Europe's Gas Problem
- henrybai091
- Feb 18, 2022
- 2 min read
Above is a graph of natural gas prices in the EU during 2021; as you can see, there is a noticeable and dramatic rise in prices almost throughout the year. Although they have leveled off slightly since then, prices are still inflated compared to pre-pandemic levels. High natural gas prices mean low-income Europeans with flimsy, poorly insulated homes are forced to pay exceedingly high prices for heating and electricity during winter. These Europeans are also the ones that won’t be able to afford retrofits.
A significant cause of this issue is Russia. As an oil giant that provides Europe with 40 percent of its natural gas, a cut could leave the continent severely depleted of an essential energy source. And this situation seems increasingly likely with the possible invasion of Ukraine by the Russians. So how did Europe become so dependent on Russia?
When the EU began cutting back on carbon-intensive energy production in the 90s, they started phasing out coal in favor of natural gas, which generates less carbon dioxide. Because Europe has weak domestic production of this resource, they were forced to import it from other countries, the US, Russia, and Iran. Then, Europe faced yet another problem, how to transport natural gas. There are two approaches to this, either through gas pipelines or via cargo ships if the gas is cooled into its liquid form called LNG (this is done to make natural gas lighter).
Europe has used both strategies to successfully diversify its natural gas supply away from Russia; by extending pipelines and building LNG conversion terminals, they were able to draw fuel from North Africa, the Middle East, Asia, and the US. But even with these efforts, due to the revival of the European economy, the underperformance of renewables, and lower supplies from Russia, Europe’s natural gas systems are still under stress. This situation leaves utility companies with a dilemma, do they focus on securing a stable gas supply or ditch it in favor of renewable options?
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