Crisis in the EU Gas Market: Genesis, Dynamics and Prospects

S. V. Zhukov and I. A. Kopytin ()
Additional contact information
S. V. Zhukov: Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences
I. A. Kopytin: Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences

Studies on Russian Economic Development, 2023, vol. 34, issue 6, 830-841

Abstract: Abstract— The article analyzes the real-time crisis in the EU natural gas market. It is shown that the crisis began in mid-2021, mainly due to omissions by regulators who set the energy transition too fast and made a mistake when assessing liquidity in the physical gas market. By refusing to conclude long-term contracts for the import of natural gas and opting for the spot market, the EU has made itself dependent on unpredictable price fluctuations for raw materials. The EU seeks at all costs to build a spot market for natural gas, the price of which is determined by the current balance of supply and demand. This goal was set because, within the framework of the climate and energy strategy of the European Union, the gas market is increasingly subordinated to servicing the electricity market. Since the spring of 2022, the development of the EU gas market has moved into a system of coordinates set by political interests and energy security considerations. The main long-term structural shifts in the European gas market were: firstly, an accelerated reorientation to LNG imports; secondly, the strengthening of the downward trend in demand; thirdly, the transition of gas prices to a higher level. Higher gas prices push up electricity prices, allowing governments to mobilize the additional financial resources needed to accelerate the green and energy transition. The forced restructuring of the European gas market and the electricity market launched the process of deindustrialization of the industrial core of the EU. The threat of deindustrialization is forcing EU member states to look for ways of non-market support for national industry, which, in principle, can push centrifugal tendencies in the EU.

Keywords: natural gas market; supply shock; demand destruction; spot; long-term contracts; crisis; pipeline gas; LNG; energy transition; deindustrialization; European Union (search for similar items in EconPapers)
Date: 2023
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1134/S1075700723060187 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sorede:v:34:y:2023:i:6:d:10.1134_s1075700723060187

Ordering information: This journal article can be ordered from
https://www.springer ... nomics/journal/11507

DOI: 10.1134/S1075700723060187

Access Statistics for this article

Studies on Russian Economic Development is currently edited by Viktor V. Ivanter, Dmitrii B. Kuvalin and Galina A. Yaremenko

More articles in Studies on Russian Economic Development from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().