Europe’s Energy Crisis Is Only Getting Worse

By: James Flippin · November 02, 2022 · Reading Time: 3 minutes

Cruel, Cold, (Costly) Winter

Europe’s energy crisis continues to intensify. What started with supply chain issues related to COVID-19 grew worse thanks to high inflation, and the situation has only grown more dire since Russia cut off the flow of natural gas to Europe.

With winter approaching, energy is rapidly becoming unaffordable. In fact, some Europeans are spending 50% or more of their disposable income on energy alone.

Thanks to plenty of gas storage and government energy subsidies, Europe appears ready to make it through the winter months. But what about next year?

Running on Fumes

Gas reserves remain around 90% full in Europe, according to the International Energy Agency. This should be enough to keep the lights on and heaters pumping for the foreseeable future. But most of the gas in storage came from Russia, imported and stored prior to February’s invasion.

Now that Russia has completely cut off the flow of gas into Europe, the EU has a massive problem on its hands. These Russian gas reserves will be spent by next winer, and it’s unclear where European nations will be able to refuel.

Pointing the Pitchfork

Meanwhile, people in Europe are growing frustrated. Several anti-government protests broke out in Germany, Austria, and the Czech Republic over the past few months after household energy prices surged as much as 10 times higher.

Blaming the government is common when things go wrong. However, these energy shortages are also leading to record profits for oil and gas companies. Subsequently, some — including President Joe Biden — are accusing energy companies of price gouging during a time of need.

In response, oil execs are blaming governments for policies that favor renewable energy over oil. Governments spent years redirecting taxpayer dollars toward renewable sources, which oil execs claim has caused oil and natural gas infrastructure to fall behind.

One thing is certain: the world is at a crucial turning point. The future might be renewable, but we remain fueled by fossils today.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

TLS 1.2 Encrypted
Equal Housing Lender