Germany made a choice to increase its reliance on Russian hydrocarbons after the invasion of Crimea in 2014, and is responsible for its own predicament, unlike the “Club Med” a decade ago.
It is being asked for a lesser sacrifice, and for a higher purpose: to halt slaughter on the EU’s doorstep is modest by comparison.
In any case, there are grounds for thinking that imported Russian gas could be replaced entirely by next winter. Extra supply of gas and coal is emerging all over the place, above all from through displaced imports no longer needed in China.
Chinese coal imports fell 40pc by volume in March. The Communist Party is switching back to domestic mine production at breakneck speed for reasons of national security, fearing that the US could at some point choke seaborne supplies of thermal coal.
This is feeding through global markets. Rotterdam coal futures prices have fallen 25pc since peaking five weeks ago, which allows gas-to-coal switching for power plants. Citigroup thinks spot gas prices in Europe could fall by half this summer.
The global oil market remains tight but the International Energy Agency has again cut its global demand forecast, this time because of China’s Omicron lockdowns and Xi Jinping’s refusal to abandon zero-Covid policies. The IEA has trimmed global crude demand by 1.5m barrels a day in a matter of weeks.
The US is adding a million a day from its petroleum reserve. Washington has mobilised US companies to drill as a patriotic duty. They can undoubtedly produce an extra one million a day this year. Frackers added 13 rigs last week. New permits in the Permian basin have smashed earlier records.
Yes, it could still be traumatic. Rystad has warned of a spike to $240 by the summer if Europe opts for an oil blockade. But such prices would destroy global demand very quickly and bring the market back into equilibrium.
It would no longer be politically possible for Saudi Arabia and the Gulf states to keep withholding 2.5m barrels a day of spare capacity. To try would be strategic suicide.
In any case, the political dam is bursting in Germany. Die Welt captured the exasperated mood of the media, calling Germany’s love affair with Putin’s Russia the “greatest and most dangerous miscalculation in the history of the Federal Republic”.
The chairmen of the foreign relations, defence, and Europe committees in the Bundestag – spanning all three coalition parties – all called for an oil embargo on Thursday.
“We must finally give Ukraine what it needs, and that includes heavy weapons. A complete energy embargo is doable,” said Anton Hofreiter, the Green chairman on Europe. “We are losing the respect of our neighbours on a massive scale. The problem is in the Chancellor’s office.”
When you are in a deep hole, Scholz, stop digging.
