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  • Allen Czermak

How Much Energy Does Russia Supply To Europe?

According to the Council on Foreign Relations approximately one third of Europe's natural gas comes from Russia. Natural gas is a mixture of butane, methane, ethane, propane, and carbon dioxide that is used for home heating, gas ranges, electricity generation, and manufacturing production. As for crude oil consumption, Russia fuels more than a quarter of the oil that Europe uses for motor gasoline, diesel, jet fuel, and many other products.

Well, that is a big issue for countries like Germany, Poland and the Netherlands that are dependent on Russian oil. These countries can’t simply close the spigot on Russia as automobiles need to be fueled and manufacturing plants need to be powered. Cutting off this supply will shoot up the price of gas which is already at $8.68 a gallon in the Netherlands. It’s a really difficult time for our European allies as they refuse to support Russia's war effort which is having ramifications on its citizens and economies.

For the very first time the European Union is now importing more liquefied natural gas from the United States than ever. Until recently the EU would get a good portion of its gas from Russia, transported via the Nord Stream pipeline. However this past Thursday, July 21, 2022, Germany resumed Russian gas imports at a steady rate after a 10 day outage. No one knows for sure what the outage was from but what we do know is that there is lots of turmoil both politically and economically on the issue of Russian gas. It appears that Germany has got their hands tied since they have come so dependent on Russia for its oil.

In an article from the Washington Post all the way back on September 25, 2018, President Donald Trump had accused Germany of becoming “totally dependent” on Russia energy at a meeting at the United Nations. The response from the Germans was an embarrassed smirk (kind of like when a parent catches a child with his or her hand in the cookie jar). Now it’s way too late in the game and the United States is not going to bail them out by importing energy across the Atlantic. It’s a really sad situation and most likely the European Union will have to put on a show of not supporting Russia while they continue to receive energy via the Nord Stream pipeline.

How Did The European Union Become So Dependent On Russian Energy?

In the 1960’s and 1970’s Europe was able to fuel its own countries with oil that was harvested from the North Sea. This was an ample energy supply for countries like the United Kingdom and Netherlands and made them energy independent. However, with a combination of depleting gas fields and earthquakes that source of energy became no longer a viable option to sustain the growing countries.

On November 1, 1993, in Maastricht, Netherlands, the European Union was formed that would make each of the countries dependent on united policies. Some of the policies would help these countries flourish while others would have a negative impact on energy. In 2020, the EU adopted the European Green Deal which would make them achieve climate neutrality by 2050 and commit to cutting emissions by at least 55% by 2030. Though this sounded nice from a climate point of view it would have a devastating effect on the energy sector as manufacturing facilities still needed fuel to run their operations. Cars still needed to be fueled at the pump and trucks still needed diesel to haul those big loads all across the country side. It was a beautiful thought but the energy sector was simply not ready for it.

To make things even worse the Atomic Energy Act was passed in 2011 that would move countries like Germany away from nuclear energy after the world witnessed the Fukushima nuclear disaster earlier that year. Unbeknown to many climate change activists, nuclear energy is actually the cleanest and most efficient way to produce energy. True, nuclear power plants must be fortified against both manmade and natural disasters with the most sophisticated security systems but no one can deny that nuclear energy is by far the most efficient method in producing energy. With that being said countries like Germany will continue to depend on Russia and the rest of the world for energy due to policies that do not support nuclear power plants.

On the contrary, France derives just about 70% of its energy from nuclear resources while the United States gets just 20% of its energy from nuclear power plants. This is quite an anomaly because if countries around the world don’t want to leave a carbon footprint they should go nuclear just like the French. Since that is the case, France has flexibility as to where to shop for the remaining 30% of energy that is needed to sustain its country and is not subject to blackmail by countries like Russia. France can support the Ukrainian war effort with little to worry about its choice having a negative impact on energy prices.

Potential Collapse Of Germany Energy Giant Uniper

Uniper is an energy company based in Düsseldorf, Germany that was founded in 2016. The company was a storage facility for liquid natural gas that would be distributed throughout Germany and neighboring countries. To put things into perspective of how a single conflict such as the Russia Ukraine war can take a company down, in October of 2021 the price per share of UNPRF was selling at $42.89 a share. The current price per share has dropped to just $7.65 a share. All of this had to do with Russia turning off the supply of natural gas to Uniper making the company unable to supply its customers.

Though gas now continues to flow to Germany investors do not see this as a viable solution and Uniper is now in the middle of emergency talks with banks to provide financial stability. But the damage was done and Russia is not changing its tone anytime soon to revive supply security to Uniper. It’s a complicated situation that Germany is presently experiencing and will be forced to appease its adversary, Russia.

Is the United States Imports of Natural Gas Helping Out?

In reality the United States has the capabilities to ramp up production of natural gas and oil but is not doing so due to policy. The other problem is that energy will have to be shipped which is more expensive than running it through the Nord Stream pipeline. At the same time accepting more energy from the United States further distances countries in the European Union from Russia. Though the imports of liquid natural gas have helped ease the pressure of total reliance on Russia it is not a long term and economical solution. As the war in Ukraine goes on so will energy prices in Europe. The price hikes will become even more noticeable as Europeans begin heating their homes in the upcoming winter season.

How Does This Impact Us Here In The United States?

You don’t need much for energy prices to rise for the biggest consumer of oil in the world. The United States consumes on a daily basis 19,687,287 barrels of oil and to maintain that we rely on a variety of energy channels. If any of those channels are slightly interrupted you can expect to pay more at the pump. As for truck drivers and logistics companies that need to fuel their big rigs with diesel fuel, that is a big problem. Truckers in South Dakota are paying between $700 and $900 to fill up their trucks. Our trucks and automobiles still require to be fueled and until we can convert our vehicles to electric we will be subservient to price volatility at the pump.

Final Words

Germany is in a real unfortunate situation but it was they who laughed at President Donald Trump when he warned them at the United Nations all the way back in 2018. Well now they are stuck and the energy giant Uniper is on the verge of collapse if the German banks can’t bail them out. One thing we do know is that policies such as the European Green Deal have put allies in precarious situations where they are forced to shop for energy from adversaries like Russia. We all want a cleaner world and want to reduce carbon emissions but it cannot come by giving countries like Russia and Iran a stronghold on energy when they can cut the supply at their will.

True, there will come a time when countries that are sitting on oil will begin to drown in its abundance due to the fact that the world no longer needs it because of cleaner energy alternatives. But the problem is that we are not there yet and we cannot advance a cause that does not have our country's best economical and security interest in mind. At this point, anyone in the United States that is voting for a politician that supports a Green New Deal is obviously oblivious to what is occurring in Europe.

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