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The war between Russia and Ukraine has revealed many side effects besides the destruction of Ukrainian territory and the countless loss of life.
The West’s stance in favor of Ukraine and against Russia has raised doubts about the fate of trade relations between the countries. Despite the political disagreement, Russia is today the biggest supplier of many essential inputs for the survival of several countries.
The war has already shaken the price and supply of oil in the world, and now it’s natural gas’s turn. The possibility of interruption of natural gas supplies by Russia has haunted much of Europe, especially Germany.
Nord Stream 1 and natural gas in Europe
Nord Stream 1 is the gas pipeline that crosses Europe and delivers gas directly from Russia to Germany. The pipeline has a supply capacity of up to 55 billion cubic meters (bcm). Germany consumes a total of about 100 bcm per year.
This means that Germany has a very high dependence on Russian supplies, and a possible disruption caused by political disagreements could do great damage to the German economy.
Natural gas is essential for several key activities on the European continent. From the heating of citizens’ homes, to the aluminum, paper, steel, porcelain, among others, directly depend on the supply of gas to remain functioning.
The most pessimistic calculation points out that the country could lose more than 12.5% of its economic growth in the second half of 2022, if the supply is entirely interrupted.
Every day the fear of the Germans grows a little. This is because, in addition to the tension with Russia, Poland has already interrupted supplies this year and Ukraine has decreased, also due to the war. Fortunately, the need for gas is greater during the winter, especially for heating houses, which occurs from December to March.
Even so, the country’s gas reserves are not as full as they wanted to be able to go through this critical phase and now reach 64%. The target would be 80% for the time.
Concerns increase as the Nord Stream 1 pipeline was recently shut down for routine maintenance. The shutdown is expected to last 10 days, but authorities fear that operations will not resume at the end of the period due to the conflicts.
Reflections on the economy and possible solutions
The war in Russia has triggered a real energy crisis all over the world. The search for alternative sources has become a reality, as well as the cost of losses by governments and, indirectly, of course, by society.
The gas issue does not herald a different solution. The forecast is that the costs for acquiring new gas sources will be passed on to consumers. In fact, there is a previous issue that is about rationing available resources, and distributing them fairly.
This is because many companies and industry sectors that depend directly on gas supply are expected to be profoundly affected. The reduction of just 30% of the supply would represent the interruption of activities of more than half of the industries in the aluminum sector, for example.
In view of this, authorities are rushing to seek alternative sources of energy supply, preferably renewable and without carbon origin. An example of this type of maneuver is the agreement signed between the Czech Republic and Germany to accelerate this transition.
Ideally, solutions should be found and implemented before the winter season, when dependence on fossil fuels increases for heating homes.