Russia is manipulating Europe’s energy market by phasing down gas and oil exports. The state-owned company Gazprom has reduced gas flowing via Nord Stream 1. This will cause more hardship in the coming winter and bring more economic pain for the European households.
Gazprom Puts More Energy Pressure on the EU
Europe is in danger of an energy crisis as Russia cuts energy supplies to the EU. Russian gas producer Gazprom announced it would halve the natural gas flowing through Nord Stream 1 to Germany. Moscow has argued that the sanctions against Russia had complicated the work of Russia’s main pipeline to Europe. A gas turbine for Nord Stream 1 has not arrived after maintenance, and a second turbine showed defects. Therefore, Gazprom reduces gas supplies to Europe to 33 million cubic meters per day, 20 percent of its capacity. This will keep European countries uncertain as they struggle to safeguard energy supplies for the winter. The war in Ukraine has changed ties between Russia and Europe, leading to an energy crisis on the continent.
EU Energy Heavily Depends on Natural Gas
Gazprom has already cut gas supplies to some European countries for refusing to pay their bills in roubles. Nord Stream 1 supply brings gas supplies to Europe via Germany, which is heavily dependent on Russian gas. Moscow will squeeze European countries by cutting Nord Stream 1 gas flow. In 2020, energy sources for the EU mainly came from five starts. They are petroleum products, natural gas, renewable energy, nuclear energy, and solid fossil fuels. Renewable and atomic energies provided 30 percent of the EU’s Energy. At the same time, petroleum products and natural gas provided 60 percent of the EU’s power. The same year, the EU produced around 42 percent of its energy and imported 58 percent. In 2021, European countries received 40 percent of their total gas needs from Russia.
There Is a Risk of Energy Shortage in Europe
The IEA has already warned about the Russian intention to cut gas from reaching Europe. It has proposed a plan for European countries to use low emissions energy sources such as nuclear and renewable energies. However, Europe had not done enough to reduce its reliance on Russian gas. This gas came via Ukraine, Belarus-Poland, Turk Stream, and Nord Stream 1 corridors. The 2022-23 winter is expected to be difficult for Europe while its economic outlook is already bleak. A sizable risk of energy shortage has pushed the EU to struggle to fill energy reserves ahead of the winter. The European Commission has proposed a new legislative tool to manage European gas consumption. It has called for reducing gas use by 15 percent until spring 2023.
Europeans Save Energy in Summer to Use in Winter
EU gas storage levels are at 66 percent, but the EU could hugely consume them until the following spring. The European Commission’s plan will collectively reduce gas consumption by 45 billion cubic meters. However, EU member states have very different energy mixes, and some have objected to the Commission. Members are 100 percent dependent on Russian gas, while some countries use less or none. The Commission has asked members to substitute gas with other fuels to save energy and store it for winter. Members can use renewable and cleaner energy, or they may use coal and nuclear power. The plan aims to hold supplies for essential users like hospitals and households. It also safeguards industries that provide vital products and services and seeks to mitigate economic risk.
Higher Energy Prices Are Inevitable
European nations are trying to increase their energy storage before the cold season. However, they will have to pay more without the Russian gas and consume less. European governments are turning to the US LNG and piped gas from Norway and Azerbaijan. Many EU countries will have to impose limits on energy usage in industries. As a result, prices will go even higher, and more households will be under financial pressure. After Russia cut gas flowing via Nord Stream 1 to Europe, gas prices surged 30 per cent. Soaring energy bills raise the inflation rate and will impact most households. The inflation will remain high throughout 2022 and 2023 in Europe. The higher gas prices indicate that financial pressure on European families and industries will increase.
Poorer Households Will Suffer More
Moscow is using Nord Stream 1 to pressure Europe to withdraw its sanctions on Russia. High energy prices will increase inflation and threatens to plunge the big European economies into recession. Higher energy cost means higher costs for households, businesses, and industries. Electricity prices in Germany and France surge to a record as natural gas prices are soaring. Germany, the biggest European economy, has triggered its energy emergency plans. Higher energy bills also led to higher food prices and rising inflation. The food industry uses gas as raw material and energy to power the synthesis process. Lower-income families will mostly feel the impact of soaring food prices. Protecting vulnerable households from inflation is essential for governments.
Gazprom has announced it will hugely reduce gas flowing via Nord Stream 1 to the EU. The announcement came as EU governments agreed on the EU Commission’s plan for a 15 percent gas savings target. The project aims to save gas and build storage for the winter ahead. Gas demand is seasonal, and the EU focuses on hold to alleviate the energy crisis in the cold seasons. Since the beginning of the war in Ukraine, the EU has planned to phase out Russian energy needs. Moscow uses energy resources as a tool against the European country for sanctioning Russia and supporting Ukraine. Western sanctions on Russia have hit the EU nations stricter than other Western countries. Russia may lose in the longer term by using gas, but the European households face hardship in the short time.