Aftershocks from the war in Ukraine are anything but an over-there problem. As if inflation and the persistent threat of a widening conflict weren’t enough, we can now add Europe’s energy crisis to the challenges Russia’s invasion presents to consumers in the U.S.
Don’t miss
Few world events have clarified the world’s delicate energy ecosystem like the conflict in Ukraine. When Russia made good on its threat to halt the flow of natural gas via the Nord Stream 1 pipeline — the biggest conduit of natural gas to Europe — it catalyzed long-held fears of the war’s downstream consequences for energy consumers in the U.S. and elsewhere.
From fine dining to fertilizer, escaping the fallout gets harder and harder.
Michelin-starred chef Tom Kerridge recently announced that one of his smaller locations faced a seven-fold increase in utility costs, a warning that other venues could force a winter shutdown of popular bars and restaurants.
Kerridge blames the potential shutterings on Europe’s failure to institute caps on energy prices, which have proven extremely volatile after the invasion and subsequent halt of natural gas flow via the Nord Stream 1.
But the problems go deeper than world-class food.
Gas prices in the U.S.
The Nord Stream cutoff has forced Europe to shop the global market for gas supplies. Global players have stepped up, including the U.S., which has dramatically increased the amount of liquified natural gas sent to Europe.
Dwindling domestic stocks equals higher prices in the U.S., and eventually, that will be felt by American households. Roughly half of U.S. homes rely on natural gas for heat.
Travel trials
Travelers headed to Europe this fall or winter should manage their expectations.
In Germany, for instance, energy consumption curbs mean lights will go out earlier in the evenings, pools will go unheated, hot water may be rationed and rail travelers could see increased wait time for trains that will cede to higher-priority transports of coal or oil.
Beer, wine and … fertilizer?
As Europe heads into winter, it may be harder to find pockets of the European economy — including goods normally headed to the U.S. — that won’t be affected.
The continent as a whole is confronting a major energy crisis. This summer’s unprecedented heat conditions affected the output of hydroelectric energy, which curbed nuclear energy output and raised demand for cooling.
Nearly 60% of British manufacturers face the prospect of closure because of higher energy prices, according to a poll from MakeUK, a manufacturer’s organization in the U.K.
In Spain, the price of cement has risen 400%, forcing many factories in that country to cut production or shut down.
One often-missed player in the global economy is fertilizer, and a halt of natural gas supply in Europe will threaten fertilizer stores. Nitrogen-based fertilizers are the most common, and ammonia — which requires heavy amounts of natural gas to make — is a key component of those fertilizers.
Natural gas’ vital role may hit everything from car parts to beer and wine drinkers, as its role in glass production comes into new focus. Making glass relies heavily on natural gas-fueled energy to melt sand, soda ash and limestone.
What to read next
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Source: finance.yahoo.com