1-7-25: A Cold January (and Europe’s “Dark Doldrums”) Should Supercharge Natural Gas

by Louis Navellier

January 7, 2025

Due to forecasts of a cold January, natural gas futures soared to over $4 per million BTU. Natural gas futures briefly hit $4.073/MBTU, its highest price in two years. The weather has always had a big impact on natural gas prices, so cold winters and hot, miserable summers (requiring air conditioning demand from natural gas peak-power plants) are the usual prerequisites for keeping natural gas prices high.

The Russian natural gas pipelines that go through Ukraine to supply Austria, the Czech Republic, Hungary and Slovakia were cut off on New Year’s Day by Ukraine, based on their refusal to renew their transit fee deal with Russia. Obviously, it is ironic that two countries at war with each other were also doing business with each other, but believe it or not, both countries were honoring a five-year contract that expired on New Year’s Day. Most of the Russian gas to Europe is now shipped via LNG. Europe also gets LNG from Norway, Qatar and the U.S. It will be interesting to see if Ukraine eventually caves in and agrees to re-allow Russian natural gas, since it needs the money from these natural gas transit fees.

As I wrote here last week, Qatar is threatening to cut off LNG shipments to the euro-zone over legislation that will penalize companies that fail to meet the EU’s strict criteria on carbon emissions, plus human and labor rights. This a great opportunity for the U.S. to fill this void, if Qatar cuts off LNG shipments.

The other reason that natural gas prices are rising is that wind and solar in Europe have been severely impeded by something called “Dunkelflaute,’ the German word for “dark doldrums,” a time when little or no energy can be generated by either wind or sunlight. A Dunkelflaute is characterized by dense cloud covers and near-windless skies. Northern Europe can have up to 10 Dunkelflautes every winter, so, as green energy output plunges, only coal and natural gas can usually make up the difference for Germany and other European countries. The bottom line is natural gas demand soars during each Dunkelflaute!

In Germany, electricity costs 30 cents per kilowatt-hour, or more than twice the average cost in the U.S., and over three times the price for electricity in predominantly coal-fired China. Germany has installed so much solar and wind power that, on sunny and windy days, renewable energy can provide close to 70% of Germany’s electricity needs, but during a Dunkelflaute, solar and wind deliver less than 4% of the daily electricity Germany needs. As a result, Germany clearly cannot replace its base load of electricity demand with renewable electricity, so its gas and coal-fired electricity plants must provide its base load.

The Wall Street Journal published an excellent article discussing how the U.S. is expected to become increasingly dominant in LNG exports under Trump 2.0. The U.S. is already the largest LNG exporter, but it should now be able to increase its dominance by replacing the Russian LNG exports to Europe. Trump 2.0 will replace the Biden Administration’s Energy Department limited exports, based on claims that “unfettered exports” of natural gas would boost global emissions, but no one is listening, as natural gas continues to replace coal all around the world as a better and cleaner source of electricity generation.

Speaking of energy, Puerto Rico suffered a massive blackout on New Year’s Eve that lasted over 30 hours. Generators at Puerto Rico’s airport kept it operational. Blackouts have also become increasingly common in Cuba due to a lack of maintenance, as well as fuel oil shortages. Unfortunately, due to this maintenance neglect, generators and power-walls may be the best alternative to both Cuba and Puerto Rico.

In EV news, market leader Tesla announced that its EV sales declined to 1.79 million in 2024, about level with its 1.8 million sales in 2023. For the fourth quarter, Tesla delivered a record 495,570 new EVs, up 2.2% from the same quarter a year ago. However, the analyst community was expecting EV sales of between 495,000 and 525,000 in the fourth quarter, and the consensus analyst estimate was 512,277.

Fortunately, Tesla’s energy storage business is booming, and its full self-driving (FSD) vehicle is getting great reviews. Tesla has always been a visionary company, so the sooner it gets its “robo-taxis” out and about on road testing in and around Austin, Texas and other cities, the better the company will be able to change its reputation from being “just another EV car maker” to being a visionary technology company.

Tesla CEO Elon Musk is now more involved in politics, as we all know – and not just cost-cutting in The DC Swamp. He is also backing the Alternative for Germany (AfD) party that is pushing for Germany to have stricter immigration policies, restart its closed nuclear plants and cut oppressive taxes. Although the AfD party is often called a “right-wing” party, its leader, Alice Weidel, prefers that AfD be referred to as a Libertarian party that is trying to reverse the poor energy and immigration decisions that were made under former chancellor Angela Merkel. AdD’s Weidel likes to point out that Merkel’s green energy solutions are impractical in Germany and are systematically destroying its industrial base, which are causing German auto manufacturers to continue to expand outside of Germany, where energy prices are lower.

It is possible that Weidel’s AfD party might win the largest vote count in the February elections, even though the Christian Democratic Union (CDC) party typically gets the most votes. Regardless, it appears that the AfD and CDC will form Germany’s ruling coalition and name a new chancellor in February.