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Crisis peaks over Europe’s gas prices as Russian gas flows dry up

Thursday, 08 September 2022 12:24 AM [ Last Update: Thursday, 08 September 2022 12:24 AM ]

Ramin Mazaheri

Press TV, Paris

France and Europe have begun power restrictions unseen since the energy crisis 50 years ago, in the hope of avoiding rolling blackouts, rationing, shuttered factories and recession this winter.

However, that was before European gas prices exploded after Russia cut gas flows four months earlier than Europe expected. At the current prices energy bills across Europe will be up over 200% compared with last winter, and would absorb 20% of the average household’s budget.

On a macro level such an increase will require two trillion Euros in additional spending across the continent, equivalent to 15% of Europe’s gross domestic product, all caused by sanctions on Russia over the unrest in Ukraine.

Most analysts agree that Brussels’ latest response - to try and cap Russian gas prices - is hollow, unenforceable and certain to end all gas shipments from Russia. The far-right is leading vital elections this month in Italy, and its leaders are running on an end to Russia sanctions because they say Italy is already “on our knees”.

French President Emmanuel Macron recently made waves by saying the country needs to prepare for an era defined by the “end of abundance”. However, many note that assumes that Ukraine will be the only unexpected crisis which Europe has to deal with in the coming months and years.

The government has predicted that the average annual inflation for all of 2022 will be 5%. However, from supply chains in China to energy sanctions on Russia to austerity demands from Brussels, there’s plenty of room for things to get worse.

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