Europe, fat and happy at the Russian gas trough over a span of decades, is on the cusp of a cold winter.
Via the European Union’s sanctions on Moscow and Russian energy giant Gazprom’s severing of natural gas supplies through the Nord Stream I pipeline (which was damaged this week by purported sabotage), most Russian gas supplies to Western Europe are suspended. Natural gas supplies in Europe are down considerably from last month, plummeting by 40% since the Dutch TTF Gas Futures market hit a high on Aug. 26. But this is little relief to European businesses and consumers. Some are shelling out so much for energy that their budgets are barely trimming above water. (Natural gas prices are up 400% from the same period last year.) European politicians understand they have a problem on their hands, one that could result in a continent-wide recession and political peril.
The EU and individual European governments have spent the last months scrambling to prevent the worst: fuel prices getting so unaffordable that factories start shutting down, industry grinds to a halt, and families are huddling together with blankets. Gas storage levels now exceed 88%. Countries like France, Germany, and Italy are signing bilateral energy agreements with Azerbaijan, Algeria, Qatar, and any state that has the capacity to send natural gas in Europe’s direction. The EU is advising member states to do what they can to decrease energy consumption by 15% and to assist fellow neighbors with supplies if energy shortages become a reality. Maintaining solidarity is the top priority among European political elites.
That solidarity, however, will be far more difficult to sustain if children are shivering in their own homes or their parents can’t pay for utilities. It doesn’t take a savant in European politics to understand that economic turmoil translates into political opposition to sitting governments.
Tens of thousands of people in the Czech Republic have already gathered in Prague to march against high fuel costs. It’s not a stretch to envision similar demonstrations occurring in Paris, Berlin, or Rome. An energy crisis is just the kind of political kryptonite anti-establishment parties can use to threaten the governing mainstream. Indeed, the far Right in Europe has already had a decent year. Marine Le Pen’s National Rally won a record 89 seats during the French legislative elections in June, broadening its representation more than tenfold. The Sweden Democrats, a fringe outfit for most of its history, helped power a right-wing coalition into a razor-thin majority. And Giorgia Meloni, the leader of the equally controversial Brothers for Italy party, will be Italy’s first female prime minister, taking over for former European Central Bank chief Mario Draghi.
The last thing Brussels needs or wants is a populist wave sweeping the shores of the continent. Politicos like French President Emmanuel Macron or German Chancellor Olaf Scholz don’t want that either — some inside the French government are worried about the very kinds of protests the Czech Republic saw this week. So they are doing what they can to soften the blow. Capping energy bills to ensure families and businesses won’t go bankrupt is now in vogue. This week, Scholz announced his coalition government would take on nearly $200 billion in debt to pay for a gas price cap. France already instituted a cap for households next year, which will cost Paris about $16 billion. British Prime Minister Liz Truss is planning to freeze U.K. energy bills to an average of more than $2,700 a year. And on Friday, EU energy ministers approved a plan that would raise around $136 billion to assist households with the cost of higher energy.
President Vladimir Putin’s weaponization of energy is a risky game for Russia, which is now compelled to rely on markets in Asia to offset Gazprom’s revenue loss in Europe. But for now, at least, Putin is getting a little comic relief as he watches European governments throw money at the problem he has made.
Daniel DePetris (@DanDePetris) is a contributor to the Washington Examiner’s Beltway Confidential blog. His opinions are his own.
