Warnings from European leaders are getting louder that there is a major financial crisis looming if the continent does not get a handle on the gas supply crisis before winter.
Gazprom, Russia’s state gas company, sharply reduced natural gas exports to Germany last week by 60%. The Kremlin said it is retaliation for Western sanctions blocking vital turbines from reaching the country. German officials moved swiftly to warn the public of imminent danger.
Europe’s largest economy faces the collapse of whole industries without necessary energy supplies restored by winter. Vice-Chancellor and Economy Minister Robert Habeck said companies would send workers home, supply chains would collapse, and people would be poorer.
Germany is now in phase two of its three-stage gas emergency plan, meaning it is much closer to rationing energy supplies to industry.
This current level does not trigger government intervention. That comes with phase three, the “emergency” level, when officials determine that market principles no longer apply and step in to control supply.
Germany is heavily dependent on Russian energy and was initially hesitant to join the West in invoking sanctions. It is, however, far from the only victim of Russia’s closing the taps. Eleven other EU countries are also affected by the move.
Italy’s natural gas supplied from Russia is down 15%. And Irish Prime Minister Michael Martin admitted the public is headed towards a “difficult winter” if the energy situation does not improve.
Amazingly, all of this developed simultaneously with the European Parliament implementing radical changes to climate policies in recent days. After the first attempt surprisingly failed, environmentalists regrouped and pushed a second deal through that critics say will stifle industry.
Particularly energy. And it’s all by design.
Of course, EU members are waking up to reality as opposed to what they would like the situation to be. Because of the gas crisis, Germany is now joined by Italy, Austria, and the Netherlands in cranking coal plants back up to offset the loss of Russian energy supplies.
There’s nothing like a cold Northern European winter to drive home the need for energy and therefore drive a wedge into the Western coalition. Because of this, it is of utmost importance that leaders do everything in their power to increase energy production. Are you listening, Mr. Biden?