On Thursday, March 3, gas prices in Europe set a historical record.
During the auction, the cost of fuel at the TTF hub in the Netherlands rose by 20% and for the first time ever reached €199.99 per MWh, or about $2,286 per 1,000 cubic meters.
This is evidenced by the data of the London Stock Exchange ICE.
Over the past two weeks, gas prices in Europe have more than doubled.
According to experts, this dynamic is largely due to the outbreak of hostilities on the territory of Ukraine and the introduction of a number of Western sanctions against Moscow.
“There is a risk of a decrease in fuel supplies to the EU through the gas transportation system of Ukraine.
Also, information that Gazprom stopped pumping through the Yamal-Europe gas pipeline added fuel to the fire.
Europeans are afraid of a reduction in the supply of raw materials from Russia and are trying to buy for the future, which is why the price is rising, ”Artyom Deev, head of the AMarkets analytical department, explained to RT.
Recall that on February 21, Vladimir Putin announced the recognition of the independence of the DNR and LNR, and on the 24th announced the start of a special operation to protect the republics of Donbass from aggression from Ukraine.
In response, the European Union, the United States and a number of other countries announced the introduction of anti-Russian restrictions.
Restrictions, in particular, affected the companies and banks of the country, and it was decided to disconnect seven credit institutions from the SWIFT system.
The sanctions also affected the supply of high-tech products to Russia.
In addition, the EU and the States closed their airspace to Russian aircraft, and a number of Western companies announced the termination of their work in the Russian Federation.
Along with this, half of the gold and foreign exchange reserves of the Central Bank was frozen and the certification of the Nord Stream 2 gas pipeline was canceled.
“Of course, some sanctions came as a surprise to us.
We are talking, for example, about freezing part of the reserves, which, in fact, can be interpreted as theft.
However, many decisions were quite expected.
We are now receiving a serious blow to the financial system, economy and welfare, but Russia will survive.
At the same time, restrictions hit the interests of all European countries, and to a large extent, Europe is now punishing itself, ”said Anatoly Aksakov, chairman of the State Duma committee on the financial market, in a conversation with RT.
It is curious that on February 22, when gas on the European market was trading near $850-930 per 1,000 cubic meters.
m, Deputy Chairman of the Russian Security Council Dmitry Medvedev warned about the risks of blocking Nord Stream 2 for the EU and the threat of rising prices to $2,000 per thousand cubic meters.
In Ukraine, meanwhile, they are calling on the European Union to completely abandon the purchase of gas and oil from Russia.
However, as experts explain, now Europe especially needs additional volumes of energy raw materials, since there is an acute shortage of fuel in the reserves of the countries of the region.
“Europe needs a lot of imported gas right now, because the raw materials in underground storage facilities are almost over.
At the moment, the EU is even more dependent on Russian gas than even a month ago, and the EU has no alternative suppliers.
As an alternative, it would be possible to replace gas with coal or oil, but these resources also come mainly from Russia, ”Igor Yushkov, a leading analyst at the National Energy Security Fund, stated in an interview with RT.
According to the latest data from the Gas Infrastructure Association of Europe (GIE), storage facilities in the EU countries are less than 28.7% full in total.
France (21.64%), the Netherlands (20.89%), Bulgaria (20.29%), Belgium (18.79%), Austria (16.94%) and Croatia (16.84%) have the smallest fuel reserves today. ).
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Against the backdrop of a record increase in the cost of gas, European countries are also facing a rush increase in the cost of electricity.
For example, in France and Germany, since the beginning of 2022, prices have increased by about four times - to €359 and €364 per MWh, respectively, according to data from the Nord Pool exchange.
Also in the eurozone states there is a general increase in consumer prices.
According to preliminary estimates by Eurostat, in February, the annual inflation rate in the countries of the region reached 5.8% - the highest value in history.
“Raw materials play a significant role in the pricing of all products.
As fuel prices rise, companies increase their expenses not only for heat and electricity, but also for logistics.
Therefore, the observed increase in oil and gas prices inevitably leads to an increase in all prices in Europe,” explained Vladimir Olenchenko, senior researcher at the Center for European Studies at IMEMO RAS.
According to him, in the current conditions, Germany risks facing serious difficulties.
A possible reduction in fuel supplies from Russia could hit, for example, the country's chemical industry.
Businesses will have to look for other suppliers, and this will take time.
Meanwhile, the cost of manufactured products will grow significantly, and the goods will no longer be able to compete on the international market, Olenchenko suggested.
“Following this, Germany's GDP growth may slow down, and Germany, as you know, is the main donor of the European Union.
The country accounts for about 21.3% of the EU economy, and most of the member states today are consumers of the funds that come from Germany, France and Italy.
The reduction of the German share will accordingly lead to a reduction in subsidies for smaller EU countries, such as the Baltic States, ”added Olenchenko.
"It's like being shot in the leg"
In 2021, almost 40% of the gas consumed in the European Union came from Russian fuel.
Such data was presented on March 3 by the International Energy Agency (IEA).
The organization has already developed a plan to reduce the EU's dependence on gas from Russia.
For example, the IEA offers Europe to abandon new contracts with Gazprom and, as an alternative, increase purchases from Azerbaijan and Norway.
In addition, the agency considers it necessary to speed up the replacement of gas boilers in homes with heat pumps, as well as increase the capacity of solar and wind power.
At the same time, ordinary Europeans are urged to lower the temperature of space heating by 1 °C.
According to the IEA, already this year these initiatives will allow the EU to reduce gas imports from Russia by more than a third, and with additional measures - by 50%.
At the same time, such a decision will lead to serious financial losses for the European Union, Georgy Ostapkovich, director of the Center for Business Research at the Institute for Statistical Studies and the Economics of Knowledge of the National Research University Higher School of Economics, is sure.
“I doubt that Europe will be able to completely replace Russian gas.
Of course, they can try to cut supplies by 50% or even 70%, but only at very high costs.
Buying fuel from alternative suppliers will cost much more than from Russia.
That is, such a step can only be taken at the expense of economic losses, which is tantamount to a shot in the leg, ”said the interlocutor of RT.
A similar point of view is shared by Alexander Abramov, Head of the Laboratory for the Analysis of Institutions and Financial Markets at the Institute for Applied Economic Research of the RANEPA.
According to him, the rejection of Russian energy resources could lead to an economic downturn in Europe.
“In this case, it is worth talking not even about high inflation, but about a recession.
The exclusion of Russia from the list of energy suppliers will lead to an increase in oil prices to $150 per barrel and fixing the cost of gas stably above $2,000 per 1,000 cubic meters.
This, in turn, is a very specific risk of an economic downturn for the EU,” Abramov said.
business waste
According to experts, the disconnection of Russian banks from the SWIFT system could cause serious mutual damage to the EU and Moscow.
Recall that using the platform, counterparties send payment notifications to each other, which allows you to quickly make payments for goods and services.
The absence of such a mechanism may slow down trade, Vladimir Olenchenko is sure.
“Disconnecting from SWIFT will lead to a slowdown in banking operations and the circulation of money, and therefore to a slowdown in economic processes and a reduction in the production of goods.
All this will not happen in one day, but the cycle can already be considered begun.
Apparently, the current political leadership of the EU is not free in its decisions.
And if it is free, then it is short-sighted, ”the expert believes.
It should be noted that in 2021 the volume of trade between Russia and the European Union exceeded $283 billion. Today, the EU is Moscow's largest trading partner.
In turn, Russia is one of the five main foreign trade partners of the association.
This is evidenced by data from Eurostat and the Federal Customs Service.
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Analysts note that the withdrawal of a number of European companies from the Russian market will lead to additional losses for EU enterprises.
According to Alexander Abramov, at the moment business is acting spontaneously and making decisions that are not fully calculated.
However, as the situation stabilizes, companies will begin to return, because they do not want to lose profits, the specialist suggests.
“Europe, of course, can survive such losses, but in this case, the parameters of the work of European companies in the automotive industry, energy construction and other areas will significantly deteriorate.
Additionally, economic growth will slow down, and enterprises will need financial support,” Abramov added.
According to Vladimir Olenchenko, today the actions of European companies are destroying the myth of the independence of Western business.
This, in turn, undermines their confidence in the world market and at the same time hurts their image, the specialist believes.
“There used to be a lot of comments and claims against Russia that business in the country is closely connected with the state.
But it turned out that in the West he is not just connected, but dependent.
With their massive exit from the Russian market, companies demonstrate almost military discipline.
Western politics is based on myth-making, and it has now suffered serious damage, ”Olenchenko emphasized.
It is curious that the danger of anti-Russian sanctions for the European economy is recognized by the EU authorities themselves.
This, in particular, on March 1, said the President of the European Commission Ursula von der Leyen.
“I understand very well that these sanctions will hit our economy too.
I know it.
We lived for two years in a pandemic and now we really hoped to get involved in the economy and the social sphere.
However, I am sure that the Europeans are well aware that we need to resist this aggression.
Yes, protecting our freedom will come at a price.
But this is a decisive moment, and we are ready to pay this price, ”the head of the EC emphasized.
Route rebuilt
According to experts, against the backdrop of economic threats that have arisen due to sanctions against Russia, Europe is once again facing the problem of refugees.
According to the latest UN estimates, during the week the number of citizens who left Ukraine for neighboring countries amounted to 1 million people.
“In 2015-2016, we already saw a massive entry of refugees into Europe.
Then their number was estimated at 2-2.5 million, and for the EU it was considered a disaster.
As a result, great difficulties arose in relations between the countries of the association.
Now we can expect similar problems, albeit on a smaller scale,” Vladimir Olenchenko noted.
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According to Anatoly Aksakov, the closure of Russian airspace will also become a challenge for the EU.
Operators will be forced to build routes around the country, which will lead to additional costs for companies and passengers.
“These flights will hit the pockets of European taxpayers.
At the same time, the EU business will suffer losses from the termination of cooperation with us, and high gas prices will hit the well-being of citizens and the economy.
As soon as the Europeans feel the opposite effect of the sanctions, they can quickly reconsider their attitude towards the current government, ”Aksakov concluded.