How Bad Europe’s Energy Crisis Actually Is
EUROPE ─ Arguably one of the world’s largest concentrations of wealth, the European Continent has always been on the thriving end of the world economic spectrum. In fact, in terms of total Gross Domestic Product (GDP), four of its economies are included in the Top 10. More notably, the prosperous continent boasts seven of its economies in the world’s top 10 list of largest economies in terms of GDP per Capita.
However, despite this fact, the continent is suffering from a massive energy supply shortage. This invertedly reveals the fundamental vulnerability of the continent — its high reliance on imported energy supply. Furthermore, studies and reports have found that the fundamental ace of the Russian Federation (Russia) in its highly controversial Ukraine Invasion is the fact that it uses its position as the single largest energy supplier for Europe as its leverage and bargaining chip.
However, despite the crisis stemming primarily from the conflict, other factors play a significant role in the current energy crisis the continent is facing.
A Broader Look at Europe’s Energy Crisis
Currently, gas prices in the continent are around ten times higher than they were on average for the last decade. To put this in perspective, natural gas prices in the continent are about ten times more expensive than in the US. Nevertheless, it’s not just the war that caused the energy supply shortage ─ a handful of factors are also responsible.
First and foremost is the fact that Europe highly relied upon Russia’s energy cap. Thus with its current effort to find alternative sources steam a grim reality, alternative energy sources are far more expensive and, at the same time, limited.
Second, nature seems to deviate from Europe’s interest. Traditionally, the continent would take advantage of the warm summer period to stack up its energy reserves for the winter season, where the highest energy demand occurs. However, because of the colder months this year, this has not been effective. In relation to this is the third factor, climate change. Climate change brought more pain to the continent as the continent experience colder months, and local nuclear power plants struggle to produce sufficient electricity because of the drained rivers.
Lastly, European policymakers continue their decade-long disagreement regarding how to best approach the current situation as well as how to implement long-lasting “shock absorbers” into the existing energy framework, enabling a more flexible and faster response to this predicament in the future.
The Worst is Yet to Come
Despite the already expensive energy prices, many experts and policymakers echo a similar concern — things could get far worse than they already are.
According to Alex Munton, an expert on global gas markets at Rapidan Energy Group, a renowned energy consultancy company, “Things are at a crisis point.” He elaborated, “We have astronomic gas prices, and we’re still a few months away from when gas demand really peaks during the winter. [So] there’s genuine uncertainty whether there will be sufficient gas to meet demand throughout the winter.”
He added that during the winter season, the continent typically “uses a lot of what it has in storage while, at the same time, importing lots of gas from other sources,” Munton said. “It needs both. But as we think about this winter, there is a very real threat that there won’t be any Russian gas at all.”
On the other hand, Tinne Van der Straeten, Belgium’s Energy Minister, warned in a tweet that “The next 5 to 10 winters will be terrible if nothing is done.” In her Twitter thread, she also emphasized the need to reduce rising energy prices for consumers, saying, “Electricity is produced today at a price that is much lower than the price at which electricity and gas are sold. There is no longer any link between the cost of production and the selling price.”
Meanwhile, the European Union (EU) is currently working on the much-awaited “emergency intervention.” The President of the EU’s executive arm, Ursula von der Leyen, hinted at a much stronger response from the Union to address the growing energy shortage in the continent. However, the fruits of these are yet to be seen.
