The consequences of European — and thereby the UK too — dependency on Russia for energy are once again written in plain sight as gas prices soared on Monday after promised supply boosts failed to materialise.
Russia, which is the largest supplier of energy to Europe, had said that it would be rising gas flows to the continent on Monday. However, orders from a key Russian pipeline have shown that supplies will likely remain at their current level, prompting massive spikes in energy costs.
The Netherlands, which is used as a benchmark for European Union’s energy prices, saw increases of up to 9.7 per cent on Monday. The UK has also been impacted by the energy crunch, with British prices up by over 9 per cent, The Telegraph reported, given it imports energy from Europe.
With demand for gas rising in the wake of eased lockdown restrictions across the world, household electricity prices have increased in sixteen EU member states during the first half of the year.
The surge in energy costs has also hit energy suppliers hard in the bloc as well as in Britain, with many firms going bankrupt after having locked-in prices for consumers prior to the supply shortages and soaring prices. The companies were simply unable to afford to supply energy at the price agreed.
The knock-on effect of limited natural gas supplies has also seen nitrogen-fertilizer plants across Europe forced to cut back production, increasing the cost of food.
Moscow has been accused of withholding gas supplies from Europe through its pipelines in Poland and Ukraine in response to regulators in Europe failing to approve shipments of gas through the recently constructed Nord Stream 2 pipeline, a claim which Russian President Vladimir Putin has denied.
During his time in office, Former President Donald Trump consistently warned that the dependency on Russian energy would leave countries like Germany “captive” to political pressure from Mr Putin. The use of energy supplies as a political weapon was put on full display by the Russian leader in 2014 when he threatened to cut off access to Europe during the conflict over Crimea.
Mr Trump also pointed to the hypocrisy of Germany seeking American military protection from Russia under the NATO alliance, while at the same time bolstering Russia’s geopolitical position through increased reliance on gas from the country.
“It is very sad when Germany makes a massive oil and gas deal with Russia, where we’re supposed to be guarding against Russia, and Germany goes and pays out billions and billions of dollars a year to Russia. We’re protecting Germany, we’re protecting France, we’re protecting all of these countries,” Trump said in 2018.
It was also noted by the former American leader that ex-German Chancellor Gerhard Schröder — who initially approved the pipeline — has since become the highly-paid executive of the company responsible for constructing the Nordstream 2 pipeline.
Trump’s successor, President Joe Biden announced in May that he would not block the pipeline as it would be “counterproductive” to American relations in Europe. Despite allowing the Russian pipeline to go forward, Mr Biden used one of his first acts as president to shut down the Keystone XL pipeline from Alaska, further exacerbating the global supply crunch.
Rather than developing domestic gas industries, countries such as Germany and the UK have both banned fracking for natural gas. The focus has been placed instead on propping up so-called green alternatives such as wind and solar, which have so far failed to become an economically viable alternative to fossil fuels.
The fracking industry in America, which was widely expanded during the Trump administration, was largely credited for the U.S. becoming a net exporter of gas and oil under the previous president.
The European Union on the other hand imports nearly 90 per cent of its natural gas supplies, a third of that from Russia. Experts have warned that Europe’s gas reserves — which are typically topped up during the summer — could face a breaking point if temperatures are particularly cold during the winter.
Should Russia keep gas shipments low, “a cold winter in both Europe and Asia would risk European storage levels dropping to zero,” said Massimo Di Odoardo of the research firm Wood Mackenzie. So little gas is presently being imported to Europe from Russia, in recent days more gas was being sent eastwards out of Germany in the Yamal pipeline than it was receiving.
There have also been warnings that in light of the soaring cost of energy and the spectre of more taxes on carbon could see widespread unrest across Europe, similar to the chaotic protests of the Yellow Vest (Gilets Jaunes) movement seen in France after energy price hikes.
Follow Kurt Zindulka on Twitter here @KurtZindulka
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