Impacts of Political Conflicts on Germany Energy Supply
Firstly, I would like to start this blog post off by saying that it was a great pleasure having Dr. Kreibich, the Consul General to the New England States, come to Babson to speak with us about Germany. I felt like the discussion was very insightful and has helped me become much more aware of Germany’s economic situation.
There were many take-aways from the discussion, however, my biggest take-away was how Germany’s energy supply was very reliant on Russia. There is quantitative data to back this up as there is data that states “In early 2022, Germany imported 55% of its natural gas from Russia”. It was interesting to hear how political conflicts could effect Germany’s economy that intensively. This goes to show that political conflicts can cause domino effects that can have long lasting impacts on many people.
When Dr. Kreibich discussed about the situation, she mentioned that Germany imported most of its natural gas from Russia. Once Russia invaded Ukraine, it caused the EU to set sanctions on Russia. Due to this, they could no longer import natural gas from Russia. This causes big issues for Germany as it made energy much more scarce, causing the price of energy to increase drastically. This is evident as the Reuters stated that “German industry is set to pay about 40% more for energy in 2023 than in 2021, before the energy crisis triggered by Russia’s invasion of Ukraine”, according to a research conducted by Allianz Trade. With energy being more scarce and expensive, there are less people who can afford energy. This has major impacts on less fortunate individuals in Germany as they will have to live without energy. For firms, costs of production will be higher due to higher prices in energy, causing prices of products to be higher. This again will have impacts on less fortunate individuals as goods will be more expensive.
I remember Dr. Kreibich saying that this is an issue that had been foreseen by the UN and former US President, Donald Trump, as it is not intelligent to put all your eggs in one basket as Germany did. With Germany importing most its natural gas from Russia, there was always the risk of something happening to Russia that would in-turn have major effects on Germany’s supply of energy.
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