https://no01.substack.com/p/carburante-esaurito
Carburante esaurito
version #
No1
34 minutes ago

After 50 years of chaos and half as many emperors, Diocletian - in his infinite wisdom - had the price of everything carved in stone.
source

More than 1,200 items: wheat, wine, pork, a pair of boots, a day of a carpenter’s time, a haircut, a slave.

Copies went up in marketplaces across the eastern half of the empire.

The preface was (as usual): blame the rich.

Charging above the list’s price was punishable by death.

Lactantius lived through it and wrote down what happened next: blood was spilled over trifles, goods stopped coming to the markets, and prices got worse (surprise, surprise).

Once enough people had been culled died, the law was quietly dropped.

Fast forward to March 15, 1973, when Richard Nixon said he was absolutely, unequivocally, categorically against food price controls.

And because politicians do what politicians do, two weeks later he put ceilings on meat anyway. Later in June he froze all prices outright.

And by July he realised what countless statemen had realised before: the freeze was holding down production and creating shortages.

Not to be outdone by its archrival America, the Soviet Union held the price of bread unchanged from 1955 onward. By the mid-80s, the country that used to EXPORT grain was IMPORTING 55 million tonnes a year. (And salt in the wound) 22 million of it from the US.

In September 1990, Moscow ran out of bread.

When something is scarce, it gets rationed. Our technology might have changed, we might drive cars instead of carts, we can have Zoom talks and fight Age of Empires online instead of IRL, but humanity didn’t evolve that much. (one could even ponder whether we did DEvolve instead)

When the price rises, it does the rationing. Cap the price and something else does it… the queue, the early riser, whoever lives nearest the depot, or whoever knows a guy that knows a guy.

And because Europe isn’t enough of a basket case in the eyes of the world, it’s going to prove Diocletian, Nixon and Moscow wrong. This time FOR REAL!

France first, because France has the most to prove.

TotalEnergies capped its pumps at €1.99 a litre for petrol back in March, stretched it through spring, dropped it in June when prices dipped, and brought it back on July 22.

On September 15 the energy minister went on television to say there was no risk of a shortage, since nine stations in ten had no problem. (never believe anything until it has been officially denied!)

Six days later the economy minister went on the radio to say 17% of France’s stations were missing at least one fuel. Roughly 2,500 of them, including 91% of Total’s network.
official source (it’s probably worse)

Total’s boss reckons that this cap has cost the company €250 to €300 million so far, and he said he’ll keep it going as long as the war lasts. On one condition though: if anybody slaps a targeted tax on Total, there will “never again be a cap at TotalEnergies”.

Around Ajaccio (Corsica), about fifteen independent stations shut down for a whole weekend in protest, complaining about the distorted competition.
source

Following in Dio’s (and less famous: Macron’s) footsteps, Italy joined last week.

Eni, which the Italian state controls, capped petrol at €1.99 and diesel at €2.19 for thirty days after a government “invitation”. IP, owned by Azerbaijan’s state oil company, followed. Q8, owned by Kuwait, joined as well with a cap it hasn’t put a number on.

As it so often goes: oil flowed freely and abundantly and absolutely no problems occurred whatsoever……..

Nah, just kidding. The same morning on day uno, some Eni stations in Florence were out of petrol AND diesel.

Papers like these were all too familiar to Eni customers...

Through this excise cut, the Italian state was knocking 17 cents off a litre of diesel. Then: -12.2 ct. Then 6.1ct. (It runs out today) And Eni’s price lands 17 cents under THAT price…

Fun fact: this costs the company about €100 million a month, but the state still collects a euro for every litre.

Another fun fact: Kuwait joined (Meloni sends her tanks), even though their crude exports got quartered from 1.2 million barrels to 375k. Don’t mind the occasional “love tap” visiting.

And because there’s always more hypocrisy in Euroland, here’s another fun fact: one year ago, Italy’s antitrust authority fined Eni, IP, Q8 and three others €936 million for moving their prices in step. And this year the government asked them to move their prices in step. Funny how that works, ah?

Hungary ran the full trial years ago. Orbán capped fuel at 480 forints in November 2021, five months before an election he won in a landslide.

I’m sure there’s no relation between the two parts of that statement.

Foreign suppliers cut their shipments, and by December 2022 a quarter of MOL’s stations were bone dry, with signs on the pumps limiting drivers to two litres at the regulated price.

As it so often goes: the cap was scrapped overnight and by the next morning diesel cost 46% more.

Because it worked so well last time, and with another election coming up, Orbán capped fuel again in March. Hungarian plates only this time.

Poland, as a reader there reminded me this week, has turned it into a light switch. Warsaw cut VAT on fuel from 23% to 8% at the end of March, pushed excise down to the EU minimum, and let the energy minister set a maximum pump price every single day.

At the end of June it was switched off (and of course prices inexplicably jumped).

August… Back on… for two weeks.

And then Warshaw switched it on again (from Sept 26 till New Year because they also like fireworks in Poland?). Now petrol is capped at ~€1.54 a litre and diesel at €1.80.

To pay for this, Poland introduced a windfall tax of 60% on whatever fuel companies earn above their 2025 margins plus a fifth. It should raise about 4 billion zloty (about €900M), and Orlen is expected to cover roughly 60% of it.

The president vetoed the tax in the summer, signed it last week and sent it to the Constitutional Court in the same breath.

And Orlen’s shares are down about a tenth since mid-September. (FYI: Orlen is controlled by the Polish state… So Poland is taxing its own oil company to pay for Poland’s price cap at its own pumps.)

And because we don’t have enough examples of what those market manipulations do, Poland has one in recent memory: in 2023, a few weeks before the election (and I’m sure that’s a coincidence too), Orlen’s prices settled at 5.99 zloty a litre (€1.30). Czech drivers queued at the border, and stations ran dry (it was around €1.55 on their side of the border).

Prices normalised a few days after the vote (I’m really starting to believe in coincidences!). The discrepancy was explained as a “technical malfunction”. Which cost about 3.5 billion zloty. (Ok, so really a coincidence this time?)

And Czechia capped station margins two weeks ago.

Croatia and Romania have their own controls running.

And Germany says it’ll sit down with its oil industry to make them an offer they can’t refuse to discuss a cap by January 1.

Britain is going straight for the ration book.

According to the Express, government contingency plans (from at least March ‘26) include a maximum purchase per visit, restricted selling hours, priority stations for emergency services, diesel set aside for food and health supply chains, and a nationwide 50mph speed limit.
source

UK diesel broke its 2022 records, and as of July the country had about 23 days of diesel in stock.

The diesel has to come from somewhere, and the Middle East has a mild problem of self-exploding refineries. And now our most reliable trading partner Washington is openly toying with a diesel export ban.

Add to that the utter Russophobia of the Eurocrats banning anything that has even a hint of Putin on it, and their utter blindness following the “Green Agenda”, well you can already guess where this is going?

We’re fucked. About half a million barrels a day THIS QUARTER alone in jet fuel shortfall.

Eni blames the nearly 30 European refineries that closed over the past fifteen years. 10% of them were Eni’s… (that’s WAY cooler than saying three of them)

And then there’s the winter. You know, that white period with snow and … oh … COLD TEMPERATURES?!
source

Well, EU gas storage is 72.4% full.

A year ago it was 82.6%, and the five-year average for the date is close to 87%.

It’s the lowest reading for this time of year since anyone started keeping track in 2011.

Germany, which owns the biggest tanks on the continent, sat at 58.7%.

The target used to be 90% by November. It has been relaxed to 80%, and at the current pace storage should reach about 78% by November 1.

They’ve lowered the bar, and we’re on track to walk right under it.

But don’t worry… There’s no immediate risk to supply (says the Commission’s gas coordination group).

We sourced it from Qatar. Qatar is going to replace the now sanctioned Russian gas. Woops… The same Qatar that is now extending its force majeure on LNG to Europe, and cancelling its cargoes to Italy’s Edison through early December. Woops…
November contract
December contract

The next gas contracts have effectively doubled since early July.

And in January, the full ban on Russian LNG kicks in.

Nobody’s capping gas yet. Just give it some time (and a cold stretch).

All these caps, discounts and indemnities get paid by someone. Be it the companies or the governments. And the market is starting to price that in.

That’s one thing they didn’t manage to cap just yet.

France’s 10-year yield closed September at 4.85%.
Italy’s at 4.61%.
Greece’s at 4.47%.
Germany’s around 3.6%.

But at least that’s still better than the US’s rates at 5.30%, I guess?
Or Britain’s at 5.4%.

Germany > Greece > Italy > France > US > Britain.

What a difference a decade makes…