Europe Facing Possible Energy Shortfalls
As this winter approaches, Europe is facing both potential shortages and record high prices for both natural gas and electricity. Shortages in current gas stockpile, along with a failure to adapt to the higher global demand, is creating a scenario for large scale blackouts across the continent. As energy demand recovers worldwide, procurers are having a difficult time finding the supply they need to fill their shortfalls, which are already at their lowest levels in more than a decade.
Europe relies heavily on imported fuel, importing two-thirds of their gas supplies. Russians are current responsible for supplying forty percent of their demand. The Nord Stream 2 pipeline from Russia to Germany will ultimately help to remedy the situation, but further reliance on a political foe can be problematic. As of September 8th, the German regulators have four months to certify the Nord Stream 2 system.
As the gas market tightens, renewables are proving to be cheaper but more unpredictable replacement for fossil fuels and nuclear. With wind speeds below average this year, it is putting increased pressure to expand the use of fossil fuels. This means Europe is expanding the use of coal-power plants, which does not fit well with the European Union’s environmental and climate change aspirations.
If the winter is colder than usual, energy prices will likely see record levels and the continent may see shortages. These shortages may create opportunities for US producers. Liquified natural gas (LNG) exports from the US could help to elevate the issue. The cost of LNG is 25 percent greater than pipeline gas, but in the short-term may be a windfall to the industry.
A principal at California Workforce Academy. Dave has over 30 years of experience working domestically and internationally on education and economic development projects in the field of sustainability, energy, agriculture, transportation, and water. Dave is a product of the College of Natural Resources at the University of California, Berkeley.
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