The energy crisis in Europe is intensifying even as governments across the continent struggle to stop it through political measures and temporary subsidies. Last year saw a stunning 330% increase in gas prices in European markets, hitting consumers hard as the global economy is attempting to recover and adapt to the new ongoing coronavirus pandemic. So far, European governments have largely been unable to stop skyrocketing inflation. The forces against which they clash – economic, health and political – far exceed the capabilities of the European Union.
So far, European leaders "have spent tens of billions of euros trying to protect consumers from record energy prices and themselves from the wrath of voters" according to Reuters reports and analyzes, but the efforts will go far, far beyond below, the economic fallout continues to affect European consumers. " BofA analysts estimate that average Western European households spent about 1,200 euros ($ 1,370) per year on gas and electricity in 2020 ," Reuters writes. " On the basis of current wholesale prices, they estimate it will increase by 54% to € 1,850 ." this will lead to enormous social problems due to the difficulties that many families will have to face the problem
Efforts to protect consumers and enforce damage control on energy markets have included removing VAT on household energy bills, sending aid directly to poor households and, in some cases, adopting moratoriums on mining of cryptocurrencies, a remarkably energy-intensive practice that is weakening many Eastern European energy grids as miners capitalize on subsidized energy costs in poor countries including Kazakhstan and Kosovo. However, these measures do not hold up to the comparison with the crisis that continues to develop. "The measures announced so far in Western Europe will only cover a quarter of the price increases on average," said Harry Wyburd, a European utilities analyst at Bank of America Securities, by Reuters.
With inadequate political power to fight the crisis and mounting geopolitical tensions in the region, the crisis is set to get much, much worse. Omnipresent supply chain problems continue to disrupt the energy sector and render supplies unable to keep up with demand. Additionally, geopolitics is worsening the situation as oil-rich Russia strengthens its hold on Europe as the continent becomes increasingly dependent on the Kremlin to keep the lights on. Russia supplies around 40% of Europe's natural gas and over 50% of Germany's. It has been speculated that Russian President Vladimir Putin refuses to turn on the taps and meet Europe's natural gas needs because of the leverage it offers Moscow to promote its interests and promote initiatives such as the Nord Stream 2 pipeline.
The pipeline, which would pump Russian liquefied natural gas directly into Germany, bypassing Ukraine entirely via the Baltic Sea, is a point of major geopolitical tensions, as many in the West think it would give the Kremlin too much power over Europe's markets, increasing the already prodigious Russian political influence in the region. While the pipeline is already under construction, Moscow awaits the green light from Berlin to bring it online. Berlin, however, is under severe pressure to hold off the project and avoid bowing to Russia, especially at a time when the nation's aggression is becoming worryingly uncontrolled and an invasion of Ukraine is upon us.
The potential coup represents a serious threat to energy security for Europe at a time when the energy economy is already in crisis. "If Russia were to decide to cut off supplies in the middle of winter in response to the imposition of sanctions related to Ukraine, energy costs would skyrocket and millions of people could tremble in the event of a power outage," Axios reported. Monday in an article entitled " Europe's energy dependence on Russia is a crucial shield for Putin ." If this supply disruption truly occurs in retaliation for sanctions threatened by world leaders including US President Joe Biden, Goldman Sachs predicts the conflict could curb gas supply to Europe indefinitely. In this case, the industrial future of Western Europe would be endangered more than German environmental policies already do.
The Putin article can blow up Europe with energy and gas comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/putin-puo-far-saltare-leuropa-con-lenergia-e-il-gas/ on Thu, 27 Jan 2022 17:37:26 +0000.