War in Ukraine: one year of an unprecedented energy crisis

Gas pipelines in Eastern Europe.

REUTERS/Valentin Ogirenko

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2 mins

It has been a year since Russia invaded Ukraine.

The conflict caused an unprecedented energy crisis whose effects are still being felt on consumers and businesses.

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The war caused a veritable energy shock in the world, resulting in soaring and volatile hydrocarbon prices.

This has forced states to spend huge sums of money to protect consumers and businesses.

More than a trillion dollars: never have fossil fuels been so subsidized according to the International Energy Agency.

The war also revealed the European Union's heavy dependence on Russian gas.

Following Western sanctions, Russia has sharply reduced its gas supplies to Europe.

To compensate for the decline, the EU essentially turned to liquefied natural gas, with the United States as the main supplier, followed by countries in the Middle East.

The increase in the price of gas has also had a strong impact on the price of electricity in Europe.

Since the single European electricity market is partly indexed to the price of gas, the price of a megawatt has literally exploded since the start of the war, putting many European companies faced

with energy bills that are impossible to pay.

Lower gas consumption

But this crisis has also had an unexpected consequence: certainly helped by good weather, the 27 managed to reduce their gas consumption this winter;

around 20% in January.

Even though gas prices have fallen, the crisis is not over, warns the International Energy Agency.

The coming winter will greatly

depend on supplies

of liquefied natural gas, for which Europe is in competition with Asia.

The embargo on Russian refined oil which entered into force on February 5, 2023 and decided by the European Union to deprive Russia of this financial windfall has also raised fears of a surge in prices at the pump which has not yet produced.

Russia is a major oil producer, with an average daily production of eleven million barrels, five of which are exported every day in normal times.

Europe alone bought a million before the start of the war, a figure that had fallen to 720,000 in the last months before the embargo.

►Also read: Europe facing the energy crisis

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