For many years now, the words “Winter is approaching” have not sounded as threatening to the gray continent as they do this year. After many months in which Russian President Vladimir Putin threatened to impose an energy blockade – he also carried out. On September 5, an official announcement was made: the main gas pipeline carrying gas from Russia to Europe will be closed, as long as Western sanctions are imposed on it. An in-depth review of the Yelin-Lapidot investment house reveals the components of the enormous crisis that has arisen. I dived into it to understand – and so that you too can know – I have given you the main points. And for those who want to go deeper, I promise to attach the full review at the end.
1. This is not just an increase in price – for many it is an existential crisis. Putin’s announcement resulted in a 30% increase in electricity prices. This is not just a difficulty – about 14% of UK households are currently unable to pay their electricity bills on time. Factories also stop their work for the same reason.
2. Europe could actually have alternatives, and yet there are none. Europe has consciously chosen to rely on gas, and consciously on Russia as the main supplier. Many reactors for the production of nuclear energy were closed, for repairs or completely, and in their place came investment in gas transport infrastructure from Russia. The possibility of producing hydroelectric power is limited because of the forms, and in this situation – the gas stations are the only ones capable of providing a quick response and their prices rise sharply and many times without any justification.
3. Europe also ignored the warning signs. Russia has used the threat of gas as a political tool in the past (for example, when it invaded Crimea in 2014). The neighbors did not learn any lessons, and their reliance on Russian gas has almost doubled since then.
4. This is the hour of renewable energy producers. Those who are currently able to produce solar energy, wind energy or biomass energy – which do not require the burning of coal or gas, are now enjoying particularly unusual profits, of hundreds of billions of euros. At the same time, the countries are trying to produce additional solutions, such as the use of liquefied gas.
5. Meanwhile, winter is approaching and the governments are under pressure. As it looks at the moment, they will be required to intervene in the electricity market to get through this winter – which will probably include shutting down branches of industry (to reduce energy consumption) and subsidizing household electricity consumption (to prevent the population from deteriorating into poverty). All of this has huge consequences for the recession and the countries’ financial expenses.
6. This crisis will change the energy market in Europe. All countries are now working on preparing alternative plans, which will greatly affect the market. We will follow this drama with interest, whose consequences for the whole world are significant. And in the meantime, it is very worthwhile to read the detailed and complete review by Amir Alsheikh from Beit Yelin Lapidot, right here: