The View | Can Europe survive looming gas shortages as Russia halts supplies?
- While the EU debates whether it can survive Russia halting gas supplies and at what cost, less has been said about preparing for shortages
- Higher prices will not be sufficient and rationing should be a last resort, so governments must come up with initiatives that draw popular support
Yet for all the intellectual energy that has been expended estimating the magnitude of potential GDP contractions, much less has been said about how to prepare for gas shortages if Russia takes it upon itself to close the taps. It is analogous to forecasting the extent of damage a hurricane will cause instead of actually preparing for the storm.
All of Europe’s gas providers – not just European Union producers but also neighbouring countries delivering gas by pipeline and exporters of global liquefied natural gas – are already operating at full capacity.
Gas delivered mostly by pipeline from Russia constitutes around 40 per cent of EU supply. Should this supply be interrupted, as it could well be, EU gas consumption would have to be reduced significantly.
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In principle, three mechanisms can facilitate this reduced consumption: high prices, government programmes and mandatory rationing. In our view, the price mechanism alone will not be sufficient to manage shortages. Gas prices are already at record levels in Europe, and gas saving is far from sufficient.