Running on Empty: Europe’s Impending Natural Gas Crisis
As winter approaches, Europe has found itself plagued by the question of energy security. Its short-term energy goals are met for this year, but with talk of more Russian pipeline cuts, long-term security is no guarantee. With increasing pressure driven by unpredictable Russian activity even prior to the invasion of Ukraine, as well as the European Union’s proposed efforts to seek out alternative energy sources as climate change concerns heighten, Europe stands on the precipice of facing the winter months with limited energy options.
The coup de grâce for the EU energy shortage was dealt by Russia: according to the Wall Street Journal, with restricted access to Russian pipeline flows, Europe scrambled to put what natural gas it had into storage. However, as of last week, Europe was forced to dip into its natural gas fund to prepare for winter. Heating is responsible for nearly half of Europe’s natural gas use, and although mild weather has reduced the need for heating in residential and commercial areas, Europe cannot afford to use much of its stored energy this winter if it expects to make it through the next year.
On the bright side, Europe’s short-term energy needs are well secured. Warmer temperatures and liquified natural gas have proven beneficial for the EU, as evidenced by its 95.5% full gas storage. However, Europe must keep the long game at the forefront while navigating its energy usage.
Russian threats of pipeline cuts of as much as 60 million cubic meters per day- half of which runs through a pipeline from Ukraine into Western and Central Europe– seek to pressure Europe into lifting the economic sanctions against the country as “punishment” for the invasion of Ukraine. Coupled with Beijing’s Zero-COVID policy, which aims to prevent and contain domestic outbreaks by restricting access to its borders, Europe will experience difficulty finding a means of stocking up for the coming year due to increased competition and limited natural gas suppliers. As a consequence, gas prices will skyrocket, a phenomenon we’ve witnessed in the United States over the past two years following the election of Joe Biden. Russian aggression in Ukraine was the cherry on top of the already melting sundae of the global natural gas economy: “Biden [was] tasked with stabilizing gas prices for a global energy market that was already struggling to meet surging demand as economies recovered from the COVID-19 pandemic. The Russia-Ukraine war…exacerbated supply chain woes by further impacting shipments.” The domestic turmoil spurred by rising gas prices in the United States alone does not bode well for the European Union, granted the U.S. is a much larger country with a much larger appetite for natural gas.
Regardless of geographic size or natural gas consumption rate, the instability and unpredictability of the natural gas supply chain as a result of COVID-19, global overconsumption, global warming and climate change, and the Russian invasion of Ukraine spell trouble for any country whose economy and society rely on natural gas because they have transformed this once readily available resource into a commodity on the brink of extinction. If anything, this seemingly global trend of drastic rises in prices and stifled supply lines should be an opportunity for the E.U. to avoid the pitfalls of the U.S. by expanding on their proposal to entirely phase out natural gas by 2049.
Alas, despite Europe’s short-term success with regard to storage in the wake of pipeline cuts, rising gas prices, tensions along the supply chain, and geopolitical conflict spell uncertainty for 2023. As relations with Russia sour in both the European Union and the United States, the fate of the natural gas economy hangs in the balance. Russia’s use of natural gas as a kingpin in the face of the “punishment” of economic sanctions from the European Union represents yet another international wake-up call. The weaponization of natural gas is a knife at the throat of the global economy and the clock is ticking: climate change and global warming, invasions and trade wars, pandemics and economic crises, tick, tick, tick. While it is beneficial that the E.U. has handled its short-term energy security, for it gives us hope that this crisis can be averted, the challenge of securing energy resources for the long run lies ahead. This begs the question: what desperate lengths will the world go to when it starts running on empty?
Photo Credit: WSJ
