The Wall Street Journal: Europe’s worst looming energy crisis

Journalists Joe Wallace and Kim McReal in The Wall Street Journal note that the suspension of the Russian Nord Stream gas pipeline represents the worst-case scenario for European countries.

Two journalists noted that after the announcement of the closure, prices for natural gas and electricity jumped, first by a third, and then again rose by more than 10%, which led to a record fall in the value of the euro in 20 years. , and this could lead to further price increases in the future, to historical record levels, then to accelerated inflation and impoverishment of consumers and pressure on energy-intensive industries, which are experiencing a wave of factory closures.

As Western countries try to cushion the energy hit caused by the suspension of gas supplies from Russia, Germany has extended the operation of two previously closed nuclear power plants and allocated $65 billion to support families and businesses in need. For its part, France said it would open the main gas pipeline to European gas flows, allowing it to export gas to Germany in exchange for electricity supplies.

Quoting the documents they have, the two journalists continue: “The main goal is to curb wild movements in the electricity markets that force European companies to close. Options include measures to temporarily reduce the price of imported gas, including that used to generate electricity, as well as reducing revenues that renewable, nuclear and hydropower companies derive from low operating costs. Revenues above a certain ceiling will also be seized and redistributed to consumers.”

At the same time, both journalists emphasize that Brussels understands that the previously announced plans to establish a “price ceiling” for Russian hydrocarbons could cut off all energy ties with Russia, while the authors of the report say that one of the methods that the EU leadership is seriously considering the issue of setting a price for the rest of Russian gas imports, which will stop the supply of Russian gas to the region”.

G7 finance ministers on September 2 confirmed the existence of a plan to set a “maximum oil price” for Russian oil and called on “all countries” to join the initiative, with European Commissioner for Economist Paolo Gentiloni earlier saying the Commission’s goal is to reach a price that existed until December 5 last year for crude oil, and until February 5 this year for oil products from Russia.

For his part, Deputy Prime Minister Alexander Novak said that the idea of ​​​​lowering oil prices in Russia is completely absurd, and that Russia will not provide countries that support this initiative with oil and oil products, adding that imposing restrictions on Russian oil prices will destroy the market, and manufacturers have not responded either. Others are positively interested in such an initiative.

Source: Wall Street Journal

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