Gas prices are rising sharply around the world. After the Covid-19 pandemic, a global resurgence in demand for energy emerged. But all too quickly, depleted storage and supply chain bottlenecks meant providers struggled to keep pace with demand, and the price at the tanks inched higher.
Yet, in February 2022, the world would witness more significant, crippling rises in the price of gas, as Russia’s invasion of Ukraine sparked fears that Moscow would restrict supplies of natural gas in response to escalating sanctions.
Europe, dependent on Russia for about 40 percent of its natural gas supplies, scrambled for alternative sources. For instance, Italy, which imports more than 90 percent of its gas, mainly from Russia, approached Azerbaijan and Algeria for a substitute supply. Meanwhile, Germany considered increasing its electricity production from coal-powered generators.
Almost overnight, it became clear that Europe’s over-reliance on Russian gas presented an acute security and economic threat, with supply now disrupted across the world. As Paul Bledsoe, a Strategic Advisor at the Progressive Policy Institute, says, “It has taken the current crisis for Germany and the EU to recognise that its co-dependence on Russian gas is a geopolitical and climate nightmare from which they must finally awake. Reducing Russian gas reliance is a huge climate and moral imperative that Europe must prioritise.”
It is evident that Russia’s invasion of Ukraine has had a profound impact on the gas market and laid bare the challenges of over-reliance, not only on one supplier but also on one energy source.
Countries globally are now rapidly seeking not only to diversify their energy portfolio; they are looking to include a wider variety of sources such as renewables as well as diversifying their supply of traditional energy. Forcing them to explore options of importing gas from further afield to ensure stability of supply and avoid a repeat scenario where one individual event can throw the global market into freefall.