Europe’s energy crisis is getting deeper because of the limitations in the export of natural gas imposed by Russia. This led the European government to spend billions on prices to save businesses and consumers from soaring bills as the countries are moving towards recession.
According to recent reports, on Monday morning, the benchmark natural gas price in Europe spiked to about 28% which makes it about $272 per megawatt hour.
Considering the scenario of the Europe energy crisis, a question comes up, what is to the hike? Read more how Russia-Ukraine war is related to escalating Europe Energy Crisis 2022.
It’s been one of the subsequent effects of the Russian Ukraine war, the energy crisis that has been gripped much of Europe since the Russian invasion. Previously, Russia has used its vast reserves of natural gas as a weapon, first by cutting off supplies to Ukraine in a pricing dispute, and then by threatening to do the same to European nations that are reliant on Russian gas. As a result, energy prices have spiked across Europe, and many countries have been forced to ration supplies.
Escalating Europe Energy Crisis 2022 : Latest Update
After trading for the first day the energy giant of Russia, Gazprom, holds the flow of natural gas through the vital ort Stream 1 pipelines asserting that there is a leakage in the turbine. This particular pipeline is in charge of delivering about 35% of the total gas Europe use to receive from Russia. From June, Gazprom as limited the flow of natural gas to only 20% of its potential showing dispute and maintenance issues in the missing turbine, held up in the Western Export Sanctions.
On Saturday, Moscow’s decision of not reopening the pipelines of natural gas hit the concerns of the authorities that the European Union will run out of natural gas this winter; a shortage of gas is inevitable despite having properly filled storage tanks. Similar concerns churned up in the United Kingdom when there is a strike in the price of natural gas; more than a third on Monday.
Turkish president Recep Tayyip Erdoğan expressed his views stating:
European nations are “harvesting what they sowed,” “Europe’s attitude towards Mr. Putin, its sanctions, brought Mr. Putin – willingly or not – to the point of saying: ‘If you do this, I will do that.’ He is using all his means and weapons. Natural gas, unfortunately, is one of them.”
What is the affect on economy?
The condition is quite critical in European countries. The rise in the price of natural gas has taken a toll on the countries’ economies as well. According to Monday’s report, the closure of pipelines for an indefinite period on Friday has reduced the value of euros to $0.99, which is the lowest in the last 2 decades. The value of the pound hit $1.14, the lowest after 1985. The merchants feared that the doubtless drastic energy scarcity can have a toll on the regional financial exercises and budgets of authorities. Some of the European countries are preparing themselves to spend millions to restrict the ache.
To save the economy, the German government introduced a $64 billion reduction deal to support households and businesses to cope with the recession and inflation. Germany, considered the largest financial system in Europe, is appurtenant on Russia’s natural gas supply to power their industries and households.
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Liz Truss, the successor of Boris Johanson as UK prime minister is under huge pressure of announcing assistance to the household and industries to withhold against the recession. According to a report by The Sunday Times, cited by unnamed sources, Truss is going to announce a package deal of $115 billion to assist the household and industries. But then the price of the nation’s pandemic furlough schemes will exceed its threshold, through which the government-backed employees’ salaries to anticipate mass layoffs; by around $ 34 billion.
Countries are frightened that Russia would reduce the supply of gasoline further and therefore, for months now, the European Union is trying to fill energy reserves for the upcoming colder months. Moscow has stopped providing gasoline to several “unfriendly” European countries and energy firms by creating an issue over their refusal of paying them in rubles, rather than euros or dollars.
Reserve For Colder Months!
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Russian energy giant, Gazprom has reduced the supply just a few years after “ G7 nations agreed to cap the price at which Russia can sell its oil in a bid” to limit the uncontrollable income of the Kremlin so that they can fund their war in Ukraine.
Regarding the same, a point person for Siemens alleged that the leaking of oils cannot be a technical reason to stop the whole operation. “Irrespective of this, we have already pointed out several times that there are enough additional turbines available at the Portovaya compressor station for Nord Stream 1 to operate”, said the person.
European countries have stuffed almost 82% of their total gasoline storage after the news was released on Friday. “Despite a serious risk of energy shortages, we still expect most of Europe to get through the cold season without having to shut down significant parts of industry by large-scale rationing of gas supplies,” Schmieding alleged about the storage.
During the crisis period, it has been known that the energy minister is going to have a meeting to ideate plans to save the Europeans from the worst-case scenario of the rise in energy prices. Initial ideas include the de-amalgamation of electricity prices from the price of natural gas.