Forbes’ forecast about energy disaster in Europe may be realized

Alexei Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented on Forbes' forecast of an energy catastrophe that threatens Europe to Pravda.Ru.

According to Gromov, Russian and foreign journalists are often inclined to exaggerate the situation on the energy markets.

“But, nevertheless, in this case, it should be recognized that the situation that is developing in the European energy market today is of great concern, including among professionals. Europe was really not ready for the recovery demand for energy from the economy in 2021. No one expected the economy to recover so quickly after the disastrous year of the pandemic, and the energy suppliers in Europe and beyond were unprepared for this, setting the “perfect storm” for Europe. Because the demand for energy resources in the Asia-Pacific region was growing at the same time. Taking into account the fact that energy prices in Asia rose earlier than in Europe, the same natural gas in the form of LNG went primarily to Asia. And Europe was left with only pitiful crumbs of the liquefied natural gas pie that was consumed in Asia. As a result, prices in Europe have risen," the expert said.

He noted that this situation coincided with the preparation of European countries for the winter heating season.

“This year will be very difficult for Europeans from an energy point of view. If the prices for gas and gas-based electricity are as unprecedented as we see at present, over the next six months, this could lead to a slowdown in the European economy, to the shutdown of a number of industrial enterprises, the work of which will be unprofitable in current pricing conditions. Then we can get a full-fledged socio-economic crisis out of the energy crisis. High prices for electricity will be applied not only to industry, but also to the final consumer - the population. And it may not be able to pay the bills over time. And this means the risks of an increase in communal debt in the European region, which, of course, will also have the most negative impact on the economy of the European Union," Gromov said.

The expert partly agreed with the Forbes journalist’s opinion.

“Therefore, what the Forbes experts write about the impending energy catastrophe in Europe can probably be described in such a way, that Europe has already entered a serious energy crisis, which can transform in the next six months into a full-fledged economic crisis. But we very much hope that this will not happen, and solutions will be found to mitigate the consequences of the highest energy prices that Europe has faced in the last month," Gromov concluded.

Earlier, the journalist David Blackmon published an article in Forbes, in which he explained why the policy of switching to clean energy sources could lead Europe to an energy disaster this coming winter.