Rising gas prices are keeping society busy. The hefty bill that awaits companies and households can hinder economic growth. The Dutch government reports that action may be taken to keep energy affordable, although Europe ultimately depends mainly on the whims of Vladimir Putin. Or is it a matter of opening the Nord Stream 2 quickly?
The impending energy crisis needs no further introduction. The concerns are great and the news is full of them. And when the free market fails and goes off track, the government often has to step in. That seems to be happening. Outgoing Finance Minister Hoekstra said this week that the government is prepared to intervene so that energy prices remain (somewhat) affordable. It is not yet known which approach the Hague ministers have in mind for this. But billions appear to be ready to compensate for the high gas prices.
Depending on Russia
The commitment from the Dutch government (and in other countries) may be reassuring at first glance, but does not solve the cause of the problem. In 2020, the European Union imported 43% of its gas consumption from Russia, in previous years that percentage was even higher. Europe is therefore dependent on Russia's gas drip. Whether the energy crisis remains manageable will mainly depend on Russia's attitude, energy experts indicate.
For the time being, Putin is taking a helpful stance. He said on Wednesday he was prepared to increase gas deliveries to Europe for next winter, amid global supply concerns. The Russian commitment caused gas prices to fall after reaching new records of more than €115 per megawatt hour earlier in the day.
Nord Stream 2
The fact that Europe is dependent on Russian gas supplies plays into Putin's hands. European politicians blame the energy crisis on Russia. Ursula von der Leyen, president of the European Commission, blames Russia for not wanting to increase deliveries. Russia is using rising gas prices to pressure for the approval of the Nord Stream 2 pipeline, a gas pipeline running from Russia to Germany. The United States in particular advises Europe against realizing these plans, because Putin can then exert more influence by playing with the gas tap.
In the meantime, the much-discussed pipeline has been installed and deliveries can begin. However, that is not the case yet, because the German energy regulator must first issue a permit. This was initially supposed to happen in October, but has been postponed until January. Russian deliveries are therefore delayed for months. That is a sore point for Russians who miss out on a lot of rubles as a result.
Complex situation
The Russian state gas company Gazprom supplies Europe from Russia, so far even more than prescribed by contractual obligations. According to Russia, the high gas prices are a result of the purchasing policies of many European member states. They mainly buy energy on the spot market instead of long-term contracts, Putin suggests.
The role that Russia plays in the development of high gas prices is rather murky. Is Russia actually prepared to lend a helping hand, or is a game being played to get Nord Stream 2 open as quickly as possible? The latter seems to play a role. Gazprom has reduced gas deliveries via Belarus and Poland by more than 70% and the company is also supplying significantly less gas to Europe via Ukraine. All in all, the situation is politically complex and for the time being citizens and businesses are the big losers.