MOSCOW, September 13 – PRIME, Oleg Krivoshapov. The very first problems that Europe faced due to interruptions in the provision of energy resources clearly showed that there is no “united front” against Russia, which they are talking about in Brussels. Countries are trying to pull the blanket over themselves and do not want to share the precious accumulated gas. What kind of mine this has planted under the idea of a “united Europe”, read in the material “Prime”.
THERE IS NO ETERNAL FRIENDSHIP
Problems with the provision of energy resources put European countries in front of a difficult choice – not everyone adheres to a single policy, and the risk of a split is becoming ever higher. The first rebels have already begun to stir in the EU camp: Hungary has publicly announced its intention to preserve and strengthen its sovereignty under increased pressure from the Brussels bureaucracy. The recent statement by Prime Minister Viktor Orban that Europe needs to change its sanctions policy, since “energy has run out, we have to bring it here from somewhere else, and the energy that comes here is expensive,” became a natural reflection of the position of official Budapest.
These contradictions with the line of Brussels and a number of other European capitals regarding the EU sanctions policy against the key supplier of energy resources to Europe – Russia – served as the basis for criticism of Hungary from, for example, Poland. However, the Polish ruling circles are known for their anti-Russian sentiments on a broad agenda.
However, it should be noted that Warsaw also contributes to the weakening of the unity of the EU, and more recently on energy issues. The Polish authorities categorically refused to support the proposal of Brussels to share the excess of accumulated gas with neighbors in the block if necessary. That is, the Polish side, unexpectedly for itself, stood on a par with the “energy rebel” Hungary, which was scolded by it.
However, the contradictions between the EU countries in the energy sector are not limited to the actions of Budapest and Warsaw.
A natural question arises: can these contradictions, dictated by the shortage of energy resources, their high cost and the lack of common approaches to distribution within the association, worsen and develop into an insoluble pan-European crisis?
“We believe that ultra-high gas prices in Europe will not be able to last long, and we expect a significant drop in demand in the short and long term,” says Yan Melnichuk, personal broker at BCS World of Investments. According to the expert, this will happen due to the fact that European industrial concerns will either switch to alternative fuels or cease their activities. “And electricity production in Europe will return to coal and nuclear energy, although this process will take years. At the same time, the demand for electricity will decrease.”
But it is easy to see that there is always an intrigue as to which price levels are considered ultra-high. In the case of the global natural gas market, the situation has changed many times over the past year. The spot price in Europe in terms of the Title Transfer Facility (TTF) hub index has fluctuated for several years within the range corresponding to levels from 30 to 350 dollars per thousand cubic meters. And when it approached $970 per thousand cubic meters on September 15, 2021, it was a fantastic record. Therefore, the reduction in energy prices in early January to levels below 800 per thousand cubic meters was a real Christmas present for Europeans.
Well, then the pandemonium began. Fixed six months later, on June 8, 2022, the lowest price since the end of February – $878 per thousand cubic meters – already jumped to $1,410 on June 20. On August 25, gas cost $3,200, and already on September 6 this year, the price was “only” a little over $2,400 per thousand cubic meters. In the coming winter, as Gazprom believes, fuel on the European spot market may well rise in price to the level of $4,000 per thousand cubic meters and more.
CRISIS IS KNOCKING ON THE DOOR
The decline in demand for electricity in such a developed macro-region as Europe can mean only one thing – partial deindustrialization and a decrease in the standard of living of the population. This looks even more realistic in the conditions of a forced long return to coal and atom.
However, the Brussels bureaucracy and many leading politicians of the leading EU countries are adamant. European Commission President Ursula von der Leyen announces the introduction of a “ceiling” for Russian gas prices, German Foreign Minister Annalena Berbock declares that her country has “never received cheap gas” from Russia, and EU diplomat Josep Borrell competes with the Polish prime minister in rudeness against Moscow.
The key point in this “leapfrog” from the point of view of energy policy is precisely the position of Brussels, points out the Director General of the National Energy Security Fund (NESF) Konstantin Simonov. He draws attention to the fact that all initiatives of the EU authorities in the energy sector have a specific goal – to put the sphere of providing Europe with energy resources under its control. “To whom is the war, to whom the mother is dear, – says the expert. – To whom is the crisis, to whom is the opportunity to receive additional powers.”
“It will be interesting to look at Poland, by the way,” he argues. “She stocked up on Russian gas at the beginning of the year, knowing that she would make a certain demarche, although, of course, she did not expect that she would have to abandon the transition to rubles.”
You need to clearly understand what underground gas storages (UGS) are, says Vyacheslav Kulagin, director of the Center for Energy Research at the Institute for Pricing and Regulation of Natural Monopolies of the National Research University Higher School of Economics. “Despite the high prices, they, in general, pumped well,” the specialist admits. But gas in storage is 10% of Europe’s total consumption, he notes. These reserves have a specific function of a kind of buffer. The expert says that at the beginning of the heating season, there is sufficient pressure in the storage facilities. “But closer to the middle, the pressure drops,” explains Kulagin. “Accordingly, the daily selection decreases.”
There is a serious European political crisis, agrees Vasily Koltashov, head of the Center for Political Economic Research at the Institute for a New Society. “The middle strata of European society have always supported the political forces of the conditional” status quo “, whose activities made it possible at least not to make things worse,” the specialist says.
Of course, horrors in the style of mass starvation and corpses on the streets of European cities should not be expected. However, the end of the era of abundance, which French President Emmanuel Macron spoke about, has already de facto arrived. Most ordinary Europeans will simply have to forget about the former sweet, abundant and carefree life.
This can become very painful for Europe and give rise to centrifugal processes that have gradually matured in the region for a long time. The current exacerbation of long-standing contradictions in the EU is already calling into question the existence of this association, the expert is sure. “Why is it needed? To destroy the economies of European countries?” Koltashov asks. This is how the Hungarian authorities argue, whose position clearly indicates this, the expert is sure.
The prospect of developing such a situation is the destruction of the EU, he is convinced.