⚡ "Europe’s Looming Energy Crisis"

Podcast’s Essential Bites:

[6:00] JK: "Europe was getting about 40% of its natural gas from Russia. [...] And it's now down to 9%. [...] Europe does have the means and the ability to go out and buy natural gas at a premium. But that cost has to be passed on somewhere. And for example, in Germany, one of the debates they're having right now is this €400 tax that will be passed on to consumers to help pay for the increased costs of natural gas. So these countries that had relied on cheap, cheap energy from Russia all of a sudden got a real rude awakening."

[8:12] JK: "Inflation is pretty bad [in Europe]. You see it in not just the energy costs but also for other things like food. And there are real fears of a potential recession as well, especially if some of these cutbacks on energy hit industry really hard. [...] There are companies who say their energy costs are so high, that they’re gonna have to pass it on to consumers, which of course will mean that consumers have to pay more. And so there's a real concern about the state of the European economy, and how hard it might be hit by compiling crises."

[10:03] JK: "The reaction from people in Germany [...] has been mixed. People are definitely aware that a crisis is coming, but they're not really sure what they should do about it. [...] Some people negotiate their [energy] contracts far in advance, so they might be actually having a pretty good deal where others might have just negotiated it and they have really high prices. [...] In a lot of cases, people really don't know what their energy consumption is until the end of the year. [...] What a lot of households do is they pay an estimated fee of what they think their consumption might look like [...]. So what a lot of people are doing is maybe paying a lot more in advance so that they can prepare for higher energy bills. But of course, not everyone can afford to do that."

[16:01] JK: "The German government has agreed to cut gas consumption by about 15% between now and March of next year to avoid gas shortages and spiraling prices, which is a target that the European Union has set. [...] The government has taken a lot of other measures, [...] like monuments and statues [...] are not lit up at night anymore. [...] In Munich [...] street lights are turned off at odd hours to save energy. [...] So there are all of these little measures in addition to these larger campaigns, which are just encouraging people to cut back on energy, [for example to take] colder [and] shorter showers."

[19:08] JK: "I would say that Germans in general are way more energy conscious than Americans. And so I think a lot of other people in Germany are trying to work that idea into everyday life. [...] [However] we're still just exiting summer. And so it's all well and good to cut back on your energy now. But the real question is what's going to happen in the winter when energy demand goes way up? [...] There's a balance there between trying to ease the burden on people, but also really making it clear to people that they just can't use the same amount of energy that they always have."

[22:21] JK: "Germany has hit these consumption targets so far. [...] And if they continue at this pace, it looks like maybe they'll be able to withstand the winter. It might not be the most pleasant winter in the world, but Germany should maybe get through it. There's still a lot of uncertainty. [...] We don't really know what this winter is going to look like until it's here and, and what it might even look like next winter, which could be just as bad."

[22:56] JK: "A lot of experts I spoke to said they don't necessarily know if European governments have totally prepared their populations for just how much demand has to go down. And so that's a real open question. I think the lesson of the Nord Stream pipeline leaks is that European energy infrastructure is pretty vulnerable and Europe as a whole does not have a lot of margin of error to make up its supply if something goes wrong. [...] I didn’t have sabotage on my bingo card of things that could go wrong, but maybe I should have."

[23:33] JK: "One thing Vladimir Putin is banking on is that people will be really angry that their energy bills are going up, or that they're potentially freezing during the winter. And that will create a backlash to some of the European Union's policies against Russia. There's a real question about the political and social stability in Europe that I would say governments are probably worried about. They're trying to reassure their populations that they have it well in hand, but we really just don't know what's to come."

Rating: ⚡⚡⚡⚡