Europe Energy Crisis: What’s the new update?

Europe Energy Crisis: What's the new update? Image by PIRO from Pixabay 
Europe Energy Crisis: What’s the new update? Image by PIRO from Pixabay 

Key Takeaways:

  • Energy crisis deepening as gas pipeline shut down.
  • After the shutdown, Gazprom decided to ship natural gas.
  • Europe is challenged but wants to stick together.

Europe energy crisis is deepening as Russia cut off the main gas pipeline, which EU officials were told is indefinite.

European politicians said energy is being used as a weapon. Russian energy company Gazprom said they shut down the Nord Stream 1 pipeline due to urgent maintenance; they expected work to last three days. Instead, after identifying “malfunctions” of a turbine, Gazprom said the channel would not work until it was corrected – the original three days turned into “indefinite.”

Nord Stream 1 pipeline route amid Europe energy crisis. Source: Wikipedia
Nord Stream 1 pipeline route amid Europe energy crisis. Source: Wikipedia

Germany is Europe’s number one recipient of the Nord Stream 1 natural gas.

German officials say this is a Russian political move because of the invasion of Ukraine. However, European officials feared this might be coming and began buying additional supplies from Norway and Azerbaijan a couple of months ago.

The Nord Stream 1 pipeline runs under the Baltic Sea to Germany. Because Germany has become so dependent on Russia for gas, it may be difficult this winter for citizens when supplies run lower.

Gazprom Sends Gas, But Is It A One-Time Shipment?

After exchanging harsh words and a lot of stress, Gazprom said 24 hours later that they would ship 42.7 million cubic meters of natural gas to Europe through Ukraine. Although this cooled things a bit between Russia and Europe, anything can happen, and Europe is not resting on the hope all will be back to normal anytime soon.

Gas prices in Europe are four times higher than one year ago. As a result, the EU may have to consider never-before interventions such as price caps, reducing power demand, and taxes on profits.

The German Network Agency said:

“Gas supply in Germany is stable. Security of supply in Germany continues to be guaranteed at present.”

European gas prices performance
European gas prices performance. Source: Bloomberg

For many years Germany has built up a dependency on cheap Russian gas and is now working to restructure its energy policy. Stored gas is at 85%, so there is no panic, but serious concerns remain over the pipeline shutoff.

The French government requests a substantial reduction in energy consumption for the next six months. In addition, they are mandating every business to implement an “energy sobriety” plan.

France has one distinct advantage over Germany; about 70% of its electricity needs come from nuclear power. In addition, French consumers have been protected from price hikes because the government froze energy prices last November, paying the cost difference.

On the other hand, the UK raised energy prices for consumers by 80%, which will severely impact households this winter. Germany, though, has made efforts to reduce dependency on Russian gas by cutting down to 26% from 55% over the past year.

European Energy Crisis Calls for Unity

The energy crisis is a challenge for Europe as a whole. However, they have remained united on sanctions against Russia’s invasion of Ukraine, so there is a desire to stay together.

Some analysts believe Russian President Vladimir Putin’s goal is to fuel arguments between European countries and ultimately break up their cohesion. European energy ministers are meeting in Brussels on Sept. 9 to discuss energy policies and the future.

The meeting will be led by the Czech Minister of Industry and Trade, Jozef Sikela.

Europe Energy Crisis, Europe Energy Crisis: What’s the new update?

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