Good morning; here's what the Oilman has for you today:

• World Braces for LNG Supply Shock

• How the UK Lied To Make Wind, Solar Seem Cheap

• Upcoming Oil and Gas Events

• Tweet of the Day

World Braces for LNG Supply Shock

News of LNG workers planning a strike in Australia pushed international prices higher.

The spike highlights the fragile supply-and-demand balance in the LNG market.

And hints at higher energy bills.

Disrupt 10% of global supply, disrupt all supply

Reports of plans for industrial action at three LNG facilities in Australia pushed EU’s gas prices 40% higher last week.

Some expect higher prices still if the plans pan out.

Right now, the workers are negotiating with the project operators, Woodside and Chevron.

Yet even if the strike gets averted, the message is clear.

The global LNG market is in such a precarious balance the threat to 10% of supply immediately causes prices to soar.

That’s not a cheerful message for gas users anywhere, including the U.S.

We have our own gas, but we’ve started exporting a lot of it.

So, if global prices spike because of a strike at the Gorgon LNG project, for instance, they spike, well, globally.

Additional supply can’t come soon enough

“In the blink of an eye, a market that had looked well supplied and relaxed was turned into a flighty wreck.”

That’s how Reuters’ Clyde Russell summed up the situation.

He’s right.

And that’s happening at a time of relatively low demand.

Imagine if those workers had decided to strike in November.

Meanwhile, opposition to more LNG capacity remains strong, especially in Europe.

Some people remain convinced gas demand is on its way out.

Even when everything shows, it is exactly the other way around.

Europe has developed a taste for long-term LNG contracts.

Germany is building a permanent import terminal.

Pakistan is once again priced out of the LNG market because of strong demand from richer countries.

Yeah, sure, gas demand is definitely on its way out. Maybe next century.

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How the UK Lied To Make Wind, Solar Seem Cheap

The UK government has overestimated the price of carbon emissions in future energy policy drafts.

One such draft from the energy ministry saw CO2 costing 150 pounds per ton in 2025.

Right now, CO2 costs some 40 pounds per ton.

There are two ways to make something cheap

One is to lower its production and other associated costs so the end product is genuinely affordable.

The other way is the transition governments’ way.

They try to make everything else so expensive that wind and solar seem cheap by comparison.

Exactly what the UK’s Department of Energy Security and Net Zero did in its report.

The very name of the department speaks volumes in itself.

But assuming a threefold jump in the price of carbon over two years is a bit… excessive.

They’re doing it everywhere

The EU’s carbon permit system is another way of artificially inflating the cost of hydrocarbon generation.

If you’re a power generator using gas or coal, you are obliged to buy those permits.

The higher their price, the higher the cost of your output.

And wind and solar look dirt cheap by comparison… because there are no mandatory permits for them.

That’s exactly what Biden wants to do here as well.

Remember that recent EPA plan to set limits for power generator emissions?

It’s nothing but a version of the EU’s permits and the UK’s CO2 price assumptions.

If the transition won’t work on its own – and it won’t – those in charge will make it work, one way or another.

It’s not like they’re paying for this out of their own pockets.

Upcoming Oil & Gas Events

• August 16-17: Petroleum Alliance of Oklahoma Flycatcher Fly Fishing Tournament Beavers Bend, OK

• August 17: 26th Annual PIOGA Divot Diggers Golf Outing and Steak Fry Hermitage PA

• August 20-22: Kansas Independent Oil Association 86th Annual Convention and Expo, Hyatt Regency, Wichita KS

Around the Global Patch

🇧🇷 Brazilian dynamo ignites cutting-edge gas venture.
🇨🇳 July surge: Chinese refiners boost processing
🇦🇺 Australia contemplates carbon tariffs on imports.

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