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.
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