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Armoured vehicles of the Israel Defense Forces (IDF) are seen during their ground operations at a location given as Gaza, as the conflict between Israel and the Palestinian Islamist group Hamas continues, in this handout image released on November 1, 2023. 

Israel Defense Forces | Reuters

The Israel-Hamas war could have a significant impact on economic growth and inflation in the euro zone unless energy price pressures remain contained, according to Goldman Sachs.

The ongoing hostilities could affect European economies via lower regional trade, tighter financial conditions, higher energy prices and lower consumer confidence, Europe Economics Analyst Katya Vashkinskaya highlighted in a research note Wednesday.

Concerns are growing among economists that the conflict could spill over and engulf the Middle East, with Israel and Lebanon exchanging missiles as Israel continues to bombard Gaza, resulting in massive civilian casualties and a deepening humanitarian crisis.

Although the tensions could affect European economic activity via lower trade with the Middle East, Vashkinskaya highlighted that the continent’s exposure is limited, given that the euro area exports around 0.4% of the GDP to Israel and its neighbors, while the British trade exposure is less than 0.2% of the GDP.

She noted that tighter financial conditions could weigh on growth and exacerbate the existing drag on economic activity from higher interest rates in both the euro area and the U.K. However, Goldman does not see a clear pattern between financial conditions and previous episodes of tension in the Middle East

The most important and potentially impactful way in which tensions could spill over into the European economy is through oil and gas markets, Vashkinskaya said.

Watch CNBC's full interview with Bank of England Governor Andrew Bailey

“Since the current conflict broke out, commodities markets have seen increased volatility, with Brent crude oil and European natural gas prices up by around 9% and 34% at the peak respectively,” she said.

Goldman’s commodities team assessed a set of downside scenarios in which oil prices could rise by between 5% and 20% above the baseline, depending on the severity of the oil supply shock.

“A persistent 10% oil price increase usually reduces Euro area real GDP by about 0.2% after one year and boosts consumer prices by almost 0.3pp over this time, with similar effects observed in the U.K.,” Vashkinskaya said.

“However, for the drag to appear, oil prices must remain consistently elevated, which is already in question, with the Brent crude oil price almost back at pre-conflict levels at the end of October.”

Gas price developments present a more acute challenge, she suggested, with the price increase driven by a reduction in global LNG (liquefied natural gas) exports from Israeli gas fields and the current gas market less able to respond to adverse supply shocks.

“While our commodities team’s estimates point to a sizeable increase in European natural gas prices in case of a supply downside scenario in the range of 102-200 EUR/MWh, we believe that the policy response to continue existing or re-start previous energy cost support policies would buffer the disposable income hit and support firms, if such risks were to materialize,” Vashkinskaya said.

Nobody knows the endgame of the Israel-Hamas war, says former Italian ambassador to Iraq

Bank of England Governor Andrew Bailey told CNBC on Thursday that knock-on effects of the conflict on energy markets posed a potential risk to the central bank’s efforts to rein in inflation.

“So far, I would say, we haven’t seen a marked increase in energy prices, and that’s obviously good,” Bailey told CNBC’s Joumanna Bercetche. “But it is a risk. It obviously is a risk going forward.”

Oil prices have been volatile since Hamas launched its attack on Israel on Oct. 7, and the World Bank warned in a quarterly update on Monday that crude oil prices could rise to more than $150 a barrel if the conflict escalates.

General consumer confidence is the final potential channel for spillover affects, according to the Wall Street bank, and Vashkinskaya noted that the euro area experienced a substantial deterioration in the aftermath of Russia’s invasion of Ukraine in March 2022.

The same effect has not been historically observed alongside outbreaks of elevated tensions between Israel and Hamas, but Goldman’s news-based measure of conflict-related uncertainty reached record highs in October.

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Germany’s largest offshore wind farm fires up its first turbine

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Germany’s largest offshore wind farm fires up its first turbine

Germany’s largest offshore wind farm hit a big milestone: The first turbine at EnBW’s He Dreiht project has produced its first kilowatt-hour of electricity and sent it into the grid.

More turbines are expected to come online over the coming weeks. European energy provider EnBW has already installed 27 of the wind farm’s 64 turbines, all of which are scheduled to be commissioned by summer 2026.

Peter Heydecker, EnBW board member for Sustainable Generation Infrastructure, described the November 25 milestone as a “significant moment for EnBW.” With 960 megawatts (MW) of total capacity, He Dreiht is now Germany’s largest offshore wind farm.

Vestas supplied the 15 MW turbines, marking their world debut. Nils de Baar, president of Vestas Northern and Central Europe, said the giant turbine’s technology sets a new standard for offshore wind. “Its efficiency and performance enable a significant increase in energy yield per turbine.”

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Just one rotation of the 15 MW turbine’s rotor can power the equivalent of four households for a day. The hub stands 142 meters (466 feet) tall, and the rotor’s 236-meter (774-foot) diameter sweeps a 43,742-square-meter (10.8-acre) area — roughly the size of six football fields. To put the scale into perspective, EnBW’s first offshore project, Baltic 1 in 2010, used 2.3 MW turbines.

EnBW wrapped up the wind farm’s internal cabling in August. Those lines connect all the turbines and feed into a converter platform operated by transmission system operator TenneT. That’s where the power is collected, converted from AC to DC, and sent to shore through two high-voltage DC cables.

Once complete, He Dreiht will generate enough electricity to power about 1.1 million households. The project is being built without state funding and sits roughly 85 kilometers (53 miles) northwest of Borkum and 110 kilometers (68 miles) west of Heligoland. EnBW’s offshore office in Hamburg is coordinating the build.

A partner group made up of Allianz Capital Partners, AIP, and Norges Bank Investment Management owns 49.9% of the project. Total investment comes in at around €2.4 billion.

Read more: China’s surge pushes global wind toward fastest growth ever


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BYD tried crushing its $180K luxury SUV with a 2-ton tree and it barely left a mark [Video]

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BYD tried crushing its $180K luxury SUV with a 2-ton tree and it barely left a mark [Video]

The Yangwang U8L is among the most expensive Chinese vehicles, starting at about $180,000. To prove it’s built for just about anything, BYD dropped a 2-ton tree on it, three times, and the ultra-luxury pretty much brushed it off.

BYD drops a tree on its ultra-luxury SUV during testing

BYD launched the Yangwang U8L in September, a long-wheelbase version of the U8 off-road SUV. The U8 was first introduced in September 2023 as the first vehicle from BYD’s ultra-luxury sub-brand, Yangwang.

Yangwang is a new energy vehicle (NEV) brand that sells high-end plug-in hybrids (PHEVs) and 100% battery electric (BEV) vehicles as BYD expands into new segments.

The U8L is Yangwang’s fourth vehicle, following the U8, U9, and U7. It’s available in China with a quad-motor extended-range electric vehicle (EREV) system, delivering a CLTC range of 200 km (124 miles) on battery power alone.

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A 2.0-liter turbocharged gasoline engine serves as a generator, delivering a combined CLTC range of 1,160 km (720 miles).

Measuring 5,400 mm in length, 2,049 mm in width, and 1,921 mm in height, the Yangwang U8L is even bigger than the Rolls-Royce Cullinan and Range Rover Long Wheelbase.

BYD-luxury-SUV-tree-drop

BYD’s ultra-luxury SUV is priced from 1.28 million yuan ($180,000), making it one of the most expensive models from a Chinese brand.

It may look pretty, but the Yangwang U8L is built for far more than just good looks. Like the U8, the long-wheelbase version is equipped with advanced features such as emergency float mode, which allows it to float on water for up to 30 minutes, tank turns, crab walking, and more.

To prove its durability, BYD engineers put the luxury SUV through the paces, dropping a massive 2-ton tree on it, not once, but three times.

During the final drop, the company said the maximum impact energy reached 50.4 kJ, or about 37,200 lb-ft. After three consecutive drops, the Yangwang U8L barely even got a scratch. The body structure remained intact, the door still opened, the columns didn’t bend, and the vehicle could even drive like normal.

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Amid affordability crisis, White House plans to raise your fuel costs by $23B

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Amid affordability crisis, White House plans to raise your fuel costs by B

The White House will formally announce its planned hike in US fuel costs by $23 billion tomorrow, according to Reuters.

Since the beginning of this year, the occupants of the White House have been on a mission to raise costs for Americans.

This mission has encompassed many different moves, most notably through unwise tariffs.

But another effort has focused on changing policy in a way that will raise fuel costs for Americans, adding to already-high energy prices.

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The specific rollback tomorrow focuses on a rule passed under President Biden which would save Americans $23 billion in fuel costs by requiring higher fuel economy from auto manufacturers. By making cars use less fuel on average, Americans would not only save money on fuel, but reduce fuel demand which means that prices would go down overall.

The effort to roll back this rule was initially announced on the first day that Sean Duffy started squatting in the head office of the Department of Transportation. Duffy notably earned his transportation expertise by being a contestant on Road Rules: All Stars, a reality TV travel game show.

Then in June, Duffy formally reinterpreted the Corporate Average Fuel Economy (CAFE) standard, claiming falsely that his department does not have authority to regulate fuel economy.

Republicans in Congress even got into effort to raise your fuel costs, as part of their ~$4 trillion giveaway to wealthy elites included a measure to make CAFE rules irrelevant by setting penalties for violating them to $0. In addition, it eliminated a number of other energy efficiency and domestic advanced manufacturing incentives.

Duffy’s department then told automakers that they would not face any fines retroactively to 2022, which saved the automakers (mostly Stellantis) a few hundred million dollars and cost American consumers billions in fuel costs.

Tomorrow, Duffy is expected to make an announcement formally changing CAFE rules, lowering the required fuel economy for 2022-2031 model year vehicles, even despite all of the other changes in trying to make the rules unenforceable. The theory behind this would be to make it harder to later enforce the rules, and to allow automakers to get off with more pollution, and to increase fuel demand and fuel prices for longer until a real government returns to power and starts doing its job to regulate pollution.

We don’t know the specifics yet of what exactly the announcement will entail, but given the general trend of recent announcements, it will likely be a full rollback of the improvements to the rule made by President Biden.

Tomorrow’s announcement is expected to be attended by executives from the Big Three American automakers – GM, Ford, and Stellantis (formerly Chrysler).

Their presence on stage suggests that their prior commitments to energy efficiency and electrification were not serious, as they are now joining in an effort to increase your fuel costs, just to save themselves a few engineering dollars on having to provide something other than the disgusting, deadly land yachts that are a blight on the nation’s roads and are murdering pedestrians at a 50-year high.

Tomorrow’s announcement is just one many efforts currently being undertaken by executive departments to try to raise your fuel costs.

One of the largest is the EPA’s attempt to delete the “Endangerment Finding,” the government’s recognition of the scientific fact that climate change is dangerous to humans. The EPA is undertaking this effort so that it can then eliminate other rules intended to reduce pollution, with the goal of making you more beholden to fossil fuels.

Even the Energy Department’s own numbers, signed off on by oil shill Chris Wright, say that changes sought by the White House will increase gas prices by $.76/gal.

Like most other governmental changes, today’s change will likely go up for public comment, as required by the Administrative Procedures Act. We’ll let you know when they do.


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