Moscow wants to fill up the EU with gas

Moscow wants to fill up the EU with gas
Moscow wants to fill up the EU with gas

Yesterday there was a predictable but effective joke on the markets: “We are at the gas pipe.” A 40% jump in natural gas prices in Europe (60% in two days) has in fact shifted the alarm level to Defcon 2, tilted downwards in the price lists (-1.35% Milan, -1.5% Stoxx600, -0.9% Wall Street one hour after closing) and produced more cracks in the narrative that the inflation spike would last like a summer storm.

What is happening, on the other hand, increasingly resembles an energy shock capable of plunging the world into the pit of stagflation. Winter is almost upon us and, in terms of energy, it will be that of our discontent. There are creepy scenarios – and they are not even those from apocalypse now -: in the event of failure to resolve the crisis, 25% of the SMEs of the Old Continent would risk bankruptcy, since energy weighs on their costs for 33%. Economic growth could be eroded by 1.5%. And that’s not all: if the high cost of living continued to bite, Christine Lagarde and the doves of the ECB would have some problems in maintaining not only the paraphernalia of monetary stimuli, but also the system of zero rates. A possible anti-inflation squeeze, however, would risk clipping the wings of growth even further. The dilemma is shared by the Federal Reserve: the high cost of living also bites in the US, but what effect will withdrawing aid from 120 billion dollars a month have on recovery and on a healthy job market (+ 568,000 jobs created in September)?

With rising inflation threatening to fuel social tensions and wage demands (see protests in Germany), Brussels is trying to put a piece of it: the idea is to create a common consortium to store gas reserves, a supported hypothesis. by Mario Draghi. “It is a very positive thing – the premier said yesterday at the end of the EU summit in Slovenia – not to be caught unprepared for energy peaks that not only have consequences on the economy but also on distribution, on inequality”. Vladimir Putin, however, points the finger at Europe, held responsible for the explosion in prices for having abandoned long-term contracts, favoring spot ones. “It had emerged, and now it is absolutely obvious, that this policy is wrong,” underlined the Russian president. For the Kremlin, therefore, it is not the fault of Gazprom’s short arm in supplies (“It has never pulled back”), on which European methane needs depend for a third. After the blow, the Russian leader stretches the carrot: “We are ready to stabilize the market by increasing the offer, also through Ukraine”. Putin’s words cooled prices down a bit yesterday afternoon, with futures collapsing in the Netherlands and Great Britain by more than 7% and with a -8% of natural gas prices in the United States as well. The Ecological Transition Minister, Roberto Cingolani, looks further ahead: “Maybe there will be changes, potentially some improvements after March, when Nord Stream 2 starts to be active.”

However, it could be too late, especially for Italy. Where, according to the Minister of Economic Development Giancarlo Giorgetti, we must begin to discuss, “without taboos, how we produce energy”. However, immediate interventions are needed. In order to mitigate the effects of price increases on consumer pockets and businesses, some analysts in fact suggest that the EU use the more than 20 billion it will collect this year from CO2 emissions rights, whose prices have exploded by 200%. .

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