Can Europe Weather Looming Gas Shortages?
While Europeans debate whether they could manage without Russian gas, and at what cost, much less has been said about how to prepare for gas shortages if Russia takes it upon itself to close the taps. The inevitable severe gas shortages would demand a comprehensive policy response – which should start now.
BERLIN – What would a stop on Russian gas imports mean for European economies? The question sharply divides economists. Everyone agrees that there would be negative consequences, but how bad? Predictions range from a mild recession to economic disaster and mass unemployment.
Yet for all the intellectual energy that has been expended estimating the magnitude of potential GDP contractions, much less has been said about how to prepare for gas shortages if Russia takes it upon itself to close the taps. It is analogous to forecasting the extent of damage a hurricane will cause, instead of actually preparing for the storm.
But now that Russia has suspended gas deliveries to Poland and Bulgaria, European policymakers and pundits have no choice. They must shift the focus from caviling over probable outcomes (which no one can predict with precision) to containing the actual consequences of potential gas shortages. All of Europe’s gas providers – not just European Union producers but also neighboring countries delivering gas by pipeline and exporters of global liquefied natural gas – are already operating at full capacity. Gas delivered mostly by pipeline from Russia constitutes 40% of EU supply. Should this supply be interrupted – as it well could be – EU gas consumption would have to be reduced significantly.