Great article Chris. I live in hope that the people will begin to realise that energy security, food security, economic security and national security are all interconnected. Alas Canberra and its allies in the mainstream media still seem to be chasing a progressive utopia. Not sure what it will take to shock them out of it - a serious spike oil prices maybe?
Chris, I love your doses of reality amidst all the magic thinking. Still, a corrective note on the effects of the 2003 overthrow of Saddam Hussein. It’s not commonly known but when the US Army rolled into Baghdad the Iranian leadership was so panicked at the Great Satan in its borders, it reached out with peace overtures. An opportunity for historic rapprochement between the Islamic Republic and the US was there to be taken but Cheney and Rumsfeld were so full of hubris (& W was so callow) that they spurned the approach, then compounded their error by disbanding the Iraqi Army and leaving the soldiers to go home and start the insurgency. Iran quickly recovered its nerve and fed fuel to the fire. The rest is history. For a clever country, the US can be remarkably stupid (as can another clever country, Israel). And we ALL must bear the consequences.
The global fertiliser market was already tight. China has restricted exports to secure domestic supply, while European producers have cut output after losing access to cheap Russian gas. The margin for further shocks had already been shrinking.
Unsurprisingly, fertilizer stocks are reacting. Yara International—one of the world’s largest fertilizer producers—jumped to a three-year high.
Even if the Hormuz situation resolves quickly, the problem will persist. Planting season is approaching and farmers need fertiliser now. The world’s most populous countries—India and China—as well as major agricultural exporters like Indonesia and Australia are likely to be affected the most. Australia is almost entirely dependent on fertiliser imports
Diesel is another critical input to modern agriculture and is currently surging both in Europe and in Asia.
The reason is not just high crude prices. Refineries use natural gas to produce hydrogen, which is used to strip sulfur from diesel. Reuters notes with regards to Asia:
Cracks for 10ppm sulphur gasoil jumped to just above $48 a barrel, the highest since August 2022.
“This is symptomatic of an impending shortage of feedstocks into the refineries due to the dependency on crude from the Middle East that is currently logjammed at the Strait of Hormuz,” June Goh, senior oil market analyst at Sparta Commodities, told Reuters.
Compounding these issues is another problem most people are unaware of. Propane is widely used to reduce the moisture content of harvested grains such as corn, wheat, and soybeans for storage and sale. This process is crucial to prevent mold growth, spoilage, and the loss of crop quality and value.
The Northwest European large-cargo propane price reached a weekly gain of more than $160 per tonne—the biggest on record—after hitting a three-year high this week. In Asia-Pacific, the Argus Far East Index (AFEI) paper contract rose by 17% to $657 per tonne.
Propane typically costs more than methane (LNG is super-cooled methane), but LNG shortages drive substitution toward propane in flexible applications, spilling over to lift propane benchmarks.
The U.S. is currently awash in propane thanks to associated gas production from the Permian Basin. But that glut does not automatically stabilize global markets. Export capacity and arbitrage economics determine where those molecules flow, leaving North American abundance coexisting with tightening markets elsewhere.
All these issues are exacerbated by the fact that not just LNG but a vital share of fertilizer, diesel, and propane production lies on the wrong side of the Strait of Hormuz.
Fair comment. But taxation and spending increased via VAT/GST. No government or Treasury anywhere ever wants to leave taxpayers alone to look after themselves and their families. From Europe, to the Americas to the Pacific, we must be reduced to gratitude for handouts. Adam Smith noted the general sales tax caused the decline of Spain.
Great article Chris. I live in hope that the people will begin to realise that energy security, food security, economic security and national security are all interconnected. Alas Canberra and its allies in the mainstream media still seem to be chasing a progressive utopia. Not sure what it will take to shock them out of it - a serious spike oil prices maybe?
You "hope" people realise? Not a strategy, sounds like the Liberal moderates wringing their hands
Chris, I love your doses of reality amidst all the magic thinking. Still, a corrective note on the effects of the 2003 overthrow of Saddam Hussein. It’s not commonly known but when the US Army rolled into Baghdad the Iranian leadership was so panicked at the Great Satan in its borders, it reached out with peace overtures. An opportunity for historic rapprochement between the Islamic Republic and the US was there to be taken but Cheney and Rumsfeld were so full of hubris (& W was so callow) that they spurned the approach, then compounded their error by disbanding the Iraqi Army and leaving the soldiers to go home and start the insurgency. Iran quickly recovered its nerve and fed fuel to the fire. The rest is history. For a clever country, the US can be remarkably stupid (as can another clever country, Israel). And we ALL must bear the consequences.
We all bear the consequences of War. Always. That’s why an ounce of prevention is precious. Self-interested and humane.
FOOD SHORTAGES COMING
One thing leads to another - the knock-on effect of the Iran conflict.
https://brawlstreetjournal.substack.com/p/from-gas-to-grain?
The global fertiliser market was already tight. China has restricted exports to secure domestic supply, while European producers have cut output after losing access to cheap Russian gas. The margin for further shocks had already been shrinking.
Unsurprisingly, fertilizer stocks are reacting. Yara International—one of the world’s largest fertilizer producers—jumped to a three-year high.
Even if the Hormuz situation resolves quickly, the problem will persist. Planting season is approaching and farmers need fertiliser now. The world’s most populous countries—India and China—as well as major agricultural exporters like Indonesia and Australia are likely to be affected the most. Australia is almost entirely dependent on fertiliser imports
Diesel is another critical input to modern agriculture and is currently surging both in Europe and in Asia.
The reason is not just high crude prices. Refineries use natural gas to produce hydrogen, which is used to strip sulfur from diesel. Reuters notes with regards to Asia:
Cracks for 10ppm sulphur gasoil jumped to just above $48 a barrel, the highest since August 2022.
“This is symptomatic of an impending shortage of feedstocks into the refineries due to the dependency on crude from the Middle East that is currently logjammed at the Strait of Hormuz,” June Goh, senior oil market analyst at Sparta Commodities, told Reuters.
Compounding these issues is another problem most people are unaware of. Propane is widely used to reduce the moisture content of harvested grains such as corn, wheat, and soybeans for storage and sale. This process is crucial to prevent mold growth, spoilage, and the loss of crop quality and value.
The Northwest European large-cargo propane price reached a weekly gain of more than $160 per tonne—the biggest on record—after hitting a three-year high this week. In Asia-Pacific, the Argus Far East Index (AFEI) paper contract rose by 17% to $657 per tonne.
Propane typically costs more than methane (LNG is super-cooled methane), but LNG shortages drive substitution toward propane in flexible applications, spilling over to lift propane benchmarks.
The U.S. is currently awash in propane thanks to associated gas production from the Permian Basin. But that glut does not automatically stabilize global markets. Export capacity and arbitrage economics determine where those molecules flow, leaving North American abundance coexisting with tightening markets elsewhere.
All these issues are exacerbated by the fact that not just LNG but a vital share of fertilizer, diesel, and propane production lies on the wrong side of the Strait of Hormuz.
Excellent as usual. It’s a pity more commentators don’t take a leaf out of Mr Ed’s book: he never spoke, unless he had something to say.
Sadly the labor govt in Canberra fails to understand any of your main points.
Don't worry our fuel cones from Singapore, Korea and Japan !!
Or, That's why we need more electric cars!!
Solar and wind are free!!
The sun burns a hole in my "pocket".
The wind fans the flame.
Unfortunately here in Melbourne no "rain" to douse the flames!
Useless no "dig" government!
The sun and the wind themselves are free, but everything following that is not.
Fair comment. But taxation and spending increased via VAT/GST. No government or Treasury anywhere ever wants to leave taxpayers alone to look after themselves and their families. From Europe, to the Americas to the Pacific, we must be reduced to gratitude for handouts. Adam Smith noted the general sales tax caused the decline of Spain.
Energy security is baseline sovereignty. China know it, the US know it.........Australia?
No idea or willfully ignoring it. Whatever the reason, it will bring on civil commotion once the Australian panacea "no worries" runs its course.
If the Brits , according to Turnbull, had better intel on Iraq why wasn't it presented to the public?
I can recall watching Powel's panicky presentation to the UN, before the backdrop of Picasso's Guernica.
His nervous narration included illustrations of train-mounted WMD facilities and movies of a low flying Mig21!
The whole production was weak and unconvincing .
We were sucked in, knowingly or not.
No modern war has been won solely by the use of barrages of bombs and artillery.
It is only a matter of time before more young men die on some foreign field.
If a land war eventuates, and goes very badly, Israel's reach for a nuclear solution becomes more likely.
Iran: Satan. U.S.: The Great Satan. So many people afraid of so many Satans!