Global Gas Prices Surge Anticipating Summer Scramble To Refill Storage
By John Kemp, energy analyst and founder of JKempEnergy
Spot market gas prices around the world have doubled over the last twelve months as reported inventories in all the major consuming regions have fallen to multi-year lows, signalling the refill season will be much tougher in 2025.
Sharply higher prices will encourage electricity generators to switch to alternative fuels and force energy-intensive industries in Europe and price-sensitive utilities in South and Southeast Asia to cut use wherever possible.
Combined inventories across the European Union, the United Kingdom, Ukraine and the United States are 400 terawatt-hours (1,446 billion cubic feet or 32 million tonnes of LNG) lower than they were a year ago:
EU and UK inventories were 266 TWh (961 bcf or 21 million tonnes) below prior-year levels on February 19.[1]
Ukraine’s inventories were 28 TWh (103 bcf or 2 million tonnes) below year-ago levels on the same date.[2]
U.S. inventories were 106 TWh (386 bcf or 8 million tonnes) below prior-year levels on February 14.[3]
Japan’s inventories were also 6 TWh (22 bcf or 0.5 million tonnes) below prior-year levels at the end of October, the most recent data available, and have likely remained below year-ago levels since then.[4]
Since the second quarter of 2024, consumption has grown faster than production as a result of record gas-fired generation and lower drilling in the United States, a colder winter in North America and Northwest Europe, and sanctions on Russia.
As a result, surplus gas inventories carried over from a mild winter in North America and Northwest Europe in 2023/24 have been entirely used up over the course of winter 2024/25.
But the rapid emptying of storage has become unsustainable and prices have climbed steeply to rein in consumption and encourage more drilling to conserve the remaining stocks.
Front-month futures prices have doubled over the last year in North America and Northwest Europe and are up by 75% in Northeast Asia compared with the same point in 2024.
The biggest increases have come in near-dated futures contracts to conserve the remaining stocks as much as possible and curb consumption over the summer of 2025 to enable stocks to be rebuilt ahead of winter 2025/26.
With the United States, the European Union, Ukraine and Japan all needing to rebuild inventories faster-than-average over the summer of 2025 there will be fierce competition for gas over the eight months to October.
Energy-intensive industrial users in Europe and price-sensitive buyers in South and Southeast Asia are likely to be priced out, as they were during the first summer after Russia’s invasion of Ukraine in 2022.
In the event of a persistent summer heatwave over North America, Northwest Europe, Northeast or South and Southeast Asia driving higher-than-normal airconditioning loads, the scramble for gas could become intense.
Anticipating tight supplies and a tough refill season, portfolio investors have alreadyamassed exceptionally large bullish positions in futures and options based on gas prices in both North America and Northwest Europe.
In North America, hedge funds and other money managers have accumulated a net long position equivalent to 2,975 billion cubic feet, the highest for more than three years and in the 91st percentile for all weeks since 2010.
In Northwest Europe, investment funds had amassed a near-record bullish net long position equivalent to 292 TWh by the first week of February, before selling 34 TWh to realise some profits in the second week of the month.
Fund buying has anticipated, accelerated and amplified market tightness and price rises this summer, enforcing an early adjustment by encouraging fuel switching in favour of coal and fuel oil and compelling more industrial closures.
Europe’s policymakers, facing another year of painfully high prices for households and industry, will be tempted to blame hedge funds and other speculators (as is always the case when prices escalate rapidly).
But the reality is that the global market will be much tighter this summer than it was in 2024 and 2023 and prices have to rise to restore balance by curbing consumption and encouraging a return to production growth in the United States.
[1] Aggregated Gas Storage Inventory (Gas Infrastructure Europe, February 21, 2025). [2] Aggregated Gas Storage Inventory (Gas Infrastructure Europe, February 21, 2025). [3] Weekly Natural Gas Storage Report (U.S. Energy Information Administration, February 20, 2025). [4] Trend of Natural Gas and LNG Prices (Japan Organization for Metals and Energy Security, January 30, 2025).
Cocoa Slides To Multi-Month Low As Demand Destruction Fears Overshadow Tight Supplies
Cocoa futures in New York tumbled to a two-and-a-half-month low last week as demand destruction concerns continue to flourish this month, overshadowing concerns about poor output in West Africa.
Bloomberg reported Thursday that the top bean growers in the Ivory Coast had a very slow start to next season’s harvest, which begins in October. The slow start has been blamed on pricier hedges for traders, with prices hovering over $10,000 a ton for the last few months. Higher bean prices and increased volatility also forced the exchange to raise margin costs.
Executives from Hershey and Mondelez warned last week that bean prices could move higher amid emerging signs of demand destruction for their sugary products.
Earlier this month, Piper Sandler analyst Michael Lavery asked Hershey CEO Michele Buck about the consumer environment for chocolate…
Mondelez CFO Luca Zaramella recently said, “We are seeing signs, particularly in parts of the world like North America, where cocoa consumption is coming down.”
To close the week, demand destruction fears drove cocoa futures in New York down to $8,934 per ton, a two-and-a-half-month low. However, prices remain extraordinarily elevated compared to early 2023 levels.
Judy Ganes, president of New York-based J. Ganes Consulting, explained to Bloomberg that traders were operating under the assumption that chocolate demand would hold up through the holiday season into the first quarter. Yet she pointed out that does not appear to be the case.
Traders were wrestling between structural output challenges in the West African cocoa market while weighing news concerns over demand destruction.
We wonder if Goldman’s commodity derivatives analyst Hugo Fuentes is still “go long cocoa” based on “structural supply deficits, under-hedged consumers, and historically low warehouse stocks.”
What about Pierre Andurand, founder of Andurand Capital Management LLP? Is he still cocoa’s biggest bull?
President Donald. J. Trump’s seismic shift in energy policy will be felt far beyond U.S. borders. His withdrawing from the Paris Agreement, expanding American oil and gas exports, terminating the Green New Deal and eliminating the prospect of carbon tariffs offers a lifeline todeveloping nations grappling with chronic energy poverty.
When the United States pivots sharply, other nations reassess their positions. Nowhere will a change in the dynamics of energy policy be more welcome than in developing nations whose imperative to increase access to energy conflicts with pressures to submit to Western climate lords’ anti-growth, anti-humanistic, and dystopian Paris climate agreement.
Many developing nations have long expressed frustration with the climate agenda’s constraints on their economic growth. India and China, for instance, have consistently maintained that they need flexibility to determine their own domestic energy mix, emphasizing that access toaffordable fossil fuels is crucial for lifting millions out of poverty.
Similarly, nations across Africa have argued that their development priorities must include utilizing their natural resources – including coal, oil and natural gas – to meet people’s basic needs.
Take Nigeria, for example. With its significant natural gas reserves, the country has been caught between international pressure to limit the use of hydrocarbons and the urgent need to provide electricity to its growing population. International financial markets friendlier to fossil fuels could accelerate Nigeria’s plans to monetize its natural gas resources and expand domestic power generation.
As Yemi Osinbajo, a former Nigerian vice president, said, “Africans need more than just lights at home. We want abundant energy at scale so as to create industrial and commercial jobs. To participate fully in the global economy, we will need reliable, low-cost power.”
Global Implications of U.S. Energy Expansion
One of the most notable effects of Trump’s energy policy is an anticipated surge in exports of liquefied natural gas (LNG) from the U.S., which is to resume processing permit applications for new LNG projects interrupted by former President Biden.
For developing countries, this means reliable energy at competitive prices – a stark contrast to the intermittent power of solar and wind projects that have been favored by climate-compliant financial institutions.
Energy poverty remains a crippling obstacle in many parts of sub-Saharan Africa, South Asia and Latin America. According to the InternationalEnergy Agency (IEA), nearly 800 million people worldwide are without electricity, while 3 billion rely on smoky biomass for cooking.
By moving to increase the global supply of LNG, Trump offers an avenue for these nations to transition toward cleaner-burning natural gas. Benefits will include less deforestation, less indoor air pollution and a chance for more economic growth.
India has already invested in LNG terminals in the U.S. and will be increasing imports as demand grows from its population of 1.4 billion.
Moreover, an increased supply of LNG will stabilize global reserves and reduce the vulnerability of energy-importing nations to geopolitical disruptions. Energy abundance is a prerequisite for stability and prosperity – a reality that developing countries know all too well and the climate obsessed seemingly undervalue.
No Carbon Tariffs: A Boon for Developing Economies
While many pundits harp on Trump’s proposed tariffs on imports, they don’t recognize – or at least fail to acknowledge – that many in the developing world are likely to be happy that carbon tariffs of the climate agenda won’t be part of Trump’s tax regime.
Carbon tariffs, a darling of the climate crowd on both sides of the Atlantic, are designed to penalize the producers – and users – of carbon-intensive goods. In practice, however, they act as a regressive tax on developing nations, many of which lack the financial and technological means to “decarbonize” their industries.
For countries like India, which Foreign Minister S. Jaishankar has argued must prioritize economic growth over rigid climate targets, the carbon tax-free future represents a much-needed reprieve. It levels the playing field, allowing developing economies to compete in global markets without bearing the disproportionate burden of forced emissions reductions. Yes, Trump has threatened other tariffs, but those can be resolved through diplomacy.
Fossil fuels still account for over 80% of the world’s primary energy consumption, with countries like China, India and Indonesia expanding their infrastructures to produce, import and use hydrocarbons despite pledges to meet impossible climate goals.
With Trump’s bold move, these nations will no longer feel the need to hide behind the veneer of climate appeasement.
Trump’s rejection of climate orthodoxy matches the aspirations of developing nations striving to ensure energy security and overcome poverty. Expect these countries to be emboldened to more openly pursue their preferred energy strategies and leave the Paris agreement themselves.
Vijay Jayaraj is a Science and Research Associate at the CO2Coalition, Fairfax, Virginia. He holds an M.S. in environmental sciences from the University of East Anglia, U.K., a postgraduate degree in energy management from Robert Gordon University U.K., and a bachelor’s in engineering from Anna University, India.
FBI Freak Out As Dan Bongino Named Deputy Director
On Sunday evening, President Donald Trump announced that former Secret Service agent and conservative talk show host Dan Bongino will become the new deputy director of the FBI – the agency that helped Obama and Hillary Clinton set Donald Trump us with the Russia Collusion hoax – which included leaks to the press, fabricating evidence, and die-hard deep state servants who vowed to destroy our president.
And now – Bongino and newly minted FBI Director Kash Patel are in charge…
…which is not sitting well with current and former agency officials – or deep state journalists like NBC‘s Ken Dilanian, who reports that the FBI Agents Association struck out against Bongino’s selection.
Without naming Bongino directly, the Association lashed out over the fact that the Deputy Director has typically been an active Special Agent.
“The FBI Deputy Director should continue to be an on-board, active Special Agent—as has been the case for 117 years for many compelling reasons, including operational expertise and experience, as well as the trust of our Special Agent population,” reads a memo obtained by WNBC‘s Jonathan Dienst.
The announcement sent shock waves through the FBI, whose new director Kash Patel had offered Republican senators private assurances that he would name a special agent with bureau experience to be his deputy, rather than a political outsider. Patel was sworn in at the White House on Friday.
Leaders of the FBI Agents Association, who met with Patel in January, said the new director had agreed that the deputy should be a current special agent…
Ken Dilanian echoed this sentiment, complaining on X that Bongino “has never spent a day working at the FBI, but he has spent many hours spouting baseless falsehoods about the bureau.”
A few minutes before Trump made his announcement, my colleague @jonathan4ny obtained a memo from the FBI agents association which said in part:
“The FBI Deputy Director should continue to be an on-board, active Special Agent—as has been the case for 117 years for many compelling… https://t.co/vnc80obNYs
Bongino is part of the Russiagate corner—he knows this stuff from our side of the fence. No classified briefings, no peeking under redactions—just the hard grind of piecing it all together. Now he’s a co-keeper of the holy grail and we’re about to see it all. It’s all coming out.
You can support ZeroHedge and longtime reader and patriot John O. by purchasing one of these amazing wooden flags that look great on any wall. Shipping included in the price to the lower 48.
Maryland Democrats’ ‘Extremist’ Green Agenda Sparks Power Bill Crisis Crippling Households
Apocalyptic environmentalism by Maryland’s far-left Democratic leadership in Annapolis has plunged the state into a severe energy crisis, with power bills doubling in some cases and 20% of households in Central Maryland now behind on payments.
The takeaway is that Maryland’s far-left leadership is more focused on apocalyptic environmentalism—inherently de-growth and pro-inflation in nature—while also prioritizing illegal aliens over their citizens. This represents a major violation of their oath of office, which requires them to uphold the general welfare of citizens.
Marylanders are quickly learning that local elections matter. Electing far-left activists into positions of power who have no business being in managerial roles has severe consequences, and the most immediate one is the pocketbook.
1.3 million BGE electric customers in Central Maryland, just over half of them also paying for natural gas, and more than 264,000 of them are behind on their bills
Last August, Goldman Sachs warned clients about Maryland’s deteriorating power grid situation: “After a series of auction delays and relatively low clears (see chart below), PJM capacity prices appear to have finally caught up with the generative AI data center load growth story that has been central to parts of PJM.”
Goldman Says Mid-Atlantic Power Prices “Finally Caught Up To AI Data Center Load Growth Story” https://t.co/6BInBek7Zz
The headlines from local media outlets capture the power crisis of exploding power bills, which is not just figuratively crushing pocketbooks but also resulting in anger and disgust for Democrats who have failed the state.
If you search “Maryland power bill” on Facebook, you’ll find many frustrated residents voicing their outrage …
“Energy Bills are ballooning out of control due to EXTREMIST ENVIROMENTAL MANDATES!” Republican Delegate Brian Chisholm wrote on Facebook.
Resident Ronald Coster said: “The reason why our electricity bills are going so high,Maryland has to buy 40%of the power needed from surrounding states. Gov. Moore and the Democrat politicians will not allow new power plants.”
Marylanders must discuss with their neighbors whether Annapolis lawmakers are incompetent or deliberately sabotaging the state by bankrupting their residents with toxic green inflationary policies.
A recent conversation with a major asset management firm in the region revealed that Maryland’s financial situation is so dire that they no longer recommend the state’s municipal bonds to their clients—and have even advised some clients to leave due to fears of out-of-control tax hikes.
On top of this all, Democrats and Gov. Wes Moore have placed the state in a death spiral with a budget crisis that has arrived and risks a “deep recession.”
Maryland’s Death Spiral: Reckless Democratic Lawmakers Spark Budget Crisis Fears As “Deep Recession” Looms https://t.co/reReKpxTsN
All you need to know about Wes Moore. Agent of Soros?
Here’s all you need to know about why Maryland is FORCING wind energy, EV mandates, higher taxes, @VinSchiraldi and illegal immigrants on us: pic.twitter.com/roCOI7RIeb
Maryland’s financial troubles were festering under the surface well before Trump. The state’s economy doesn’t produce much but relies heavily on government services. Now, with DOGE draining the swamp and hundreds of thousands of federal workers being laid off, a perfect storm of pain has unfolded.
“Government Recession Begins”: DC Active Home Listings Soar, Jobless Claims Spike As DOGE Drains Swamp https://t.co/1vP15sKxff
Maryland’s conservatives in the House of Delegates have jumped into action to protect residents while Democrats are still focusing on making sure ICE doesn’t arrest illegal alien criminals.
Can’t make this up. Maryland Democrats are focusing on condoms for kindergarteners rather than tackling the power crisis.
Condoms for Kindergarteners — this is the priority of @mddems. Rather than supplying the grid with more power and lowering electric bills, or giving children stuck in failed schools a better option, Annapolis Democrats want to put condoms in kindergarten classrooms. Sad. pic.twitter.com/rpBog5jkgd
Marylanders are in for a period of pain—but that may be just enough to fuel grassroots efforts over the next election cycle or two to elect common-sense lawmakers who put “Maryland First.”
NYC Suspected Migrant Gang Members Arrested On Gun Charges, But Released On Reduced Charges
Two men arrested in a Feb. 5 gun and drug raid at a New York City auto repair shop were later released on reduced charges that may not lead to prosecution, according to police and court records – despite being suspected members of the Venezuelan Tren de Aragua (TdA) gang, which has been spreading violence across the country.
Jose Tamaronis-Caldera, 27, and Richard Garcia, 33, were taken into custody after authorities seized a Glock handgun, two imitation pistols, and a significant amount of drugs. While sources told the New York Post of their gang ties, the NYPD has not confirmed their affiliation, according to Fox News.
Rafael Nieves, 54, the alleged owner of V&R Auto and Collision in Woodside, Queens, was also arrested during the raid. Initially facing felony drug and gun charges, his charges were later reduced to criminal possession of a firearm, an imitation handgun, and a controlled substance in the seventh degree, none of which qualify for bail.
Prosecutors noted the gun was unloaded with no ammunition nearby, and the drugs—cocaine and oxycodone—were found in an office area.
Jose Tamaronis-Caldera and Richard Garcia, who were also arrested, saw their charges downgraded to two misdemeanors—possession of an air pistol or rifle and possession of an imitation firearm—allowing them to be released without bail. Under an adjournment in contemplation of compliance (ACD), their charges will be dismissed after Aug. 5 if they avoid further offenses.
The Fox News report says that the Queens DA’s Office defended the handling of the case, stating, “The DA’s office reviews all evidence and charges as warranted. In this case, the weapon charge against defendant Nieves is for an unloaded firearm and is not bail-eligible. Our office asked for supervised release, and the judge granted supervised release.”
Prosecutors also noted that charges against Garcia and Tamaronis-Caldera were limited to air pistol possession, making them ineligible for bail.
Tamaronis-Caldera and Nieves reside at the Crowne Plaza JFK Airport migrant shelter, while Garcia lives at the Roosevelt Hotel shelter in Manhattan, police said. Both Tamaronis-Caldera and Garcia crossed the U.S. border illegally in 2023 but were later released, according to federal immigration sources.
A law enforcement official criticized the leniency, telling the New York Post, “These are not misguided individuals. They’re documented members of a known violent criminal enterprise… and the best we can do is let them out?”
Migrant-related crime has surged under the Biden administration amid record border crossings. Last month, Department of Homeland Security Secretary Kristi Noem revealed that a TdA gang leader arrested in the Bronx had attempted to buy grenades after a weapons deal. “Why would anybody in this country need to buy a grenade and go out and perpetuate violence?” Noem said.
Americans tend to vote with their feet. Moving from one state to the next depends on which state offers them the best opportunity to thrive. Tax structures, regulations, and business climates – all handed down by their local elected officials – directly impact their decision-making process. After the US Census Bureau released its latest net domestic migration report last month, it’s become clear that elected officials from the low tax states made the right call.
Texas led the nation with the highest net in-migration from July 2023 to July 2024, gaining over 85,000 people. It was followed by North Carolina, South Carolina, Florida, and Tennessee. Together these states added nearly 350,000 new residents. What do they have in common? Low taxes, fewer burdensome regulations, and policies that foster economic opportunity. Those attributes attract individuals and businesses seeking a free enterprise environment where economic opportunity may thrive.
In stark contrast, states with policies that stifle competition and impose high costs on businesses continue to lose residents. For the fourth consecutive year, California experienced the largest net outflow, with nearly a quarter of a million people leaving during the 12-month period. In the last five years, the Golden State has lost more than 1.4 million people on net. That loss represents not only a dwindling population but a profound economic loss. Taxpayers, businesses, and jobs leaving the state compound the fiscal difficulties California is already juggling. In 2024, this contributed to a $47 billion budget deficit, forcing policymakers to deplete their rainy-day fund and raise taxes.
California’s struggles are not unique. Other high tax states like New York, Illinois, New Jersey, and Massachusetts are also experiencing significant outmigration. Combined, these five states lost nearly 500,000 residents on net according to the Census Bureau report. The common thread is an overreliance on high taxes, excessive regulation, and policies that discourage business growth. The irony is that the promise of fairness and security often produces the conditions that drive away those the states hope to serve.
Working with Dr. Arthur Laffer and Steve Moore over the past 17 years, and we have compiled the Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, ranking states based on key economic policies. We’ve identified 15 policy variables—such as income taxes, property taxes, spending, and regulatory policies —that influence migration patterns. Our findings are clear: states with economically competitive policies attract the most people. In 2024, the top 15 states in our rankings all saw net domestic in-migration, proving that sound economic policies can help drive success.
West Virginia provides a striking example of how policy reform can reverse a state’s fortunes. Once known for economic decline and outmigration, West Virginia has seen a remarkable turnaround in the past few years. In 2008, the state ranked 38th in Economic Outlook in Rich States, Poor States. By 2024, it had improved to 23rd, and, more importantly, it had experienced four consecutive years of net in-migration (after decades of consistent out-migration). This success is largely due to policy changes that create a more competitive environment, including a reduction in personal income taxes, protecting workers with Right-to-Work legislation, and a strong emphasis on education freedom. West Virginia’s turnaround has inspired other states, with 12 adopting similar education reforms and 25 reducing income taxes since 2021.
The success of West Virginia and others demonstrates that both economic and educational freedom are powerful drivers of growth –especially so when a state pursues both. Four of the ten states attracting the most people have no income tax, and another four have flat personal income taxes.
The lesson for policymakers is clear: your policies have a significant impact on whether your state attracts or loses residents. States that embrace low taxes, minimize burdensome regulation, and foster individual freedom create environments where people and businesses thrive. In contrast, states that burden their residents with high taxes and stifling regulations will continue to see their citizens leave for more competitive states.
As we look ahead to 2025, it’s evident that the future belongs to states that prioritize economic and educational freedom. These states will attract growth, create opportunity, and foster the conditions necessary for long-term prosperity. The key to success lies in the understanding that sound policies are what truly drive economic progress. For hardworking taxpayers across America, that’s exactly what they voted for in November and what they will demand going forward.
Jonathan Williams is the President and Chief Economist of the American Legislative Exchange Council. Joshua Meyers is the Tax and Fiscal Policy Task Force Director of the American Legislative Exchange Council
FBI Director Patel To Take Over ATF Too – Will He Burn It To The Ground?
Leftists were already apoplectic that Donald Trump managed to install firebrand Kash Patel as FBI director. Now, upping the ante, Trump is about to turn the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) over to Patel too, according to sources cited by multiple news outlets on Saturday evening. The extraordinary move has some wondering if Trump might move to dissolve the ATF altogether.
Trump’s FBI Director pick, Kash Patel, is backed by a gun rights extremist group that opposes all forms of background checks on gun sales. The FBI runs the federal background check system.
The ATF is already the focus of a Trump II overhaul. Last week, Attorney General Pam Bondi fired the ATF’s top lawyer, Pamela Hicks. “These people were targeting gun owners. Not gonna happen under this administration,” Bondi told Fox News. The FBI and ATF both reside within the Department of Justice.
Patel may be sworn in as acting director of the ATF this week, a Justice official told AP. The agency has roughly 5,500 employees — today, at least. With Trump’s Department of Government Efficiency looking to slash the federal employment rolls, the ATF should be a prime target for headcount reduction.
Better yet, many are hoping — and others fearing — that putting the ATF in Patel’s portfolio could signal that the ultimate objective is to dismantle it. That would be a bold move for a president who comes into his second term with a decidedly spotty record where the right to armed self-defense is concerned.
Exceeding its authority,his first-term ATF imaginatively reinterpreted the definition of an automatic weapon to include bump stocks, banned their sale, and demanded that civilians turn them in the ones they already owned.
Trump promised to push for increasing the legal age for purchasing firearms to 18.
Patel needs to perform an exorcism on the ATF and then set the course for abolishing the entire thing.
The ATF is an unnecessary agency that exists solely to infringe upon the Second Amendment. https://t.co/buNfohXP61
That said, Trump’s second term is off to a strong start on the gun rights front. On Feb 7, Trump signed an executive order that sought to curtail federal infringements on rights guaranteed by the Second Amendment. Among other things, the multifaceted order directed Bondi to:
Catalogue and address all actions of the Biden administration that infringed on gun rights
Reverse the heavy-handed “zero tolerance” or “enhanced regulatory enforcement policy” by which enforcement actions against Federal Firearms Licensees (FFL’s) — many of them small businesses –skyrocketed nearly six-fold.
Review how firearms and ammunition are categorized and thus regulated
Rightly resented by liberty-minded Americans, the ATF has played central roles in some of the most ghastly crimes committed by the federal government in recent decades, from the ATF entrapment of Randy Weaver that led to the killing of his 14-year-old son and his wife as she held their 10-month-old daughter, to the standoff in Waco that ended in the mass slaughter of 76 Branch Davidians, including 25 children.
German Exit Polls Are Out: Conservatives Win, Will Form Coalition Govt; AfD Comes In Second
Update: The German election exit polls are in, and the result is on light side for the AfD which were polling around 21%, but appear to have ended up with 19.5% of the vote, coming in short of a blocking position.
*GERMAN CONSERVATIVES GET 29% IN ELECTION: ARD EXIT POLL
*GERMAN AFD GETS 19.5% IN ELECTION: ARD EXIT POLL
*GERMAN SOCIAL DEMOCRATS GET 16% IN ELECTION: ARD EXIT POLL
*GERMAN GREENS GET 13.5% IN ELECTION: ARD EXIT POLL
*GERMAN LEFT PARTY GETS 8.5% IN ELECTION: ARD EXIT POLL
*GERMAN LIBERAL FDP GETS 4.9% IN ELECTION: ARD EXIT POLL
*GERMAN FAR-LEFT BSW GETS 4.7% IN ELECTION: ARD EXIT POLL
And visually, the ARD exit poll:
And ZDF: here AfD just fractionally better at 20%, but still below the 21-22% they would poll last week.
Unlike previous elections which were anemic affairs, participation today was a whopping 84%, the highest since German reunification in 1990.
The emerging picture is one where the initial exit polls are in line with the most recent public polling, showing a CDU victory, with the SPD and Greens collapsing while the AFD doubles its support from 10% in 2021 and is set to become the main opposition power in the new government. Of note, and to get an indication of how unpopular legacy politics in Germany have become, the Social Democrat party of Chancellor Olaf Scholtz posted its worst result since World War 2.
*GERMANY’S SCHOLZ: IT’S A BITTER ELECTION RESULT FOR THE SPD
In other words, Germany’s opposition conservatives won the national election on Sunday, putting leader Friedrich Merz on track to be the next chancellor…
*CDU’S MERZ: WE HAVE WON THIS ELECTION
*CDU’S MERZ: NEED A GOVT WITH A GOOD PARLIAMENTARY MAJORITY
*MERZ WANTS TO FORM GERMAN GOVERNMENT AS SOON AS POSSIBLE
… while the populist Alternative for Germany came in second, its best ever result. Naturally, the SPD was not happy:
*SPD’S MIERSCH: IT’S A HISTORICAL DEFEAT FOR SPD, BITTER EVENING
*SPD’S MIERSCH: FRIEDRICH MERZ HAS THE MANDATE TO FORM A GOVT
*SPD’S MIERSCH: BORIS PISTORIUS WILL PLAY IMPORTANT ROLE IN SPD
That said, with 29% of votes in exit polls, the CDU/CSU falls short of parliamentary majority needed to govern alone. However, it will likely be able to form a two-party governing coalition with the SPD.
Meanwhile, since the AfD – which has been shunned by every other party and will not participate in any strategic alliances with anyone – did not enjoy a last minute burst in support, and came in at or just below where the polls said would, it will come in short of having a blocking position in the new government, and as a result will not be able to prevent either the stimulus flood or the easing of the debt brake which so many had already priced in. Still, the AfD’s spirit was high:
AFD’S WEIDEL: WILL OVERTAKE CDU AT NEXT ELECTION
It won’t be easy: while AfD is currently the dominant party across all of what used to be East Germany (with the exception of Berlin), West Germany belongs fully to the CDU/CSU, for now.
Finally, the Greens – which came in at 13.5% – have succeeded at minimizing their losses and remaining a significant player in the Bundestag, which was the goal their entire campaign was structured to achieve.
Despite his resounding victory, conservative leader Friedrich Merz was roundly criticized during the campaign for trying to push through hard-line immigration measures with the help of the far-right AfD, triggering mass demonstrations and even a rebuke from former Chancellor Angela Merkel (who was the former leader of the CDU/CSU).
According to Bloomberg, Merz consistently polls poorly with women and younger voters, and there seems little enthusiasm for him overall. But one fact speaks to his party’s success: asked which party they considered the most competent in three core policy areas — foreign and security; immigration; and the economy and finances — respondents to a Forsa poll taken for the RTL/ntv on the eve of the election, placed Merz’s party top in each field. Even on the AfD’s calling card issue of migration, Merz’s bloc stood well out in front, while on the economy, it led Scholz’s SPD by a whopping 42% to 12%.
Finally, as IIF’s Robin Brooks notes, “there’s only one question that matters for today’s election in Germany: does the outcome hurt or help the AfD? CDU tried to tighten immigration law before the election, but was undercut by SPD and Greens. CDU now goes weakened into coalition negotiations. The only winner is AfD.”
There’s only one question that matters for today’s election in Germany: does the outcome hurt or help the AfD? CDU tried to tighten immigration law before the election, but was undercut by SPD and Greens. CDU now goes weakened into coalition negotiations. The only winner is AfD. pic.twitter.com/IsqVGnf3Li
… it’s time for a quick reassessment of where we stand (we summarize various reports from DB, Goldman and Bloomberg).
1. Executive Summary
Polls, coalition options and potential impact on policies
Polls: The conservative CDU/CSU is leading the polls with 31 followed by the far right AfD at around 21 the Social Democrats at 15 and the Greens at 13%. A lot of attention will be on whether the three smaller parties (FDP, BSW, Left) make it into parliament
Timeline: First projections based on exit polls after 6 pm CET on February 23 preliminary results from 6 30 pm CET on and then updated during the night/early morning
Coalition formation: Coalition negotiations might take several weeks as they require some difficult compromises
Coalition options
Base case – two party grand coalition: Polls suggest that the Conservatives could form a coalition government with either the SPD or the Greens A CDU/CSU SPD coalition appears more likely as polls suggest it could achieve a more comfortable majority On defence/foreign policy, there are significant policy overlaps with the Greens
Surprise – three party centrist coalition – “Kenya”(CDU/CSU-SPD-Greens) or “Germany”(CDU/CSU-SPD-FDP). On the one hand, a three party coalition could prove to be rather fractious and result in fraught policy compromises On the other hand, a “ coalition might increase the chance of a meaningful shift in fiscal policy if centrist parties kept the two thirds majority
What’s are the risks?
Downside risk – blocking minority of fringe parties (AfD & BSW):This would imply that constitutional change for setting up an off budget defense/infrastructure fund/debt brake reform is contingent on concessions to the fringe parties or not possible at all
Absolute tail risk – AfD as part of the government: Extremely high bar to be crossed all parties credibly rule out that option ex ante
Potential impact on policies
Fiscal policy pivot towards higher spending – The perceived erosion of Europe’s security architecture makes it likely for the new government to swiftly agree on funding higher defence spending outside the debt brake. The fiscal impulse could be material However, the short term growth multiplier should not be overestimated, with the bulk of military procurement going abroad Debt brake reform for the Länder might provide additional and more immediate fiscal stimulus from 2026 onwards
Compromises on structural reforms – A CDU/CSU led coalition could potentially agree on a step by step reduction of the corporate tax burden, streamlined administrative processes, and measures to lower electricity prices, but no major pension reform
How much of the election is already factored into our forecasts?
For 2025, Deutsche Bank expects the economy to grow by 0.5%. The bank’s 2026 forecast is predicated on a meaningful probability that the next government relaxes the constitution debt brake to allow more debt financed investment. Without it, the status quo would imply structural stagnation
2. Backround
A deeply divided coalition government in Berlin has failed to take the hard decisions needed to turn Germany’s economy around. The snap election on Feb 23. is therefore a chance for voters to deliver a stronger government capable of tackling the country’s pressing problems.
The main danger is that the poll yields another fragmented parliament. This could leave a power vacuum at the heart of Europe during a particularly challenging time and, eventually, result in a government that is too weak to implement much-needed reform. Furthermore, much of the proposed fiscal stimulus emanating out of Germany has already been priced into European stocks, so a “tail” outcome tomorrow could have a major adverse impact on European markets.
The greater the number of parties that enter parliament, the higher the risk that the center-right Christian Democratic Union (CDU)/Christian Social Union (CSU) alliance and the Social Democratic Party (SPD) have too few seats to form a grand coalition.
Policy uncertainty is already through the roof in Germany and this is weighing on growth as companies delay investment decisions. The more time it takes to form a coalition, the greater the delay in kickstarting an economic recovery.
The duration of coalition talks will also show how willing parties are to overcome their differences to tackle urgent issues such as structurally weak growth, a potential US-Russia deal on Ukraine and a transatlantic trade war.
Polling stations will close on Sunday at 6:00 pm Berlin time. Sufficient clarity about the election results should emerge during the evening. The CDU/CSU alliance is set to win, according to opinion polls. The far-right Alternative for Germany (AfD) would have to close a 10-percentage-point gap to defeat the center-right parties.
Barring any surprises, CDU leader Friedrich Merz will become the next chancellor. However, the CDU/CSU alliance is unlikely to have enough seats to lead a cabinet on its own, which means it will have to form a coalition with other parties.
Merz has repeatedly declared he will not cut a deal with the AfD. The Free Democratic Party (FDP) isn’t seen as a suitable partner, since it will probably not have enough seats to make a difference — it might even struggle to make it into the Bundestag (national parliament).
The most obvious option for Merz is to form a coalition with either the SPD, the Greens, or both. The ideological distance between the Greens and the CDU on social issues such as migration remains large, which means it might be easier for him to cut a deal with the social democrats.
Still, much will depend on the distribution of seats in parliament. The more parties enter the Bundestag, the higher the risk that the CDU/CSU and the SPD might not have enough seats to form a government by themselves.
3. Timeline:
Timeline for the Bundestag election 2025: What will happen from voting until government formation
4. Polls
Germany heading towards new leadership?Conservatives are leading the polls, while the right wing AfD and Left gained further support
Accuracy of polls seems reasonably good: Far right AfD seems not to be systematically underestimated in polls
What is driving voters’ decisions? State of the economy is more important for voters’ decisions than immigration
5. Electoral System
Germany‘s mixed electoral system demystified: Peculiarities of the voting system might have an impact on the election outcome
Postal voting has started two weeks ago: Increasingly popular option among German voters
6. Coalition Formation
Zooming in on coalition negotiations: Coalition agreement in spring might provide psychological boost to confidence
Preview of potential coalition options: Conservatives likely to lead the next government according to current polls
7. Policy Outcomes
CDU/CSU – SPD or CDU/CSU – Green coalition – agree to disagree? Where do ex ante policy stances differ?
Potential impact of CDU/CSU policies on the economy: More supply-side policies, but still fiscal hawkishness
Economic policy implications: Fiscal policy pivoting towards higher defence spending
The fiscal defence policy nexus: Smaller parties not necessarily standing in the way of constitutional reform
Constitutional majorities and fiscal regime change: The more fragmentation, the less likely a fiscal regime shift
Zeitenwende 2.0 moment in defence spending: Pivot towards higher defence spending early in the next parliamentary term
Fiscal regime change – a cheat sheet for potential options: Policy options, needed majorities and potential timelines
Germany’s stance on joint EU borrowing: How to fund the VdL 2.0 policy priorities
8. Economic Outlook
How much of the election outcome is already factored into DB’s forecasts? A meaningful relaxation of the debt brake is not part of the 2025 baseline forecasts
9. Much-Needed Reforms
A stable coalition would also strengthen Germany’s ability to respond to a long list of pressing economic challenges and thus, support growth in the medium and long term. Germany has to improve its productivity and revive competitiveness while at the same time deal with the threat of high US tariffs and the requirement to boost defense spending.
What all these challenges have in common is that they will likely end up costing a lot of money. The good news is that, in principle, Germany would have the necessary fiscal leeway. According to our estimates, it could raise public investment spending by 1% of GDP in the coming years and the debt-to-GDP ratio would still fall until 2040 and settle below the 60% mark.
One main thing to watch is whether the parties that favor a reform of the very strict national fiscal rule, the so-called debt brake, will have the necessary two-third majority in parliament to deliver the required constitutional revision. Conversely, a very fragmented parliament would undermine the ability of the centrist parties to revise the current borrowing limit.
10. Tail Risks
What’s in the tails? Surprises, downside and extreme tail risks
Scenarios for a blocking minority of the far right AfD: Would require significant shift of approval rates and no small party entering the Bundestag
11. Challenges to Forming a Government
The country’s political fragmentation means that negotiations to form a coalition might not be straightforward. CDU’s Merz has shown during the campaign that he wants to move more to the right on migration.
That’s further away from the SPD’s stance and in order to make any deal with Merz more palatable to its electorate, the social democrats will try to extract as much as possible (for instance on economic issues) during negotiations.
Recent elections show coalition negotiations have taken a substantially long time to wrap up. However, the bleak economic situation and uncertain geopolitics might provide an incentive for parties to accelerate discussions. In fact, how long it takes to form a government will indicate how willing parties are to work together to deal with Germany’s impending challenges.
A minority government or new elections would be the available options if coalition negotiations were to fail. However, parties would likely try to avoid a repeat poll given voters might punish them for failing to form a government.
12. Election of the Federal Chancellor: Usually just a formality
More USAID Fraud? Billions Of US Tax Dollars Are Missing From Haiti Relief Projects
There are those that say all government aid is a scam in one way or another, and so far the revelations surrounding USAID are proving those people right daily. Democrats and the establishment media, in a bid to muddy the waters and save face, continue to claim that there was never any fraud at USAID and that the Trump Administration is simply labeling projects they “disagree with” as suspect.
Of course, spending American tax dollars on projects the public never asked for and were never told about is the epitome of fraud, and waste is never a good thing. Beyond that, the question of billions in missing funds certainly falls into the category of criminality.
Trump has taken a lot of heat from the media with the shut down of USAID and much of the criticism suggests that without US funds people in third world countries will fall back into desperation. The Washington Post recently claimed that Trump’s cuts to USAID are a “gift to Haitian gangs” terrorizing the locals; a typical leftist appeal to emotion that assumes most of the funds were getting to the Haitians in the first place.
Yet another example of this problem has been revealed in a New York Post expose on the audit of USAID which shows a disturbing shortfall in funds surrounding ongoing relief projects in Haiti. The Post notes:
“Since the 2010 earthquake in Haiti killed as many as 300,000 people, the US government has disbursed around $4.4 billion in foreign assistance to the small island nation.
At least $1.5 billion was disbursed for immediate humanitarian aid, while another $3 billion went to recovery, reconstruction and development.
Of the at least $2.13 billion in contracts and grants for Haiti-related work, less than $50 million, or 2% went to Haitian organizations or firms. By comparison, $1.3 billion, or 56%, has gone to firms located in or near the US capitol. Little wonder USAID is so threatened by the sudden scrutiny.
It remains unclear how exactly the billions have been spent and whether US tax dollars have had a sustainable impact. USAID and its vendors have generally failed to make such data public…”
The exposure of USAID by DOGE actually confirms long running suspicions of mishandled aid. Some Haitian reporters warned about this disappearing money years ago under the Obama Administration. USAID funds to Haiti were dispersed in part through the Clinton Foundation.
Elon Musk just shared details on the USAID Haiti Scam exposing “$4.4B SPENT, SIX HOMES BUILT”
Of all the contracts, “Haitian companies got just 2%”
2016 Haitian Reporter, “The whole world has given billions.” They say Bill Clinton and Hillary Clinton stole it
The lack of funding transparency was also noted by the Government Accountability Office (GAO) in 2023. Though, not surprisingly, the impotent agency did nothing about it. The GOA stated in their analysis of USAID activities in Haiti:
“The USAID mission in Haiti does not fully track data on its local partnerships, or its activities to strengthen local organizational capacity, which limits institutional knowledge about these efforts and understanding of results and lessons learned to inform future activities.”
“The Administrator of USAID should ensure that USAID/Haiti develops a process to track and assess consistent and complete results information for infrastructure activities, such as the final outputs, outcomes, costs, time frames, and lessons learned.”
“The Administrator of USAID should ensure that USAID/Haiti establishes a process to completely and consistently track and analyze data on awards made to local organizations, such as the amount and percent of total funding awarded and the percent of total awards provided to these organizations.”
Of the five “recommendations for executive action” put forward by the GAO for USAID, two are marked as “completed”. Transparency was never achieved and no one was held accountable. The question is, if only 2% of the $4.4 billion allotted for Haitian relief was actually used in Haiti, where did the rest of the money go?
As the New York Post points out, 56% went to firms located in or near the US capitol, and apparently the money stayed there. A comprehensive forensic accounting of these funds (along with all other missing funds) needs to be undertaken and tracked to the recipients. Not just because it is is politically advantageous for the Trump Administration, but because justice needs to be served for once in the case of government fraud. Americans are tired of seeing bureaucratic conmen get away with it.
The public is welcome to debate whether or not any American taxes should be spent in Haiti (proximity to the US does not mean they are entitled), but if the money was already sent and it never arrived, then whoever took it stole from both sides of the equation – Americans and Haitians.
