Europe

Why is There an Energy Crisis in Europe and is Russia to Blame?

 / Go to the mediabankYamal LNG liquefied natural gas plant / Go to the mediabankEuropean officials continue to debate Brussels’ push to introduce a price cap on natural gas, with Germany, the Netherlands, and Denmark uniting in opposition to the idea amid Moscow’s warnings that Russia simply won’t sell energy to Europe if it’s not profitable. Is Russia responsible for Europe’s energy crisis? The short answer is, “yes…and no.”The European Commission begrudgingly conceded this week that it would be “impossible” to put a cap on gas prices for electricity generation purposes, or to create a regional “transaction price corridor” to try to bring down sky-high costs.Europex, the bloc’s association of energy exchanges, has expressed “concern” over the price cap idea, warning that it could “lead to a deterioration of security of supply” and cause “risks to financial stability.”As winter draws near, many of Europe’s politicians and officials continue to blame Russia for the crunch.“We need to keep the social peace. We need to keep the economies up and running. We need to ensure that [Vladimir] Putin will not be able to basically create social unrest or insolvencies or the recession of the European economy because whatever we have invested so far [in Ukraine] will be gone,” Czech Energy Minister Jozef Sikela told UK media on Wednesday.

Is Putin to Blame for Europe’s Energy Crisis?

Using the Russian president as a scapegoat responsible for all of Europe’s energy woes has become a favorite pastime for European officials and media over the past eight months, with Putin accused of attempting to “choke Europe off” from Russia’s cheap and plentiful energy to put pressure on Brussels over its support for Ukraine.Both in words and actions, Russian officials have on the contrary demonstrated annoyance with Brussels’ attempts to cut Europe off from Russian energy, reiterating Moscow’s willingness to turn on the taps of existing routes, and to create new ones.In late September, for example, Putin accused the “Anglo-Saxons” of blowing up the Nord Stream 1 and 2 pipelines and thus “embarking on the destruction of Europe’s entire energy infrastructure,” depriving the region of as much as 110 billion cubic meters of gas per year (about a quarter of the EU’s gas consumption in 2021). Before that, the Russian president repeatedly expressed Moscow’s willingness to turn on the taps in short order if the EU and the UK dropped sanctions preventing the pipelines’ maintenance and operations.Nord Stream SabotageNord Stream AG Says Completed Initial Data Collection From First Line of Nord Stream Site2 November, 13:43 GMTAlong with Nord Stream, Gazprom operates the Yamal-Europe gas pipeline with its 33 billion cu3/year capacity, and Soyuz (26.1 billion cu3/year). The flow of Russian gas through Yamal-Europe was stopped this summer after Poland cut off flows and turned the pipeline on in reverse flow. Soyuz, which runs through Ukraine, has also seen flows drop, but not stop, thanks to the Russia-NATO proxy conflict in that country.Consequently, the only Russian gas pipeline network through which flows have remained steady throughout the past eight months is TurkStream, a 31.5 billion cu3/year pipeline which runs along the bottom of the Black Sea to Turkey, and from there, on to Greece, the Balkans, and Southern and Central Europe.Strawman Putin is so dastardly that Moscow and Ankara recently even announced talks on turning Turkey into a gas hub for additional deliveries to Europe. Politicians in Brussels and European media have yet to spin that story into another example of Russian efforts to “choke” the Europeans.RussiaMoscow and Ankara Discussing Gas Hub Establishment at Expert Level, Envoy Says31 October, 08:57 GMT

How is Russia Responsible for Europe’s Energy Crisis?

If Russia is somehow responsible for Europe’s energy crisis, it’s only by spending decades building pipeline, port, and other transmission infrastructure, and opening up the riches of Siberia to the Europeans and providing them with cheap and reliable gas, oil, coal, and electricity supplies for so long.This past spring, as politicians rushed to “punish” Moscow for its military operation in Ukraine, European multinationals, recognizing that their prosperity and profits hinge on Russian energy, sounded the alarm about the prospects of being cut off from this cornucopia of prosperity which has allowed them to line their pockets for so long. In April, the CEO of German chemicals giant BASF warned that by cutting itself off from Russian gas, Berlin raised the specter of destroying “our entire economy with our eyes wide open” and sparking “the worst crisis for the German economy” since World War II.Later in the year, leading German economic researchers and unions emphasized that Germany couldn’t simultaneously fill its gas reserves and continue to operate energy-intensive industries, and that the gas crisis threatened to bankrupt “entire branches of German industry.”Energy Crisis in Europe‘Entire Branches of German Industry in Danger of Collapsing’ Due to Loss of Russian Gas, Union Warns5 July, 13:53 GMTPutin warned Germany and other European countries about the folly of their ways back in May, characterizing EU sanctions on Russian energy as “suicidal” and emphasizing that the move would rob the bloc of its global economic competiveness and cause businesses to flee.Later, the Russian president pointed out that Europe’s allies across the ocean were putting pressure on Brussels to sanction Nord Stream. “And why are the Americans pressuring the Europeans? Because they themselves want to sell them gas for three times the price,” Putin said.Russia’s ’s warnings came to pass, with hundreds of European manufacturers, including steel and chemical makers, car manufacturers, pharmaceutical and food companies shifting operations to the US, where energy is cheaper, thereby threatening the EU with deindustrialization, not with a bang, but with a whimper.At least some of Europe’s leaders appear to have caught on to America’s strategy. Last month, in a rare break with Washington, French President Emmanuel Macron blasted the US for selling gas to European countries at prices several times above domestic US rates. “Their costs of energy are so much lower as they are producers. They sell their gas for 3-4 times less than we have to pay, and they have also great subsidies from the state in some areas, up to 90 percent. That is unfair. These are double standards,” Macron complained.Late last month, International Energy Agency chief Fatih Birol nevertheless expressed certainty that Russia would “lose the energy battle” with the West, and wouldn’t be able to replace lost European oil and gas markets, which have been “lost…forever,” with alternative buyers.Just who’s going to “lose” what remains to be seen. Russia produces roughly 10 percent of the world’s oil, about 14 percent of the world’s gas, accounts for about 18 percent of global coal exports, and about 2.2 percent of electricity exports. In a tight energy market in which prices are high and availability is limited (thanks in part to OPEC+’s recent decision to cut crude production), Russia will remain the elephant in the room that Europe won’t be able to ignore – if the Europeans want to preserve at least a shred of their erstwhile global economic competitiveness, that is.AmericasOPEC+ Decision Contradicts Earlier US Talks With Saudis on Boosting Oil Output – Kirby26 October, 22:13 GMT

When Did the European Energy Crisis Begin?

Contrary to what politicians and pundits with the memory of gold fish might tell you, Europe’s energy crisis didn’t actually start this year. Global energy prices really began to creep up in the fall and winter of 2021. The price hike has been attributed to a broad range of factors, including growing energy demand, rising competition for a shrinking pool of supply between Europe and Asia, unusually cool weather, countries’ failure to stock up on natural gas in the summer months, over-dependence on spot market prices, and poorer-than-expected returns on investment in alternative energy sources such as wind as solar power, which have been pushed heavily by the World Economic Forum’s “green transition” initiatives.Earlier this year, Putin pointed out that in the West, capital investments in the traditional energy sector have stagnated for many years in favor of alternative sources. “They are big specialists in non-traditional relations. So they decided to put a premium on non-traditional energy in the field of energy – solar and wind energy. It turned out to be a long winter. There was no wind. That’s it,” the Russian president quipped.RussiaPutin: Western Policies From Last 10 Years to Blame for Soaring Energy Prices20 July, 03:29 GMT

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