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Europe Prepares For A Gas Crisis



Europe is preparing itself for the possibility of a full-blown gas crisis later this week, which comes at the same time as a record-breaking heatwave, which has increased the demand for energy to help cool down the continent’s homes and businesses.

After undergoing normal maintenance for the past ten days, the important Nord Stream 1 pipeline, which acts as a vital artery connecting Russia’s gas to the bloc, is scheduled to return on Thursday. However, there is a growing danger that Russia will keep the taps turned off as a form of retaliation for the sanctions that the European Union has imposed on Russia as a result of its invasion of Ukraine in February.

At the beginning of this month, Germany’s Minister of the Economy Robert Habeck stated that the nation had to “prepare for the worst.”

“Anything can happen. It could be that the gas flows again, even more than before. It could be that nothing will come at all, “In a radio interview, Habeck made the following statement.

The pipeline is responsible for around 40 percent of Europe’s total pipeline imports of gas from Russia and provides 55 billion cubic meters of gas to Europe annually.

There is the possibility of completely severing ties with Moscow’s gas supply. The government has already reduced the amount of gas it sells to a number of countries in Europe. Germany, the region’s largest economy, declared a “gas crisis” one month ago after Gazprom, Russia’s national gas corporation, cut exports through the pipeline by sixty percent. This caused Germany to make the declaration.
Gazprom has placed the responsibility for the move on the decision made by the West to withhold essential turbines due to sanctions.

For Monday, the German gas distributor Uniper announced that it had received a letter from Gazprom alleging a force majeure on previous and ongoing deficits in gas delivery. The letter was received on Friday. A clause in a contract that excuses a corporation for failing to meet its obligations due to circumstances beyond its control is called a force majeure clause. It is often only used in really dire situations, such as when there has been a natural disaster.


However, a representative for Uniper reported in a recent interview that the company has “officially refuted” the accusation. In addition, the troubled company utilized a €2 billion ($2.04 billion) credit facility with bank KfW on Monday due to the impact that problems in Russian gas supply have had on the company.

A shortage of gasoline during this week would come at the worst possible time. Temperatures are expected to climb above 40 degrees Celsius (104 degrees Fahrenheit) over the next few days in Europe, which is already sweltering under record heat. Parts of France and Spain are currently battling wildfires as temperatures are expected to climb above 40 degrees Celsius (104 degrees Fahrenheit) over the next few days.

The increased use of air conditioning has led to an increase in the amount of electricity that is needed to power it. The operator of Spain’s gas transmission system, Enagas, reported the previous week that demand for natural gas to produce power reached a new record of 800-gigawatt hours.

Given Europe’s other sources of power and the fact that the heatwave is predicted to end by the middle of the week, some analysts were more optimistic than others. During this time, countries in Europe are working feverishly to stock their gas storage facilities before the onset of winter in order to forestall an energy shortage that may have disastrous consequences.

According to data provided by Gas Infrastructure Europe, the level of gas storage capacity across the European Union now stands at approximately 64 percent.

As the EU works to reduce the amount of gas it imports from Russia, it is working quickly to secure gas supplies from other countries. A critical gas distribution route is going to have its capacity increased by 50 percent over the next five years according to a memorandum of agreement that the European Commission signed with Azerbaijan on Monday.

According to the statistics provided by the Intercontinental Exchange, prices for Dutch natural gas, which is used as the European benchmark, increased by 3 percent from Friday’s level to reach €165 ($167) per megawatt hour on Monday.

Fears of a big gas cutoff drove prices up earlier this month, pushing them to their highest levels since the early days of Russia’s invasion of Ukraine. At that time, prices were hovering around €183 ($186) per megawatt hour. Since the beginning of the year, there has been a 129 percent increase in price.


Economic News

As inflation Soars In The UK, Real Wages Fall At A Record Rate.





According to data that was released by the Office of National Statistics on Tuesday, real wages, which reflect the power of employee’s pay after accounting for inflation, decreased by an annual 3% in the most recent quarter. Real wages reflect the power of employee’s pay after accounting for inflation.

According to the ONS, while the average pay grew by 4.7% in the period from April to June (excluding bonuses), the cost of living surged at an even higher rate and outpaced the growth of wages.

According to Darren Morgan, director of economic statistics for the ONS, this is having an effect on the purchasing power of people’ incomes in their day-to-day lives.

“There has been a continuing decline in the real value of pay. When bonuses are taken into account, it is still falling at a rate that is quicker than any other time since similar records were first kept in 2001,” he remarked.

Households in the United Kingdom have been feeling the strain of increased financial strain due to higher energy and food expenditures. As a result of the continued rise in the cost of living issue that has taken hold of the nation, people are seeing their purchasing power decline.
Inflation in the United Kingdom reached a new 40-year high of 9.4% in June, and analysts anticipate that it will climb past 13% by October. This month, in response to rising prices, the Bank of England raised interest rates by 50 basis points, bringing the total to 1.75 percent. This was the greatest single increase in interest rates in 27 years.

According to the economist for the United Kingdom branch of the website Glassdoor for careers, Lauren Thomas, inflation and rising costs are the primary concerns of workers right now.

“The only thing that will remain the same in 2022 is change, and prices will continue to climb. Workers are feeling the pinch despite robust wage growth and a tight labor market, as inflation is emerging as the biggest winner in the current economic climate. The fact that real salaries have fallen by a record 3.0 percent due to inflation means that the cost of living is a priority for many people who are looking for work,” she said.


The data from the ONS also showed that the unemployment rate stayed the same, at 3.8%, although the number of job openings decreased within the same time span.

According to James Smith, an economist at ING who specializes in developed markets, the Bank of England will be keeping a careful eye on both the rate of wage rise and the unemployment rate in the United Kingdom.

“The official forecasts of the Bank of England point to a material increase in the unemployment rate over the next couple of years; however, policymakers will be looking for signs that firms are ‘hoarding’ staff even where margins are squeezed, because they are concerned about their ability to rehire again in the future. The rate of wage rise is currently picking up decent steam, and the committee will be concerned about whether or not this can be maintained, he added.

In the future, this may result in the Bank of England increasing interest rates by a significant amount, as suggested by Smith:

Even if we are getting closer to the conclusion of the tightening cycle, “for the time being,” we think there is not much in these recent numbers that will prevent the Bank of England from hiking interest rates by another 50 basis points in September.

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Economic News

Cannabis: “The United States Is A $100 Billion Opportunity,” States The Head of Tilray





Irwin Simon, CEO of Tilray (TLRY), says that the U.S. market for cannabis is huge, even though Congress hasn’t given it the go-ahead yet.

Simon told Yahoo Finance Live that the U.S. cannabis market is worth $100 billion (video above). “When it comes to cannabis in the U.S., 93% of people want it to be legal for medical use, and between 63% and 65% want it to be legal for adults. Today, about 33 states and the District of Columbia allow it. So, everyone knows that most people want cannabis to be legal.”

Tilray is one of the biggest marijuana growers in the world. It wants to grow its market share by focusing on both recreational and medical marijuana.

Simon stressed that the chances aren’t limited to the drug, though. There is also a growing market for products like food, drinks, and personal care items that are similar to cannabis.

“Once cannabis is legalized in the U.S., big companies like Diageo, Brown-Forman, ABI, and even Nestle and Unilever will want to get into the business because they know that’s what Gen Z and millennials want,” Simon said.
Curaleaf (CURLF) CEO Matt Darin said something similar to what Simon said: “We think that new ideas are the key to the future. And a lot of the growth in the industry is being driven by the new categories that are coming online.”

Darin said that the drinks category, in particular, was a big one. “It’s still a small part of the market,” he said, “but we see that as a category that will keep growing as new ideas come out and as they become more widely available across the country.”

Even though the legal status of weed continues to weigh down the industry, recent earnings point to growth in the cannabis space.
Tilray said that its sales went up by 8% in the fourth quarter of its fiscal year. This made the stock go up, even though the Canadian company was still losing money.


In the second quarter, Curaleaf made a record amount of money and made $338 million in sales.

Darin from Curaleaf said, “We’re seeing some great momentum from that earlier in the year, when it was a little bit harder.” “So, we’re very happy with the results and the way the industry is going.”
“There’s never been more support from both sides.”

Still, the question of legalization is still a big deal for the industry. Simon said that federal changes like legalizing or decriminalizing drugs are not a matter of if, but when.

Darin agreed, “We’re very happy with what’s going on in Washington, D.C. right now.” “Reforms that make sense have never had more support from both parties.”
The National Conference of State Legislatures says that 37 states and D.C. allow some form of medical marijuana use, while 19 states and D.C. allow adults to use marijuana for fun.

POLITICO said that at the end of July, Democrats introduced a bill that would make the drug legal on a federal level, but there are not yet enough votes for it to pass.

Simon said that it would “absolutely” make sense to legalize marijuana and pointed to Canada as a country that has benefited from laws.

“If you take a step back and look at Canada, for example, it’s the only country where it’s legal for adults to use cannabis,” Simon said. “And over the last three and a half years and more, it has brought in about $20 billion in taxes, created over 150,000 jobs, and spent about $6 billion on building up infrastructure.”

“Look at the tax money we’re losing by not legalizing cannabis and the tax money we could be getting,” he said. “All the medical benefits of cannabis today, like how it can help with pain, anxiety, sleep, cancer, and other drugs that it could replace. So cannabis has a lot of good things going for it, which is why it should be legalized.”
Even so, cannabis companies are moving forward with other product lines and international growth, whether or not Congress acts.


“Even if the U.S. doesn’t legalize cannabis in the next few years, our spirits, beer, and Manitoba Harvest businesses will grow a lot,” Simon said. “Twenty countries in Europe allow the use of cannabis for medical purposes. Then there was Canada. Listen up: Canada is as big as California. We won’t stop looking for companies to buy. We will look into making more purchases to add to the Tilray brands.”

Even though the movement toward legalization is slow, Darin said that the companies that are already in business are trying to get ahead of the competition.

Darin said, “It’s important to get started early.” “This has been Curaleaf’s plan from the start.”

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Economic News

SK Hynix of South Korea Will Start A US Chip Facility In 2023.




South Korea

SK Hynix of South Korea plans to select a US location for its advanced chip packaging plant and break ground there in the first quarter of next year, according to two people familiar with the matter, helping the US compete as China pours money into the burgeoning sector.

The plant, which is expected to cost “several billions,” would begin mass production in 2025-26 and employ approximately 1,000 people, according to one of the sources, who declined to be identified because the plant’s details have not been made public.
According to the source, it would be near a university with engineering talent.

According to one of the sources, the company “hopes to make a site selection and break ground sometime around the first quarter of next year.”

The new plant was announced last month as part of a $22 billion US-based investment package in semiconductors, green energy, and bioscience projects by SK Group, South Korea’s second-largest conglomerate.

The White House announced that $15 billion would be allocated to the semiconductor industry through research and development programs, materials, and the establishment of an advanced packaging and testing facility.
“R&D investments will include the establishment of a nationwide network of R&D partnerships and facilities,” the source said, adding that the packaging facility would combine SK Hynix memory chips with logic chips designed by other US companies for machine learning and artificial intelligence applications.

Following the recent report about the timing of the groundbreaking, the  South Korean company confirmed that it plans to select a site for the plant in the first half of next year, but no decision has been made on when construction will begin.

Most basic, low-value chip packaging operations were long ago outsourced to overseas factories, mostly in Asia, where chips are placed into protective frames and then tested before being shipped to electronics manufacturers.


However, new battle lines are being drawn in the race to develop advanced packaging techniques, which involve combining multiple chips with different functions into a single package, enhancing overall capabilities while limiting the added cost of more advanced chips.

“While the United States and its partners have advanced packaging capabilities, China’s massive investments in advanced packaging threaten to upend the market in the future,” the White House stated in a report released in 2021.
According to the report, an executive at China’s top chipmaker SMIC, which was added to a US trade blacklist in 2020, stated last year that Chinese companies should focus on advanced packaging to overcome their weaknesses in developing more sophisticated chips.

The move by SK Group of South Korea comes after Biden signed the CHIPS Act into law this week, which provides $52 billion in subsidies for chip manufacturing and research, as well as an estimated $24 billion investment tax credit for chip plants. According to the sources, both the R&D facilities and the chip packaging plant would be eligible for the funding.

In recent years, chipmakers in the United States have announced a flurry of expansion plans, ranging from Taiwan Semiconductor Manufacturing Co to Samsung Electronics and Intel.


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