Energy intrigue. Will “separate” prices undress Europe in winter?

MOSCOW, September 7 – PRIME, Oleg Krivoshapov. With the cessation of supplies via the Nord Stream gas pipeline, Europe found itself face to face with the worst energy crisis in decades. And the realization of this fact seems to have come to the authorities of individual countries, and to ordinary Europeans.

“Euro as dollar”. New European realities without Russian gas

HIGH PRICES, “DIVISION”, SHORTAGE, HARD REPAIR AND INFLATION

The suspension of natural gas supplies via the Nord Stream pipeline led to the fact that the crisis in Europe began to develop according to the worst-case scenario, the American edition of the Wall Street Journal (WSJ) concluded.

The result of Gazprom’s decision was a new sharp rise in the cost of energy in the European market, which, in turn, caused the euro exchange rate to fall to the lowest levels over the past 20 years. In turn, inflation in Europe also sets new records.

However, the authorities of the EU countries are trying to take urgent measures, the WSJ assured. So, in Germany, the operation of two nuclear power plants, which were previously planned to be stopped, was extended. And Paris offered Berlin gas supplies in exchange for electricity.

In addition, in Germany, to support importers of “blue fuel”, from October 2022 to 2024 they will levy a “gas levy” in the amount of 2.4 euro cents per kilowatt-hour. (However, the Germans, apparently, did not appreciate the “innovation”, and protests began in various German cities calling for the country’s authorities to drastically change their energy policy).

New British Prime Minister Liz Truss, according to Bloomberg, has drawn up plans that she conceives will fix the average British household’s electricity and gas costs at the current level of £1,971 ($2,300) or lower.

Nord Stream Nord Stream 1

Stop, Nord Stream. Europe is losing Russian gas piecemeal

According to unnamed documents cited by the agency, up to £130bn could be spent on implementing these measures over the next 18 months.

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In turn, the authorities of Switzerland and Finland, following the German government, offered loans to energy companies out of fear that reduced supply and rising prices would cause financial chaos in Europe, Bloomberg specified.

The Swedish government also intends to finance over $23 billion in liquidity guarantees for energy companies, Finance Minister Mikael Damberg said. In addition, in order to reduce energy consumption, Stockholm will introduce restrictions on the supply of electricity to 200 government institutions, Swedinfo reported.

“Every kilowatt-hour we release can be used to reduce vulnerability,” Energy Minister Kashayar Farmanbar said. “It could be switching to energy-efficient lighting and turning off lights and ventilation.”

As for the Swedish experts, they did not appreciate some pan-European energy initiatives. The British edition of the Financial Times reported that the energy agency of the European Commission has prepared for the united Europe two options for “emergency restrictions on wholesale prices” for “blue fuel”. The first involves the introduction of a ceiling or the establishment of a single buyer, the second – the division of the EU into “red” and “green” zones. It is assumed that the countries of one of the zones will purchase gas at unregulated market prices, while the other will receive volumes at artificially established ones. On the air of the SVT TV channel on September 6, according to Regnum, Swedish economists discussed these plans of the EU leadership.

For example, the former chairman of the Swedish Fiscal Policy Council, John Hassler, said that politicians are mistaken when they think that with a stroke of a pen they can change the situation in the market and reduce the price of energy produced in ways that are alternative to gas.

“The only thing that can bring down electricity prices is to reduce consumption – either voluntarily or by regulation,” Hassler said.

Laura Hartman, chief economist at the Swedish Trade Union Confederation, agreed that “separate” prices were unlikely to be a long-term solution, but noted the need for urgent action to provide households with affordable electricity.

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Gas burner

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And the former Prime Minister of Poland, leader of the opposition Civic Platform party, Donald Tusk, told Polsat News about an “avalanche of desperate messages” from citizens due to the initiative of the national oil and gas company PGNiG to raise gas prices by 12-15 times. The politician suggested that in January-February “dozens, and maybe hundreds of the best Polish factories will fall.”

He accused PGNiG and the current government of Poland of trying to force the country’s entrepreneurs to buy gas at exorbitant prices, for whom, according to him, the cost of fuel is now 2.5-3 times higher than in Germany, France, Spain or Portugal.

Romania is also facing serious problems with energy supplies in the foreseeable future, Energy Minister Virgil Popescu told the Bucharest TV channel Digi24. And he urged to stock up on “alternative fuel” as a matter of urgency.

As European politicians grapple with the deepening energy crisis, one of the most pressing problems in the EU is liquidity. The energy ministers of the association countries intend to meet in Brussels on September 9, and one of the key items on the agenda will be “emergency liquidity tools,” Bloomberg reported.

Rising energy bills for European households will peak in early 2023, rising by 2 trillion euros ($2 trillion), Bloomberg reported citing analysts at Goldman Sachs. This highlights the need for government intervention, the analysts concluded.

Central European gas hub in Baumgarten

Played on the nerves: who controls gas prices

YOURSELF IS TO BELIEVE

“We are faced with two crises that have overlapped each other… The Covid crisis and the crisis provoked by the sanctions that Western countries have imposed on our country,” Russian presidential spokesman Dmitry Peskov said in an interview with Izvestia. “In fact, they are in resonance entered, both crises, and now we are witnessing great chaos in the economy of Europe, world economic relations.”

Discussing further priorities in the development of the country’s export energy policy, he noted: “The less gas is sold to the West, the more active will be the attempts of our gas sellers, that is, Gazprom, to find alternative buyers. This is absolutely natural. Let’s see how much it will be possible to compensate for these falling volumes of gas sold”.

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The European countries themselves are to blame for the problems that they face in the coming winter due to the reduction in gas supplies from Russia, Turkish President Recep Tayyip Erdogan said in turn. According to him, quoted by Kommersant, “Europe is reaping what it has sown,” while Turkey “has no problems with gas supplies.”

“When the big economic crisis began in 2008 and the US market crashed, followed by the oil market crash, the prevailing idea was to stabilize the United States, British and European financial systems as linked to the American system, causing the world to will return to some kind of economic balance,” recalls Vasily Koltashov, head of the Center for Political and Economic Studies of the New Society Institute, “economic growth will be possible again, and prices, including prices for hydrocarbons, will return to a certain comfortable level, and everything that was in 2001-2008 will resume .

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However, this model collapsed, and now we are seeing a diametrically opposite picture, the specialist says.

Now, even if suddenly someone, in response to the growing economic problems in the countries of the “collective West”, rushes to save them, then this decision would be the most unreasonable possible, because their stabilization will be achieved at the cost of ruining their own economies, the expert argues.

“The plan of the US, the UK, the EU is simple – you have to give them cheap resources,” Koltashov is sure.

Regardless of the further development of events, the EU countries will try to diversify the sources of imports of “blue fuel”, expert Kirill Rodionov of the Institute for the Development of Fuel and Energy Complex Technologies (IRTTEK) believes. “However, it will be difficult for Europe as a whole to completely abandon gas from Russia,” the specialist states.


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