“The European energy crisis is not over yet,” said Goldman Sachs in a research note this week. The bank’s analysts think that gas prices could remain twice as high as normal until 2025. British wholesale gas prices, which are heavily influenced by Europe, are currently about four times higher than they were a year ago, at 218p a therm. An escalation in Ukraine could see prices top their highs of last December.
It might not come to that, says Bloomberg. Germany, which is highly dependent on Russian gas, has long argued that Moscow is a reliable supplier: it “kept sending gas to Europe all through the Cold War” and during the 2014 Crimean annexation. Russia is thought to be unlikely to want to damage that reputation. It is also economically dependent on the revenue from energy sales. Still, if the US throws Russia off the Swift payments system then energy transactions could become impossible. Nord Stream 2, a new energy pipeline to Germany that bypasses Ukraine, could be hit by new sanctions. Finally, a war could damage key Ukrainian pipelines that deliver gas to the West.
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