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18 Dec, 2022 14:55

Soaring energy prices cost EU $1 trillion – Bloomberg

The estimated drain is reportedly just the start of deepest energy crisis in decades
Soaring energy prices cost EU $1 trillion  – Bloomberg

EU member states have spent roughly a trillion dollars (€940 billion) in the face of the bloc's worst energy crisis in decades, Bloomberg is reporting on Sunday, citing calculations based on market data.

Soaring energy prices have sent its economies plunging into recession as most member states opted to stop importing gas from Russia, facing the necessity to turn to more expensive supplies.

The agency highlighted that the total estimated losses marks just the beginning of a full-scale crisis, as a period of high prices for energy could last years, while aid is already becoming unaffordable.

The security of energy supply is expected to remain an issue beyond next winter after the filled gas storage facilities across the region are emptied. The nations of the EU will have to refill their gas reserves for the next cold season with no deliveries from Russia, which also heats up competition for tankers.

Even with more import terminals for liquefied natural gas (LNG) coming online, the crisis will reportedly loosen its grip only in 2026, when additional production capacity from the US or Qatar becomes available. At the same time, prices should remain high to attract LNG away from other buyers from energy-hungry Asian buyers.

A state of emergency could linger for years, according to Brussels-based think tank Bruegel, as quoted by Bloomberg.

“Once you add everything up –bailouts, subsidies– it is a ridiculously large amount of money,” Martin Devenish, a director at consultancy S-RM, told the agency. “It’s going to be a lot harder for governments to manage this crisis next year.”

A rush to fill storage during summer, despite all-time high prices, has softened the supply squeeze so far. However, freezing weather is expected to give the region’s energy system the real test this winter.

Last month, Germany’s energy regulator, the Federal Network Agency, warned that German households and small businesses have failed their first gas-saving tests. The regulator noted that a reduction in consumption of at least 20% was required to avoid a gas shortage in the coming months.

For more stories on economy & finance visit RT's business section

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