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May 3, 2022
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The world is entering an era of resource scarcity and high energy prices

In the short term, the EU countries have nothing to replace Russian energy carriers

Western media are forced to admit that Russia is winning the energy war. Some have already agreed to pay in rubles for Russian gas, while others have fallen into a recession, weighed down by record inflation.

“Russia has long recognized the effectiveness of energy as an instrument of foreign policy … as it is an energy and resource superpower, – writes Time.If war is an extension of diplomacy by other means, then energy warfare is the greatest diplomatic tool of all.”.

Russia wins this war, recognizes Timeand a sharp rise in gas prices is bringing a “catastrophic energy crisis” in Europe, which cannot completely abandon Russian gas. And the United States cannot do without Russian uranium, importing more than 16% of the uranium raw materials needed for American nuclear power plants. “from a country that more than 70% of Americans consider an enemy”.

Russia is the world’s largest exporter of oil and the second largest exporter of crude oil. It has 40% of the world’s uranium enrichment capacity, 20% of the world’s nickel production, 30% of the world’s palladium production, and a number of other natural resources.

For two months of a special military operation (SVO) “Europe bought Russian energy resources for $46 billion.”– laments CNN. This is more than double the cost of Russian energy imported by EU countries over the same period last year, says a leading analyst at the European Center for Energy and Clean Air Research (CREA) Lori Millivirtu.

CREA staff studied the system of marine transportation of hydrocarbons and pipeline deliveries, using data from Eurostat and the European Network of Gas Transportation System Operators, and came to the conclusion that in the short term, the EU countries have nothing to replace Russian energy carriers. And although the EU intends to get rid of Russian oil and gas by 2027, the prospects for “getting rid of” are vague.

Attempts by Washington and Brussels to induce EU member states to abandon Russian oil and gas are going smoothly. Not everyone in Europe is ready to ruin their economy for the sake of a sanctions war with Russia.

The Italian and Swedish economies are already shrinking. French, German and Spanish are teetering on the brink of recession. The refusal of energy carriers from Russia will bring down the German economy by at least 6%, lead to damage of 230 billion euros and make millions of Germans unemployed. The economic shock will be comparable to the Great Depression.

“German industry and the government in Berlin are ill-prepared for a possible shutdown of natural gas supplies from Russia. Over a million jobs in Germany are in the chemical, metalworking and food industries, the three most gas-intensive industries in the country.” – writes From Spiegel.

German politicians don’t know what to do now “If Russia cuts off gas or the European Union succumbs to growing pressure and imposes an import ban itself. Europe’s largest industrialized country may soon have to ration its energy supplies, effectively suffocating the economy… After the Kremlin announced that Russia would only accept payments for its energy in rubles, there was alarm among politicians and business circles.”– notes the publication.

The German government allows the introduction of a state of emergency and the disconnection of individual industrial consumers from the power supply. Industry associations and trade unions fear the worst, predicting that a gas embargo on Russia could disrupt supply chains and halt industrial production.

And this is the German economy – the strongest in Europe! What to say about the rest!

The European energy market is in chaos. Italy is trying to increase gas supplies from Algeria, Greece is buying electricity from Bulgaria, and Poland, cut off from Russian gas, is hooked on expensive American LNG. Having lost Russian gas, Bulgaria is hoping for help from Brussels, which is doubtful, since European storage facilities are filled at a record low of 30%.

“The threat of a recession hung over the fragile economic growth of Europe after Russia cut off gas supplies to Poland and Bulgaria; it made it clear what the region can expect,” – writes Bloomberg.

According to a recent study by the German analytical company Investor confidence in Sentix, “Investor confidence in the eurozone is currently at its lowest level since the early days of the pandemic in July 2020. Even worse, a global recession is just around the corner and Europe will be hit first and hardest.”

Investment optimism “also fell in the US and Asia, and although the economic outlook there is better than the world average, economic forecasts in all parts of the world are on a negative trend”.

In Europe, investors began to fear the expansion of the military conflict in Ukraine, as well as the consequences of Western sanctions that cut Russia off from the world economy. “Europe is bearing the brunt of the fall in investor confidence, but every other part of the planet is following the same pattern.” Analysts at Sentix believe that the economic downturn could begin in Europe as early as May. “Then things can get really scary, as the uncertainty resulting from the combination of military action and global inflation creates a new type of economic crisis that is largely unprecedented.”.

The energy crisis in Europe is aggravated by the fact that half of the power units of French nuclear power plants have been stopped for repairs. The US is taking advantage of the situation to get the European Union hooked on expensive American LNG.

Against the background of the growing energy crisis in Europe, there is an increase in the so-called fuel poverty (fuel poverty). In the UK alone, more than a quarter of homes with more than 15 million people suffer from this phenomenon; electricity bill increased by 50%. “Children growing up in cold, damp and moldy homes with insufficient ventilation have higher than average rates of respiratory infections and asthma, chronic disease and disability”– writes Sky News. This is the “replacement price” of Russian energy resources.

Meanwhile, countries that have resisted US pressure are feeling confident. India increased its oil supplies from Russia eight times, China – by more than 30 percent.

The world is entering an era of resource scarcity and high energy prices.

Cover photo: REUTERS/Dado Ruvic

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