Europe’s $1 Trillion Energy Bill Only Marks Start of the Crisis
The EU has been hit by losses of $1 trillion due to soaring energy prices, Bloomberg reports, adding that the crisis is only beginning. The estimated drain is reportedly just the start of deepest energy crisis in decades and high prices could last years and aid is becoming unaffordable
EU member states have spent roughly a trillion dollars (€940 billion) in the face of the bloc’s worst energy crisis in decades, Bloomberg is reporting on Sunday, citing calculations based on market data.
Soaring energy prices have sent its economies plunging into recession as most member states opted to stop importing gas from Russia, facing the necessity to turn to more expensive supplies.
The agency highlighted that the total estimated losses marks just the beginning of a full-scale crisis, as a period of high prices for energy could last years, while aid is already becoming unaffordable.
The security of energy supply is expected to remain an issue beyond next winter after the filled gas storage facilities across the region are emptied. The nations of the EU will have to refill their gas reserves for the next cold season with no deliveries from Russia, which also heats up competition for tankers.
Even with more import terminals for liquefied natural gas (LNG) coming online, the crisis will reportedly loosen its grip only in 2026, when additional production capacity from the US or Qatar becomes available. At the same time, prices should remain high to attract LNG away from other buyers from energy-hungry Asian buyers.
A state of emergency could linger for years, according to Brussels-based think tank Bruegel, as quoted by Bloomberg.
“Once you add everything up –bailouts, subsidies– it is a ridiculously large amount of money,” Martin Devenish, a director at consultancy S-RM, told the agency. “It’s going to be a lot harder for governments to manage this crisis next year.”
That’s a massive understatement.
A rush to fill storage during summer, despite all-time high prices, has softened the supply squeeze so far. However, freezing weather is expected to give the region’s energy system the real test this winter.
Last month, Germany’s energy regulator, the Federal Network Agency, warned that German households and small businesses have failed their first gas-saving tests. The regulator noted that a reduction in consumption of at least 20% was required to avoid a gas shortage in the coming months.
This devastating analysis of the crisis is contained in a report published on Sunday by Bloomberg, the international business analyst, which calculated this massive cost of energy following the fallout of the imperialist war against Russia.
Egged on by the main imperialist nations, most of the EU states decided to either stop or drastically cut back on importing gas from Russia to weaken the Russian economy and even restore capitalism to Russia.
The $1 trillion calculated by Bloomberg from market data is made up of the massive surge in energy prices for both consumers and companies.
EU governments have spent over $700 billion to try to prevent entire swathes of industry going bust and on very limited support to households facing impossible energy bills. According to the Brussels-based think tank Bruegel, a state of emergency throughout Europe will last for years.
With the European Central Bank (ECB) pushing up interest rates and all the EU states already in economic recession, the support that was supposed to cushion the blow for millions of working class households and businesses is rapidly becoming unaffordable for capitalism.
The reality is that the EU is already in the grip of a recessionary crisis and after this winter the region will have to refill its gas reserves with no deliveries from Russia at a time when over half of EU member states have debts far in excess of the bloc’s limit of 60% of Gross Domestic Product (GDP).
Last week, the EU leaders announced that the bloc will be handing a further 18 billion euros ‘assistance’ to the right-wing Ukrainian government, and at the same time, yet another round of sanctions, the ninth so far, on Russia.
Russian foreign ministry spokesperson Maria Zakharova commented that ‘the current “package” will have the same effect as all the previous ones – exacerbating the socio-economic problems in the European Union itself.’
There is no doubt that all the sanctions imposed on Russia to cripple it economically have backfired spectacularly on the EU and Britain.
Instead of bringing Russia to its knees, the sanctions on oil and gas have vastly increased the inflationary spiral, spinning it out of control, piling up massive national debts across the EU and in Britain.
These are debts that the bosses and bankers are determined will be paid for by the working class of Europe and the UK.
With tens of millions of workers and their families facing energy and food costs soaring with no end in sight, the working class of Europe and Britain will never accept starvation and freezing to death as a price of supporting the imperialist war to weaken Russia.
With capitalism on the precipice of an economic depression to rival or even exceed that of the 1930s the working class are rising up across the continent and in the UK demanding wage increases to protect them from the ravages of inflation and an unprecedented cost of living crisis.
In Britain, the working class is engaged in a mass strike wave demanding wage increases that the Tories insist bankrupt British capitalism simply can’t afford and that workers should accept ‘sacrifices’ willingly to keep the war on Russia going.
Workers are not standing for this and the demand for a general strike to kick out the Tories and bring in a workers’ government and socialism has taken hold throughout the working class.
Similarly, strikes and demonstrations have taken place across Europe, actions that will intensify as economic recession and depression drive forward, as the Bloomberg analysis reveals.