Protests are just the beginning: the EU has run out of money to get out of the energy crisis

MOSCOW, September 14 — PRIME, Andrey Karabyants. The European Commission has proposed drastic austerity measures and the withdrawal of funds from wealthy oilmen under the guise of a “solidarity contribution”, but without cheap Russian gas, this is unlikely to help overcome the energy crisis. Recession, rising fuel prices and a massive shutdown of enterprises are pushing Western Europe into the Middle Ages – with a torch and craft shops.

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In Germany, electricity bills are already so high that many businesses have to shut down. It’s not easier in the UK: new Prime Minister Liz Truss said she plans to lift the ban on gas production by hydraulic fracturing.

All this threatens the European economy with a collapse, Kenneth Rapoza, a senior columnist for the publication, is sure. He referred to the Barclays forecast, according to which Europe is destined for a long and deep recession. The reduction in GDP will be 1.7%, and the crisis will last at least until the middle of 2023 – and then if there is no force majeure. He called the traditional leaders of the eurozone – Germany, France and Italy – the main victims.

It is the inhabitants of these countries, accustomed to a well-fed, prosperous life, who will have to take a shower less often, give up soap and wipe the cherished four places on the body with a rag.

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On Wednesday, the European Commission proposed concrete measures to limit Europeans’ self-restraint, including cutting electricity consumption in Europe by at least 5% during peak hours and an overall reduction in demand of 10% or more until at least April 2023.

In addition to the limits, it was proposed to limit the income of electricity producers operating on alternative sources – renewable energy sources, atom and brown coal. We are talking about establishing a single EU limit of 180 euros for market revenues per megawatt-hour of electricity produced. This could give up to an additional 117 billion euros, the EC expects.

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Another unexpected measure proposed by the EU countries is the removal of excess profits from oil and gas companies if they exceed the average level of the previous three years by more than 20% this year. This is the so-called “solidarity contribution” to the excess profits received from activities in the oil, gas, coal and oil refining sectors.

The funds will be collected by EU Member States and redirected to the most disadvantaged energy consumers. The measure could bring about 25 billion euros in additional revenue for fiscal year 2022, the EC hopes. The money will go, in particular, to low-income households and energy-intensive industries.

STREAMS ALMOST EXHAUSTED

The EC is confident in the need for austerity measures, despite the large reserves of natural gas accumulated in European underground storage facilities. High prices did not become an obstacle to increasing the injection rate before the start of the heating season. Storage facilities were nearly 84% full on September 11, according to Gas Infrastructure Europe, significantly more than in previous years. However, even these fuel reserves may not be enough if Russian gas supplies to Europe stop completely.

In early September, Gazprom announced a complete cessation of gas supplies to Europe via Nord Stream. This gas pipeline with a capacity of 55 billion cubic meters. m / year (over 150 million cubic meters / day) was the main route for the supply of Russian gas to European “partners”. Deliveries through the Yamal-Europe pipeline stopped even earlier due to the unconstructive position of Poland.

At the moment, gas exports from Russia to the EU continue through one of the Turkish Stream lines with a capacity of 15.75 billion cubic meters. m/y and through the GTS of Ukraine in the amount of 40-43 million cubic meters. m/day Deliveries along the Ukrainian route have more than halved since, on May 11, Naftogaz stopped receiving Russian gas at the Sohranivka gas metering station (GIS), located in the former Luhansk region, over which the Kyiv regime lost control. Now the transit of Russian gas to Europe is carried out only through the GIS “Sudzha”.

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Gascade compressor station in Eisleben

German industry “with one foot in the grave” without Russian gas

In Europe, they fear, and not without reason, that due to the aggravation of hostilities, supplies through Ukraine may stop completely, then the situation on the European gas market may seriously deteriorate.

CRYING OF MANUFACTURERS

High energy prices are also detrimental to the industry – many enterprises are on the verge of closing, which in itself is suggestive of the Dark Ages. Reopening craft shops and switching to manual labor may be good for the environment. But from an economic point of view, the very idea of ​​this looks like complete obscurantism.

In the meantime, it may be necessary to go for it if the request for help from industry representatives, circulated by the Eurofer association, does not reach the goal.

“We call on the European authorities to develop clear measures to support the industry without delay so that it remains viable and can continue its activities in Europe,” it says.

The statement specifically emphasizes that rising electricity and gas prices contribute to inflation, have an extremely negative impact on the EU economy and threaten the competitiveness of European companies. The sharp rise in the cost of electricity and gas has already led to the closure of factories or a reduction in production in many sectors.

“The situation is worsening every day with potential irreversible consequences for investment in Europe,” says Eurofer.

This will be a serious test for Europeans accustomed to a comfortable and rich life. They will not tolerate it, and the degree of dissatisfaction with the actions of the authorities is already high, so scenarios with popular protests this fall are becoming reality from fantasy.

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Just last week, another wave of rallies swept through Europe against soaring food and electricity prices – and this is just the beginning.

NO WASHING FOR THREE WEEKS

Meanwhile, the energy crisis was brewing even before the anti-Russian sanctions. It started on a full scale when gas flowed to Europe without any obstacles. In the fall of 2021, its cost crossed the mark of $1,000 per thousand cubic meters and rushed higher. At that time, this was explained by the increased needs of the Asian markets, which outbid the energy resource that had become scarce from the “poor Europeans.”

In fact, the situation is explained by the refusal of those same Europeans from long-term contracts with a price formula in favor of pegging to the spot. At one time, the spot was cheaper, but the slightest change in the market showed where the mistake lies. But instead of recognizing it, the European authorities began to squeeze out cheap Russian gas from their own market with the help of sanctions.

Well, if the consequences of this step do not give reason to think, prices will continue to rise, and the Europeans will once again have to sew boots with a torch and get used to washing several times in their lives, as in the Middle Ages. At the very least, the pseudoscientific basis in the face of the idea that the body “cleanses itself with the help of special bacteria” formed after three weeks of living without water and soap has already been summed up.


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