If Russia does wield the gas weapon, how much would it hurt the West?
The conventional wisdom has long been that a complete shutdown of piped gas from Russia, which makes up roughly a third of the gas burned in Europe, was unthinkable. Thane Gustafson, author of “Klimat”, a thoughtful book on Russian energy, observes that even at the height of the Cold War, the Soviet Union did not shut off gas exports. And during Russia’s fiercest dispute over gas with Ukraine, in 2009, only the gas flowing through that country was disrupted and then only fleetingly.
If the interruption were limited to gas passing through Ukraine, as in 2009, the rest of Europe would manage fine. For one thing, Gazprom has already slashed the flow of gas through Ukraine. Citigroup, a bank, reckons it is half the level seen last year and a quarter of that in 2019. The good news is that Europe’s energy system is more resilient than it was during the crisis of 2009. Andreas Goldthau of the University of Erfurt in Potsdam points to some useful changes. Pro-competition measures have weakened Gazprom’s grip. A dense web of gas interconnectors now links previously isolated countries .
Another source of resilience is the amount of gas held in storage. Last year’s bitter winter, along with Gazprom’s reluctance to fill storage units it controls in Europe, left gas storage at levels below the five-year norm. Even so, Rystad, an energy research firm, calculates that a continuation of normal weather this winter would leave enough gas in storage by spring to make up for two months of lost Russian gas exports.
In sum, Europe will suffer if Russia cuts off the gas; but that price will be paid from the pocketbook rather than through physical suffering. That cost will be exacerbated, predicts Jonathan Elkind of Columbia University, because “Europe is not starting from calm, but from a market on edge.” The continent’s energy markets have only just been through an early-winter price shock, and the price outlook for all energy commodities is ugly.
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