financial order, breeding illegal and criminal activity such as gambling, illegal fundraising, fraud, pyramid schemes and money laundering. This all seriously endangers the people’s safety.”
People’s safety There’s an Orwellian phrase. It will affect the safety of anyone disobeying the law. Will it mean that all Chinese nationals who own cryptocurrencies now can’t sell them? One Chinese speculator cashed in millions of Bitcoins just before the deadline.
Only a matter of time until other countries lower the boom.
In an unrelated incident on Friday
Meng Wanzhou, the chief financial officer of Huawei made a deal with an American court that allowed her to avoid extradition to the United States and leave Canada on a chartered Boeing 777. She had been wearing a security ankle bracelet and living in two luxury houses in Vancouver while awaiting extradition.
In contrast two Canadians, Michael Kovig and Micael Spavor were held in deplorable conditions in China for almost three years. They arrived home on Saturday, proving what China has long denied, that it is a gangster regime engaging in hostage diplomacy. It must have been a complex negotiation. I’ll buy the book that explains it.
Fewer Christmas books this year
Ken Whyte, first editor of the National Post, author and now a publisher — Sutherland House Books— warns there will be fewer books this Christmas. Same supply chain bottleneck that means a three to six month wait for stoves and cooktops, even ones made in North America.
Here are some of his complaints from his weekly newsletter, SHuSH:
Many thousands of our fall books are sitting on a dock in Ashland, Ohio because our distributor can’t hire staff to put them into inventory.
Booksellers are having trouble getting shipments in a timely fashion, putting unwanted delays between pre-arranged publicity for books, including reviews, and their in-store availability.
We’ve got books with incorrect listings on Amazon, including a couple listed as unavailable, because Amazon is short of people to fix errors in its system.
If any of our books outperform this fall, we’ll likely have to move immediately from hardcover to paperback because of the lack of press time. Printers are having trouble staffing up and they’re getting more work than ever because of an irrational exuberance that’s sweeping publishing as we come out of the pandemic.
We’re wondering if we have to do mostly paperbacks instead of hardcovers next spring because of the hardcover printing problem.
Some of the US printers we use are short on paper, or limited in the types of paper they have available.
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Essay of the Week
Making Sense of Risk
Risk is tough thing to figure out. It is not always obvious what is a risk.
Take lotteries. Now there is a risk, though one that costs just a few dollars for a daydream. The chances of winning the biggest lottery in North America, Powerball in the United States, are 1 in 292-million. You are four times more likely to be killed by a meteor hit this year than winning that lottery with one ticket.
People keep buying lottery tickets without understanding the risk involved. The bigger the pot gets the more people line up to buy a chance on things such as Lottery 6/49, where the odds of winning usually run at `just’ 14-million to one, even though every ticket that sells reduces the chances of winning.
A study by professor of economics at Holy Cross University in Massachusetts shows that sales rise with the size of jackpot as the odds rise too. No one assesses the risk. What is even more illogical is that after a big win, when the prize drops, sales are still strong.
Most people are too busy to figure out risk. Many home owners prefer mortgages with a long fixed term so they can sleep better at night knowing their monthly costs are fixed. About two thirds of Canadians choose a four or five-year fixed mortgage; just under a third pick a variable mortgage where the rate rises or falls with interest rates . Economists say that rate pays off since the variable is always lower than the fixed in the long term. That has been particularly true of late, but nothing lasts forever.
“In a twitter-nut-shell, historically the variable or floating rate has been a better bet for Canadians, but like all bets you are taking some risk. Make sure your personal balance sheet can handle it,” says Moshe Milevsky, a professor at the Schulich School of Business at York University who specializes in personal finance.
A survey of financial literacy reported in The Economist showed that many people don’t understand some basic financial concepts such as: is it better to own a stock, which could soar like Apple or Google, or a managed fund. The answer is the fund; for every Apple or Google there is a Valeant or Northern Telecom.
“People who wrongly think they know what they are doing are particularly liable to make costly mistakes,” says The Economist.
One of the final risk decisions in life comes at retirement. Someone put this question to me just the other day: Should I buy an annuity that guarantees me a payment for life, but takes away any money I might leave, or should I stay with my investments? Those investments were a mix of dividend paying stocks.
In the current interest rate environment annuities pay out much less than they used to. For example, a C$100,000 joint life annuity guaranteed for 20 years would pay C$400 (average of 10 quotes) a month for a 65-year-old. Over the 20-year period the total payback is $96,000. The insurance company is effectively charging you $4,000 to hold your money. The decision is a risk, and one that lasts for the rest of your life.
Is it any wonder people decide to take a risk and put their cash in the stock market?