September 14, 2022

European Energy Crisis

Europe is facing an energy crisis that is squeezing ordinary people’s finances and in just a few weeks could mushroom into rolling blackouts and factory shutdowns… The crisis deepened when Russia’s state-owned exporter Gazprom said the main pipeline to Germany would stay closed, blaming an oil leak and claiming the problems could not be fixed because of sanctions barring many dealings with Russia. European officials say it’s energy blackmail, aimed at pressuring and dividing the European Union in retaliation for supporting Ukraine against Russia’s invasion.” AP News

Both sides worry about how Europe will cope without Russian gas:

“In retrospect, you can fault the European Union and the Germans for three major things. One, I think the EU had too much faith in the power of its new regulatory and market mechanisms… Number two is the Germans had too much confidence in the Energiewende [Germany’s energy transition program] and the rate at which they would be able to shut down nuclear, and ultimately coal, and increase renewables…

“Third is the over-optimism of the European business community, particularly in Germany. Ever since Soviet times, there had been a strong faith, shared with much of the German political establishment, in the power of ‘Wandel durch Handel,’ or ‘Change through Trade.’ That good business relations would favor the transition of Russia to a ‘normal’ political system… Putin made his famous speech at the Munich security conference and his bitter denunciation of the US and secondarily of Europe [in 2007]. That should have been a wake-up call.”
Thane Gustafson, Bloomberg

“Europe’s problem is that, despite a six-month war in Ukraine, it remains addicted to Russian gas. Countries such as Italy and France have made some progress lining up alternate suppliers such as Algeria, but physical infrastructure is a weak spot. Germany lacks the liquefied-natural-gas (LNG) terminals it would need to import gas in large quantities from anywhere other than Russia and won’t finish three new terminals for years… It may be time to start implementing an energy Plan B the Continent doesn’t have, including gas rationing or tapping stored gas months ahead of schedule…

“That will make for a miserable season for Europeans and their politicians, with unknowable consequences. But this also is a dangerous game for Mr. Putin. Europe’s addiction to Russian gas was built on the fiction that the Kremlin would always treat energy as a commercial matter. Europeans now see how false that was, and one can ask what took them so long. But it’s a mistake they’re unlikely to make again, however the Ukraine war ends. Other potential Russian gas customers such as China are also watching this energy blackmail. Europe is paying for its energy dependence on Russia. Mr. Putin may pay later for exploiting it.”
Editorial Board, Wall Street Journal

Other opinions below.

See past issues

From the Left

“It intuitively feels right that if we just choke off Putin’s energy-export volume, we will choke off his revenue. But that’s just not how commodities work… If we were to take 5 million barrels a day of this oil off the market… the price of oil would way more than double, and Putin would make more revenue on the 5 million barrels of oil that are still finding a way into the market than he would lose by our cutting off the supply. It’s the same thing with natural gas…

“If the price skyrocketed after Putin shut off the volume, well, that price is the benchmark he uses when he sells his gas to Asia via liquefied natural gas, or LNG. And so if you’re selling it for 40 and then you cut production and you sell half as much for 80, you’re coming out even. The price elasticity of demand in commodities is such that the only way to crush Putin’s revenue is to flood the world with energy… It’s unthinkable that Germany would still be debating whether they should keep the nuclear power plants on.”

Doomberg, New York Magazine

Iran has the second largest natural gas reserves on the planet… Although Iran today lacks the pipeline infrastructure to connect its natural gas supplies to European markets, there was an opportunity to develop those means following the signing of the 2015 nuclear deal… And it’s not just natural gas: Iranian oil could also ease energy costs around the world…

“The potentially transformative vision of the original Iran nuclear deal was killed by the Trump administration. Now it is up to President Joe Biden to try and see if something worthwhile can replace it — for the sake of avoiding war between America and Iran, and also ensuring Europe can have reliable access to the natural gas needed to stick out the hard years ahead.”

Murtaza Hussain, The Intercept

From the Right

“In the law of war, civilian immunity has long been held as a desirable principle. Indeed, the U.S. armed forces take it as a point of pride that, by law, they must observe the targeting rules that seek to secure that outcome. In economic warfare, however, these barriers to civilian harm have been breached on numerous occasions…

“With hardly any domestic recriminations, the United States follows policies in Afghanistan, Syria, and Venezuela which starve the population; the same indifference to civilian suffering attends the total economic and financial war against Russia. Usually, the objection to such measures is the harm inflicted on innocents in foreign countries; in [this] case, harm to the West’s own citizens has also emerged as a clear and present danger… ​​Even if it is conceded that the sanctions war is just, it does not follow that it is prudent.”

David C. Hendrickson, American Conservative

“Germany is the engine of the EU economy. If Germany can't run its factories because there isn't enough electricity, there goes Europe's economy…

“American readers, put yourselves in the place of Europeans -- not the leaders, but the ordinary people. Imagine that you were now facing astronomical power bills, and the very real possibility that you and your family were going to deal with blackouts during the cold winter ahead. Imagine that you were facing the closure of your small business, or the loss of your job as national economies tank from the cutoff of gas. What would that make you think about the wisdom of continuing this proxy war with Russia in Ukraine? To ask the question is not to be pro-Putin. It's simply to live in the real world.”

Rod Dreher, American Conservative

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