Natural gas prices soared in Europe and many people, especially in Europe and the U.S., have blamed Russia for rising prices. Russia has been accused of manipulating gas prices for its benefit. Are Russia and its president Vladimir Putin manipulating gas prices?
There has been a global energy crisis. Crude oil prices have risen sharply this year and are at multi-year highs. There has been a shortage of coal, which has led to a power crisis in China. India is also staring at a looming power crisis. Natural gas prices have surged, which is leading to inflationary pressures.
Why are gas prices rising?
There has been a spike in the prices of all fossil fuels. The same story generally holds good for all of them which is the demand-supply imbalance. The energy demand has picked up amid the revival in the global economy. Also, the supply has been disciplined and, in some cases, even hampered by weather-related issues.
European natural gas crisis
Meanwhile, Europe is grappling with a severe natural gas shortage, which has led to a spike in prices. The continent imports most of its natural gas needs and Russia is the largest supplier. Natural gas is the main fuel for heating homes in the E.U. and the demand is expected to rise more as the winter approaches.
According to Gas Infrastructure Europe, the natural gas storage in Europe is at 76 percent currently. At the same time in 2020, the storage levels were 95 percent.
Russia’s role in the natural gas shortage
As the largest natural gas supplier to Europe, Russia’s role is under scrutiny. For its part, Russia has maintained that it's meeting its gas supply commitments. E.U. energy commissioner Kadri Simson agrees that Russia is meeting the commitments but added that the country isn't providing additional supplies. Usually, Russia bumps up the gas supply to Europe whenever there's a spike in demand.
Why isn't Russia increasing gas supplies to Europe?
Putin, who has ruled Russia in different roles for over two decades now, has always been a suspicious figure in the West. From weaponizing gas exports to sheltering cybercriminals, Putin’s Russia has been accused of many wrongdoings.
Many people have been speculating why Russia isn't increasing gas supplies to Europe. One argument is that since increasing supplies will bring down the prices, Russia is reluctant to do so. Some people even argue that Russia doesn't have spare gas to supply to Europe. Then, some observers think that Putin is weaponizing gas to hasten the approval for the Nord Stream 2 pipeline.
Nord Stream 2 pipeline
The pipeline was always controversial and the U.S. was opposed to it. Once the pipeline is approved, it would enable Russia to supply gas to Europe and bypass Ukraine. There are apparent signs that Putin might be using the current situation to pressure European regulators to approve the pipeline.
Putin called Nord Stream 2 “a commercial project" and said that he was “100% certain” that if the pipeline was there, it would have solved Europe’s energy crisis.
Putin on gas price manipulation
For his part, and as expected, Putin has denied that Russia is manipulating gas prices. He called such claims “complete rubbish... and politically motivated tittle-tattle." While Putin has said that the country was willing to increase gas exports to Europe, we haven't seen the results on the ground yet.