Why The EU Is Struggling To Bring Its Energy Crisis Under Control

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Yves here. Most readers likely know that the EU Commission President Ursula von der Leyen was pushing hard to get the EU to adopt a price cap on Russian gas and implement other emergency measures last week, and that effort didn’t get very far. The article below gives some additional byplay, such as why the, erm, alternative proposal of a price cap on all gas didn’t get enough support (neither scheme failed for the obvious reason that it would be counterproductive).

However, one effect of the debate over price limits on Russian gas was to raise the already impossibly high bar for broaching ideas like ending at least some of the self-harming sanctions. Apparently only protestors and (outside Italy) a very few politicians dare suggest such a sacrilegious idea. In keeping, Twitter deems the longer clips from this speech to be sensitive content, which means it won’t embed properly:

Reader David had explained earlier in comments why the EU was particularly ill equipped to deal with crises:

The most important part of the explanation, curiously, is technical rather than political. It has to do with the impossibility of managing complex problems (and still more crises) by committee. Experience suggests that perhaps 5 to 6 actors are the maximum that can really manage a crisis collectively. So we are in a situation where, I suspect, many European governments are privately aware of looking into the abyss, and would take sensible measures if they were independent actors, or if they only had to worry about one or two other countries. But an organisation which is not geared for crisis management at all has had to confront the biggest crisis since 1945. The result is a kind of paralysis, where no-one wants to speak out, and no-one wants to disturb a consensus and invite all sorts of extra problems as a result. The problem is that there is no Plan B, and there never has been. Even six months ago, no European government ever thought that it would be even remotely in this situation, and so there is no articulated alternative to the present ruinous policy. The outcome will be, I think, a gradual peeling away of states, and a gradual loosening, which is likely to have disastrous effects on the EU as a whole.

International organisations handle stress badly. In 1999, NATO nearly came apart over the much less vexed question of Kosovo, and after the first few days of the crisis, paralysis set in, and all decisions were made in an inner circle of four or five nations. That can’t happen here. The EU eventually managed to out-perform the British during the Brexit negotiations, because there was a clear negotiating objective and a powerful and expert bureaucracy familiar with the issues. That isn’t the case here.

In conditions of stress, people tend towards fantasy worlds, and I think that’s what’s happening now. European states are clearly telling each other that Ukraine is turning the tide at Kherson [now Kharkiv], and that the Russians will soon have to negotiate. At that point, sanctions will be lifted and all will be well. And of course virtually none of the European leaders have any real-world experience of the parts of the economy likely to be devastated.

By Irina Slav, a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice

  • Last week, the EU considered a price cap on Russian natural gas imports, a cut in energy consumption across the bloc, and a cap on some power utilities’ revenues.
  • The only thing the group agreed upon was putting a ceiling on the revenue of non-gas power generators, a move that by itself cannot solve the energy crisis.
  • With civil unrest growing, energy prices climbing, and winter looming, the EU will have to act uncharacteristically fast to deal with this crisis.

Last Friday, the energy ministers of the 27 EU members met for an emergency discussion of the energy supply situation in the bloc. The one thing they agreed on was implementing a ceiling on the revenues of power utilities that do not use gas to generate power.

What they did not agree on was everything else the Commission suggested last week, including a price cap on Russian gas, a cap on final energy prices, and a direct intervention in EU electricity markets. It’s hard to get 27 countries to agree on so many things without any compromise. This is why the EU’s survival plans for the winter may never work as intended.

Last week, the European Commission, headed by Ursula von der Leyen, proposed that EU member states impose a price cap on Russian natural gas imports, a mandatory cut in energy consumption across the bloc, and a cap on the revenues of power utilities that do not use gas.

The Russian gas price cap was one of the items that divided the EU at the Friday discussions after Russia’s President, Vladimir Putin, warned that any country imposing a price cap on Russian oil or gas would stop receiving them.

Some EU members argued in favor of a gas price cap for all gas imports into the bloc, following a similar suggestion made by Poland earlier this month. Some 15 members of the EU were in favor of such a move, but others were skeptical. And they were right to be skeptical: Norway, the EU’s gas savior, has signaled it would not accept a cap on the price it gets for its gas.

“That’s not a solution we’d propose, we don’t think it answers the EU’s challenges,” Prime Minister Jonas Gahr Stoere said, adding, “I tell my European colleagues that I’m not the one who sells the gas.”

The problem is that the European Union does not have all the time in the world to discuss how to go about saving its economy and its citizens from blackouts this winter. And as Bloomberg pointed out in a recent analysis of the situation ahead of the energy ministers’ meeting, speed is not among the things the European Union is known for.

Belgium’s Prime Minister put it bluntly. “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,” he told Bloomberg last week. “The risk of that is de-industrialization and severe risk of fundamental social unrest.”

Protests are already a fact. Tens of thousands took to the streets in the Czech Republic earlier this month to protest the energy and foreign policy of the government. Thousands are protesting against high energy prices in Germany and Italy, too. In France, police broke up an illegal protest this weekend, arresting several dozen people.

As the weather begins to get colder, these protests might grow and multiply, too. This makes the task of the EU governments all the more urgent. Yet there are already internal differences that would be difficult to resolve in a short time.

Croatia, for instance, plans to ban natural gas exports, which has set its neighbor – and gas client – Hungary on edge. Germany’s neighbors are not happy, either, after Berlin declared it would not change its mind about its remaining nuclear reactors and will retire them as planned.

“I want to make sure that we can provide everything to pass the winter,” the EU’s internal markets commissioner Thierry Breton said last week. “I think it’s important that every country, which has a capacity to do it for this very period, that they do whatever they can. And that’s also a matter of solidarity.”

Germany clearly does not see things the same way, and it seems the only one currently seeing things the way Germany does is its neighbor France: the two sealed a deal that will see France send Germany gas and Germany send electricity back. The rest of Germany’s neighbors, however, remain reluctant to ink solidarity deals with the EU’s largest – and currently most vulnerable – economy.

Even at the best of times, decision-making in the European Union takes quite a while. This is perfectly understandable: getting 27 states with their own national interests to agree on one course of action is often a challenge, and compromises need to be made.

This time, there is little space for compromise and even less time to settle on a course of action. Agreement on a gas price cap appears to be off the table if the EU wants to move fast. The only thing left that can be agreed upon quickly would be an intervention into energy markets to cap prices because consumption caps would be a challenge to negotiate.

“This is not the moment to have principal debates on energy markets. We just need solutions right now,” Marco Mensink, director general of the European chemical industry association Cefic said, as quoted by Bloomberg, last week. “The situation is very alarming – this is about the future of industry in Europe. Companies are shutting production down as we speak, and with these prices, they will not reopen.”

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37 comments

  1. The Rev Kev

    Looks like Star Trek had it right. That before the end of the century the European Union will convert itself into the European Hegemony. All these moves by people like Ursula von der Leyen,Olaf Scholz, Robert Habeck & Annalena Baerbock make no sense in that they are deliberately trying to defy on the ground facts and make their own realities. And they will continue to do so in defiance of what their people demand. The question is why and just today I thought of one possibility.

    So the plan in February was to implode Russia’s economy through sanctions, have Putin regime-changed and which they have openly admitted to, then go in and carve up Russia like it was the 90s all over again but to also break it up into lots of smaller States that will never come back together again. You are talking about trillions of dollars of assets up for grabs. So consider this idea.

    What if…what if all these elites bet big on this happening this way. Mortgaged everything to the hilt and took all sorts of positions on the stock market through secret trades so that they would have a massive once-in-a-generation payday. Staked fortunes on the big payout of a victory. Well as we know, that is not going to happen but those financial positions are all out there. Yeah, it is just a theory based on something I read in a novel but if it turned out that these elites are risking the prosperity of their countries so that they are not financially ruined, I am going to say that I can believe that.

    Reply
    1. Jack

      Interesting point. But what if it isn’t so much about profiting off of Russia, but rather Germany and the EU? Further evidence that is the US elites doing this to keep their profits coming is a RAND report that recently came to light. I read about it on Larry Johnson’s blog; https://sonar21.com/is-the-war-in-ukraine-part-of-a-u-s-strategy-to-weaken-germany-rand-says-yes/. He provides a link to the full report.
      Michael Hudson also thinks the Ukraine war is more about bringing down Germany and the EU than killing Russia; https://michael-hudson.com/2022/02/america-defeats-germany-for-the-third-time-in-a-century/.
      Oh the tangled webs we weave.

      Reply
      1. The Rev Kev

        Now that is an interesting point you just brought up. Shorting German industry? Ursula von der Leyen, for example, has always had a whiff of corruption about her but this would amount to a stench.

        Reply
      2. Michaelmas

        a RAND report that recently came to light. I read about it on Larry Johnson’s blog

        While there may very well a document saying something like the things that Johnson’s purported RAND document says circulating somewhere in the higher reaches of the US state — and, yes, some of the the real world consequences to the EU economy likely *will be* what the purported ‘RAND’ document predicts — that document is almost certainly *not* a real RAND document.

        Sorry. For a whole bunch of reasons it doesn’t pass the smell test.

        Reply
        1. Reaville

          Agree that this supposed RAND report does not pass sniff test. RAND used to stand for “Research and Development” and was originally a USAF sponsored think tank. RAND is not going to author a document about knocking out Germany with a war in the Ukraine. It may author a study of the possible post war environments and their consequences, and one environment could include a weakened Germany.

          Reply
          1. RalphR

            Yes, the document does not look authentic. Too many comments about German politics. However, to Michaelmas’ line of thought, what if Rand had written a paper along these lines (as in coming to the conclusion that Germany would be good for the US but in properly analytical tones), and word was getting out now that events were actually shaking out that way? Remember the Dan Rather scandal, where he ran a big story that was based on a faked document about Bush….that corresponded to actual bad facts? So suddenly the bad facts were conflated with the document being fake and thus the bad facts were assumed fake when real. Remember the US was super unhappy about Germany proceeding with Nord Stream II.

            This environment has gotten so polluted, that it’s not entirely crazy to think crazy-sounding things.

            Reply
            1. Michaelmas

              RalphR: what if Rand had written a paper along these lines (as in coming to the conclusion that Germany would be good for the US but in properly analytical tones), and word was getting out now that events were actually shaking out that way?

              Eh.

              [1] Let’s get the RAND thing out of the way, to begin with.

              RAND does NOT have an executive role in setting strategic policy of this kind on this level. Indeed, RAND is ostensibly not even part of the US government—it was founded in 1948 by the Douglas Aircraft Company to offer research and analysis to the US armed forces and it’s funded by the US government, corporations, universities, and individuals.

              Very simply, this is framed as a RAND report because the long 2019 analysis ‘Extending Russia’ came from RAND, and the target audience for a piece of psyops (as this seems to be) would know that much and from there leap to the belief that this is more of the same.

              But here’s the ‘Extending Russia’ report from RAND in 2019 —
              https://www.rand.org/pubs/research_reports/RR3063.html

              Go look at the style, intent, and formatting of a real RAND document. It’s long, detailed, rational (whether or not you approve of its realpolitik assumptions) and backs up the arguments it makes. This document is/does none of those things.

              [2] The fact that it’s CCed to the CIA, NSA, and the DNC (!) also makes no sense.

              NSA does sigint and has no significant role in determining strategy of the kind this document purports to be determining. Specific executive NSA figures might get and send specific operational directives regarding surveillance/propaganda needs arising from executing the objectives outlined in this document. But that’s it.

              Conversely, if CIA is CCed, why not DIA? If CIA has a role in role in determining and executing the kind of strategy the document purports to be advocating, so does DIA. Certainly, more than NSA would.

              Except of course to the general public DIA does not carry the lurid import that mention of CIA and NSA does.

              And then, why the DNC? The DNC isn’t a power center of any kind. The real policymakers in DC are the lobbyists (and the donors they represent), not Democrat (or Republican) politicians. The only reason to send an allegedly top-secret strategic document to the DNC would be because it’s the fastest, surest way to leak it to everybody in the world and their mothers within an hour.

              [3] As for the document’s actual content, the arguments don’t really make sense — are self-contradictory or simply not borne out in the real world. Forex —

              (a) In the first paragraph, the claim is that there’s been so much quantitative easing that the dollar will collapse by Christmas so US banks need reinforcement by the injection of German financial assets —

              “The present state of the U.S. economy does not suggest that it can function without the financial and material support from external sources. The quantitive easing policy, which the Fed has resorted to regularly in recent years, as well as the uncontrolled issue of cash during the 2020 and 2021 Covid lockdowns, have led to a sharp increase in the external debt and an increase in the dollar supply.”

              But then later we have this passage–

              “The cumulative losses of the German economy can be estimated only approximately …The euro will inevitably, and most likely irreversibly, fall below the dollar. A sharp fall of euro will consequently cause its global sale. It will become a toxic currency, and all countries in the world will rapidly reduce its share in their forex reserves.”

              So which is it? Is the injection of Euro assets into the US financial system on an immediate basis absolutely necessary or is the Euro so potentially unstable that in a couple of years the US can render it a “toxic” currency?

              (This isn’t even to get into the fact that RAND analysts probably understand MMT and how money really works just as well as anyone at Naked Capitalism, so would not be making either argument.)

              (b) Or consider the claim that “If one day we abandon Europe, there will be a good chance for Germany and France to get to a full political consensus.”

              This has no basis in real-world EU history. For instance, there’s no prospect whatsoever that France will allow Germany a say on the use of France’s nuclear force de frappe. In the past, French attempts to get Germany to share in the costs of the force de frappe were repeatedly abandoned when in return Germany wanted to have just a look at the French nuclear target catalogue.

              [4] Not only are there typos and misspellings all through the document, but also whoever wrote it is unsure when to use or not use the English definite article ‘the.’

              e.g.: Besides, if the U.S. is for a certain period is engulfed by domestic problems, the Old Europe will be able to more effectively resist the influence of U.S.-oriented Eastern European countries.

              Whoever wrote this document doesn’t appear to be a habitual, colloquial user of English either in its American nor British versions.

              RalphR: …the bad facts were conflated with the document being fake and thus the bad facts were assumed fake when real.

              The document is psyops apparently written by a non-native English speaker — Russian or German — and is so obviously fake, as I’ve established at tedious length above, that it’s easy to dismiss it as amateur hour. And if I and half the people here can see that, so can Larry Johnson unless his brains have turned to mush.

              In which case, why isn’t Johnson calling it out as amateur hour psyops? Well, maybe because he thinks the things it says need to be out there and because he knows that amateurish as the document seems to you, me, and him, we are not its intended target audience.

              Maybe the intended target audience is the proverbial Good German, who’s never thought these things before and will buy into the arguments about quantitative easing, etc.

              On that basis, it’s psyops I approve of, because the average German has a whole world of hurt on the way if things go on the way they’re going.

              Reply
              1. RalphR

                I didn’t elaborate sufficiently.

                First. I should have included the notion not that there was an entire paper, but even just a section of a paper or a few paragraphs of a Rand or another official-ish US advisory organ that discussed how weakening Germany would be in US interest. So muddying the waters with an obvious fake to dilute the impact of word of the real one getting out would be good insurance.

                I don’t think your assessment about it being written by a non-native speaker changes that much. To your point, the impact of even a paragraph from an official document saying the US would profit from Germany’s harm would be inflammatory and would boost the cause of the anti-war Germans. So there would be Germans who back the current policies who could be interested in ginning up such a document.

                Or it could be an anti-war European, which is an implication of your observation.

                Second, Rand writes only papers it is asked to write, as in either someone genuinely wants a question answered or wants a policy justified. I never said or implied Rand makes policy.

                Reply
                1. Michaelmas

                  RalphR: … muddying the waters with an obvious fake to dilute the impact of word of the real one getting out would be good insurance …
                  Or it could be an anti-war European, which is an implication of your observation.

                  Either. Short of subsequent developments, the intent of the originator of this document is something we can’t know.

                  To tell the truth, I was more interested in the question of why Larry Johnson would promote such an amateurish piece of work.

                  Reply
      3. Lambert Strether

        Larry Johnson doesn’t actually link to the report. He links to another blog which which says:

        I was just sent a classified RAND Corporation research report that partially exposes PSYOP-UKRAINE-INVASION in the greater context of the rapidly accelerating Great Reset program now underway.

        I ran some image analyses and reviewed the content of this report and it appears perfectly authentic.

        So let me know when we have a source. “It therefore had an impressive topicality which at once, in Smiley’s eyes, made it suspect.”

        Reply
    2. Tony Wright

      Hmm, I read that the main reason EUenergy companies were in financial manure (and in need of “assistance”- too big to fail?) was they had heavily shorted energy prices via 1.5 trillion euros worth of derivatives. This would fit in with your theory Rev, if said shorters were also in the know.

      Reply
    3. Carolinian

      Michael Hudson has said that the EU leaders go along with the US because we literally bribe them to do so. Perhaps it’s time to consider whether old fashioned corruption isn’t the true story of our era with Pelosi and Biden being the poster children in my country and the Clintons setting the earlier example. All have become quite wealthy while doing the people’s business.

      Reply
    4. Kouros

      This idea comes close to what David Graeber described in Debt- the first 5000 years, on how the conquistadors were indebted for the transatlantic travel and equipment and having that burden, then stopped at nothing in extracting as much as possible from the new continents…

      However, this time it is Russia that has better weapons…

      Reply
    5. Jay Francis

      This is a fantasy. Firstly, that sort of “mortgaging” would have been hugely visible. Secondly, there is no way the speedy collapse of Russia was remotely possible. Remember how long the Soviet Afghan War lasted. Thirdly, if the EU leadership had committed to such a plan then they would have built more LNG terminals, topped up gas reserves, etc.

      Reply
      1. The Rev Kev

        ‘Firstly, that sort of “mortgaging” would have been hugely visible’

        You mean like in airline position before 9/11? Remember too that the west threw everything to destroy the Russian economy and I mean everything. So probably they were hoping for a quick collapse so any disruptions would be only for a few months. And that is why they saw no need to build LNG terminals and the like as pretty soon they would be getting control financially of Russia’s gas supplies for themsleves. They already tried that in about 2004 if I remember correctly. So consider it a Financial Blitzkrieg which has unfortunately for them turned out to be a Financial Somme.

        Reply
  2. MT_Wild

    Doesn’t even sound far-fetched at this point. While the true oligarchs would have the resources to hedge their bets, getting the politicals beneath them to go all in would be a great insurance policy.

    Reply
  3. Schopenhauer

    A short remark to the clip with Sahra Wagenknechts speech: Today a guy named Ulrich Schneider, the head of a welfare organization (“Deutscher Paritätischer Wohlfahrtsverband”) that was founded in 1924 to defend and help the sick and the poor, proclaimed that he quitted his membership in the party “The Left” in protest at the Wagenknecht speech in parliament last week; he is of the opinion that Wagenknecht should not have spoken in the name of the left.
    Schneider can count on a lot of other party members (the NATO/EU/WEF-left) who support his claim and who demand now that Wagenknecht should be thrown out of the party because of her alleged “putinism”. The german party “The Left” is a fraud in permanence and as left as Karol Wojtyla was a communist.

    Reply
    1. Old Sovietologist

      Sahra Wagenknecht will be arrested by the authorities should things start on the German streets. There is brutal repression coming to Europe this winter and the bourgeoise will aided and abetted by the the NATO/EU/WEF/Green-left.

      Reply
      1. nippersdad

        Wouldn’t the Bourgeoisie be the product of the Mittelstad that is presently being destroyed by the NATO/WEF/Green-left? Back when they thought they could plunder Russia that would have been a natural coalition, but now maybe not so much.

        They wanted to support a bunch of Nazis again, and now they are going to find out what that means, again. How many times do they need to game that out to realize that their pretensions to Ubermenschen status never works out the way they think it will?

        Reply
  4. John Steinbach

    “The only thing left that can be agreed upon quickly would be an intervention into energy markets to cap prices because consumption caps would be a challenge to negotiate.” The implications of this impasse is that as people try to consume energy as usual, supplies will fall dramatically short resulting in ongoing blackouts and potentially even a partial collapse of the grid. Since a near-term negotiated solution based on Ukrainian neutrality seems unlikely, strict energy rationing and a shutdown of all non-essential production facilities is required to avoid a catastrophe.

    Reply
  5. nippersdad

    This seems odd: “Croatia, for instance, plans to ban natural gas exports, which has set its neighbor – and gas client – Hungary on edge.”

    Reading the link, it sounds like a Hungarian company is the majority shareholder in the gas works, so how does that make Hungary a “gas client” unless Croatia is planning on nationalizing it? If Croatia is going to be nationalizing its’ gas production and unilaterally deciding where the product goes how does that make them any different than Russia and Gazprom?

    Can we expect NATO to invade Croatia for weaponizing energy any time soon? It is probably a good thing that Hungary signed that gas deal with Gazprom last month because they cannot even count on benefiting from their own investments anymore in the Brave New World of the EU.

    Reply
    1. Jay Francis

      You don’t have to nationalise a company to impose export controls. There are little known things called “laws.” E.g. The US currently prohibits the export of certain technology to China… It didn’t have to nationalise the companies involved to do that.

      Reply
  6. Brooklin Bridge

    This reminds me of a high tech company (one of many, I suppose, but in this case, the one I worked at) that went under in the late 90’s due to Microsoft’s OS making huge advances in supporting industry application software. The process of going under took about 5 years of circling around the drain like a giant lumbering plane in a forced landing in the middle of the ocean. Massive layoffs about every 9 months kept the atmosphere heavy with gloom. At certain points along the way, crazy think or something like it would freeze upper management such that they passed down ever more unhinged directives until they became literally group think insane, completely divorced from reality, like letting all admins in the entire company go (layoffs) in one day with nothing to replace them.

    At that point you knew you were all going under soon. Upper management was grabbing at anything no matter how utterly implausible (like trying to impose price caps on Russian oil after all the already crazy sanctions imposed). Fruit cakes at the helm preventing any workable solutions from even being considered.

    If the analogy holds, this doesn’t end well.

    Reply
    1. Brooklin Bridge

      Clarification: Microsoft’s OS (not to mention hardware and memory advances) making huge advances in supporting Microsoft specific industry application software.

      Reply
  7. Werther

    And in the sidelines another detail in this developing energy-crisis. The Dutch government has proposed, under pressure of criticism in parliament, to create an ’emergency-fund’. It should be applied in case families will get in the ‘debt-relief-programs’, by cause of unbearable energy-costs, to be administered by their local municipalities. I don’t know the specifics, but it feels like a lot of families will have to burn through all their means left first, before the government will turn up with a ‘surrogate’ aid. And recently, this country has had a bad record in the handling of comparable programs. Thousands of families were crushed by the tax-ministry in the ‘child-care-dossier’ and maybe more in the Groningen-gas-earthquake drama…

    Reply
  8. Bart Hansen

    Just now a check on the 10 day forecasts for Stockholm and Helsinki shows the highs are in the 50s and the lows in the low to mid 40s. This is only 12 September.

    Reply
  9. Altandmain

    The nations like Poland in the article talking about a gas cap for all imports are discussing a complete fantasy. Not only is it Russia and Norway, but all oil producers (such as the OPEC nations) that will refuse to export to nations that establish a price cap. I doubt even the US oil producing corporations would accept such a cap.

    The problem is that the leadership of the EU is totally incompetent and corrupt. There isn’t an understanding of how industry works and how vulnerable the EU was to Russia energy export cuts. If there was, a more measured response to the Russian Special Military operation would have been adopted and this would never have happened. Actually, the EU would have been pushing Ukraine to honour the Minsk agreements.

    As I have mentioned previously, and as the article hints, de-industrialization will be the outcome. This will hit the manufacturing industries that are energy intensive such as metal working and the chemical industry very hard.

    An example is the aluminum industry shutting down.

    https://www.bloomberg.com/news/articles/2022-08-17/norsk-hydro-shuts-aluminum-plant-as-europe-s-power-woes-deepen

    Full disclosure – although I”m currently unemployed, I’ve worked for industries that are a customer to aluminum. Aluminum is very energy intensive and companies will often locate where electricity prices are cheap. Most readers are familiar with outsourcing to lower labour costs, but energy costs for many industries are another big issue. In one job I interviewed with, one company even went to the extent of trying to generate their own electricity -it’s that big a deal in some industries.

    An even bigger problem is the loss of food suppliers if the fertilizer industry begins to shut down in Europe.

    https://www.bloomberg.com/news/articles/2022-08-25/yara-to-further-cut-european-ammonia-production-due-to-gas-spike

    Either there will have to be costly imports, or the fertilizer companies will have to pass on their costs to their customers, which ultimately will mean higher food costs for the consumer.

    By the way, seafood too will be more expensive due to the higher cost of fuel.

    https://fishingnews.co.uk/news/rocketing-fuel-costs-forcing-tie-ups/

    So really, the EU is hit by many different challenges:

    1. Rising electricity costs will mean de-industrialization
    2. Food costs will skyrocket
    3. Home heating and industrial applications for natural gas will skyrocket

    The end result will be something comparable to the EU that the US Midwest experienced after NAFTA and the Clinton decision to integrate China into the WTO.

    Not all industries will of course shut down (and in the Midwest, there is still a lot of manufacturing). Less energy intensive industries in particular are likely to survive. Nonetheless, this will cause serious social unrest, just as the loss of manufacturing employment did in the US, where it was a major contributor to the election in 2016. Keep in mind that this means that incomes for those working in these sectors will be falling (or zero for the laid off, apart from what social support exists, which will be under a ton of strain) at a time when energy and food costs are skyrocketing.

    An even more pressing issue will be those who must choose between food and heating. This will go all the way up to the upper middle class. I fear in the working class, they may not even have enough money for 1 of the 2, barring a major change in foreign policy.

    This current generation of EU politicians, along with the American neoconservatives and political class, appears to lack a basic understanding of how economies work. This seems to be a combination of neocon and neoliberal “finance-centric” ideology. They deserve to be removed from power. The tragedy here is that many people will needlessly suffer due to their mismanagement. I would not be surprised if a “EU Spring” like the “Arab Spring” were to happen.

    Reply
  10. drumlin woodchuckles

    The jet streams wander more north and south than they used to. So this winter could be “warmer” than usual over Europe or “colder” than usual over Europe depending on which way the jet streams wander.

    If a herniated polar vortex settles over Europe for this winter, then the energy shortage will feel even worse than expected.

    If these events lead to a functional abolition of the EU, is that a bad thing for the potentially re-sovereignizable countries of Europe?

    Reply
  11. Michael Skywood Clifford

    I live in UK, am a socialist, and have been around for a long time. I used to love the EU as Social Democratic org in the 70s, but over the last ten years I have been looking into it in detail and became something of a Brexiteer coming from the left.

    How it has behaved since Nato and the West created this war with Russia has utterly astonished me. The most beligerent and extreme policies coming from an EU that seems to be full of Biden puppets, determined to destroy the economies ofEurope and yet these leaders seem more and more intent upon doing that. Insanity. The UK is in a mess no doubt, but I am so glad to be out of that dreaful – and I can only call it evil – organisation.

    Nothing shocked the global elite as the people voting to leave. They were SWAMPED with propanda and wonderfully it never worked.

    Reply
  12. H. Alexander Ivey

    as Bloomberg pointed out in a recent analysis of the situation ahead of the energy ministers’ meeting, speed is not among the things the European Union is known for

    Can’t think or move fast?!? Ha ha ha. They moved with alacrity when the US says jump, I mean, impose sanctions on Russia.

    Reply
  13. Jay Francis

    >The most beligerent and extreme policies coming from an EU that seems to be full of Biden puppets

    Actually Boris Johnson was Zelensky’s strongest supporter…

    Reply

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