European Energy Concerns Deepen

For months European Union officials have claimed the Union should prepared if Russia decides to halt gas shipments to Europe indefinitely. However, Gazprom’s decision halt Nord Stream 1 deliveries, ostensibly due to needed turbine repairs, has shown the earlier EU confidence might’ve been premature. Energy markets are volatile right now with prices surging. If this was not bad enough, many European energy companies are facing margin calls at the worst possible time. Collateral cash is not available in the amounts needed, mainly owing to the volatility of energy markets, which has been sparked in-turn by the energy. The chips are down, and the red light is flashing on the continent as leaders and energy ministers try and come to terms with the crisis now staring directly at them.

Belgian Prime Minister Alexander De Croo warned today that swift action must be taken to prevent a broad economic shutdown continent-wide. “A few weeks like this and the European economy will just go into a full stop. Recovering from that is going to be much more complicated than intervening in gas markets today. The risk of that is de-industrialization and severe risk of fundamental social unrest.” De Croo made these comments in an interview with Bloomberg. Tomorrow 27 EU energy ministers will meet in Brussels to discuss a plan for intervention in European energy markets. As some analysts have said earlier this week, Europe is now facing a “Lehman Event” and swift intervention could be the only tool strong enough to stave off major disaster.

Even though European officials continue to claim gas storage supplies are sufficient enough to get EU nations through the winter, there’s increasing worry that if even one member-state must resort to blackouts and other energy restrictions it will create a domino-effect throughout the entire EU. Given the current state of energy in Europe this is a very possible prospect once winter sets in.

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