Europe’s energy crisis is expected to last until 2024.
Chris O’Shea is the CEO of Centrica, which owns British Gas. He said, “The market suggests the high gas prices will be here for the next 18 months to two years.” This was before Russia invaded Ukraine.
Yet, the end date is unclear. Adam Tooze is a Fortune Policy columnist and co-host of Foreign Policy’s weekly economics podcast Ones and Tooze. He said, “The short answer is we don’t know. There’s really no reason to think that the situation is not going to get progressively more difficult.”
WHAT IS CURRENTLY HAPPENING IN EUROPE
In one year, Russian imports have fallen from 41% to 9% of Europe’s total gas imports. Gas prices in Europe are now around 10 times higher than they were on average over the last decade and about 10 times more expensive than prices in the US.
Europe filled up its natural gas storage tanks and is conserving energy this winter. Still, it’s not obvious where the replenishment will come from for the following year.
European governments are encouraging the public to reduce their gas usage. If everyone in Europe turned their thermostats down from 22°C to 19°C, which is 71.6°F to 66.2°F, this would hugely cut back on the continent’s import dependence.
WHAT IS CURRENTLY HAPPENING IN THE US
This isn’t to say the US is immune. Russia and Saudi Arabia, acting as leaders of the OPEC+ energy cartel, agreed they would cut production by 2 million barrels a day.
There is an interesting contrast between the US and Europe. The US is largely self-sufficient as it produces a huge volume of fracked gas and is an energy exporter, whereas Europe is a major energy importer. When it comes to oil, the US is still reliant on imports from Russia and Saudi Arabia.
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