Gravitas: Russia shuts Nord Stream 1 gas pipeline to Europe

Europe's worst nightmare is coming true winter is around the corner and their biggest gas pipeline has been shut the north stream won it was Vladimir Putin's trump card against Europe a card that he has used before the pipeline was first closed in the month of July Russia said it was carrying out repair works after 10 days the glass gas flow resumed now they've done it again Russian power company gasprom has closed off North stream one their excuse is the same as July repair Works gas prom says this is temporary they say the pipeline will reopen three days later but Europe cannot take that chance let me tell you why North stream one is the biggest gas pipeline between Europe and Russia it transports 55 billion cubic meters of gas you cut that off and you plunge Europe Into Darkness that's what Putin is counting on after Europe imposed sanctions on Russia he began choking their gas supply first it was reduced to 40 percent of full capacity and since July it's 20 percent so what did Europe do they began filling up their gas reserves they reduced consumption and diverted supplies to their stock but that process is still not complete the eu's gas storages are at 79 capacity Germany is at 83 percent to fill the rest they need gas from node stream one Vladimir Putin knows this so he played the trump card he shut off the pipeline where does that leave Europe for now the reserve should be enough after all temperatures are still high in Europe the heating season has not yet started German officials feel their country's better place than the last time we do not really understand the technical need for this renewed maintenance from Russia but in the meantime Germany is now better prepared we have filled the storage facilities better we are getting gas from Norway Holland Belgium soon France we are saving gas and in this respect I assume that we will be able to cope with this for the time well the last part is key we'll be able to cope for the time being it does not sound like a solid energy strategy the fact is Europe needs Alternatives it cannot rely on Russian gas supplies during the coming winter if they do there will be shortages so what options do they have the European Union is proposing an emergency intervention the plan has two parts the immediate goal is to bring down energy bills the long-term goal is to change how the energy Market works let's deal with the first part bringing down bills European gas prices are going through the roof they're 12 times higher than last year inflation hit an all-time high of 9.1 percent in August both these problems can be attributed to the same cause Russia's gas Warfare to solve this crisis Europe has limited options number one they could cap energy costs both Spain and Portugal are already doing this they have placed a legal limit on how high the energy costs can be just one problem the strategy must be pan-europe if not suppliers will just export to countries without a price cap option two is import restrictions Europe could decide to limit the price of Russian gas Imports but again the problem is obvious why would Russia agree to such a cap they would much rather burn off that energy in fact they're already doing this a Russian gas plant near Finland is burning off huge quantities of natural gas almost 10 million dollars worth of gas every day option number three is windfall taxes Europe could take a slice from the profits of Big Oil they can easily afford it Norwegian firm equinor paid 3 billion dollars in dividends last month Francis total energy saw their income triple so the windfall tax is a viable option Europe could use this extra money to subsidize energy for consumers now those are the three immediate options for Europe what about the long-term option now that is a lot more complicated right now Europe's electricity Market is based on wholesale prices it means every type of producer bids into it the nuclear plants the windmills the gas plants all of them but the final rate is based on gas now usually it is the most expensive source of energy now why would Europe design such a strained system after all green energy is a lot cheaper the electricity generated from wind is less expensive then the power generated from gas yet both are sold at the same rate what explains this the idea was to incentivize green energy by selling at higher costs green producers could make more profits and more profits equals more Investments that was the whole thrust behind this plan but today's situation is completely different green energy is still as cheap as it was in 2021 but gas prices are 12 times higher now do you see the problem here I'll explain with an example assume that you produce one unit of solar power for one dollar one unit for one dollar you can also produce one unit of gas power but for ten dollars now ideally those two units should have separate costs but that's not the case in Europe in Europe the final price will be decided by the gas producer hence the problem the European Union is hoping to change this on September 9th the energy officials will convene a special meeting they're expected to announce some big reforms how big well that depends on how United they are as for Russia their gas Warfare is not ending anytime soon gas prom just posted a profit of 41 billion dollars in the last six months imagine that 41 billion dollars so much for boycotting Russian gas the fact is Putin has a lot more leverage here than Europe earlier we thought gas trade would be a double-edged sword if Europe needed Russian gas Russia also needed European money well it turns out that's not the case gas prices are so high that these pipeline shutdowns will not really hurt Putin he was supplying just 40 percent of total capacity since March yet gas prom made 41 billion dollars in profits so all this talk about javelins and high Mars and mig-29s turns out the biggest weapon of this war is energy weon is now available in your country download the app now and get all the news on the move

Channel: WION

Views: 831,442

Keywords: russia, europe, nord stream, nord stream 1, nord stream 1 gas pipeline, nord stream 1 pipeline, nord stream 1 gas pipeline news, nord stream 2 gas pipeline to germany, nord stream 2 gas pipeline, gas pipeline russia, nord stream gas pipeline, nord stream 2 gas pipeline project, russia gas pipeline, nord stream 2 pipeline, nord stream 2 gas pipeline news, russia threatens to cut gas flows to europe, nord stream 1 gas pipeline to germany, nord stream 1 gas pipeline project, gravitas

Id: hlpeZtITgxE

Length: 6min 31sec (391 seconds)

Published: Wed Aug 31 2022