Natural gas in Europe: The potential impact of disruptions to supply

Gabriel Di Bella, Mark Flanagan, Karim Foda, Svitlana Maslova, Alex Pienkowski, Martin Stuermer and Frederik Toscani

Energy Economics, 2024, vol. 138, issue C

Abstract: This paper studies the economic impact of a potential full disruption of Russian pipeline gas flows to Europe. We apply a modeling framework that takes into account frictions within the pipeline infrastructure, and compare results to those from a framework assuming a fully integrated EU market. Our findings suggest that the most vulnerable countries in Eastern Europe – Hungary, the Slovak Republic and Czechia – could have faced shortages of as much as 40% of gas consumption and gross domestic product shrinking by up to 6% in the summer of 2022 in the event of a full shutoff with severe pipeline frictions. The effects on Austria, Germany and Italy could also have been significant, depending on the remaining pipeline bottlenecks. Ex post, the observed output losses in Europe were lower, more in line with results from the fully integrated market framework, because (i) concerted efforts were made to keep the Europen gas market as integrated as possible, and (ii) Russian pipeline gas never fully ceased. Overall, the paper shows that integrated energy markets with a resilient infrastructure help to buffer the economic effects of energy supply shocks.

Keywords: Energy supply; Natural gas; Supply shocks; Aggregate output effects; Market integration; Pipelines (search for similar items in EconPapers)
JEL-codes: E23 F51 L71 L95 Q02 Q41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:138:y:2024:i:c:s0140988324004857

DOI: 10.1016/j.eneco.2024.107777

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