Taps Coogan – June 6th, 2022
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The following chart, from Reddit creator Jcceagle, shows the sources of Germany natural gas imports since 1990.
Despite everything that’s happened vis-a-vis Russia since 1999: Chechnya, Georgia, Crimea, etc… Germany has dramatically increased its dependency on Russian gas over the past 40 years. Before the current bout of Ukraine tensions and the subsequent invasion, Germany was widely expected to greenlight the Nord Steam 2 pipeline, which would have given Russia a near monopoly on gas exports to Germany.
Germany’s energy policy has long been a caricature of bad decision making: shutting down zero-carbon nuclear, blocking LNG terminals that would have driven price competition and supplier diversity, over reliance on intermittent power sources without storage, etc…, but the Nord Stream 2 pipeline was the cherry on top.
Contrary to popular belief, Germany and the EU have large excess natural gas import capacity when one counts Russia’s pipeline capacity. In 2018, more than half of the EU’s natural gas import infrastructure was operating below 50% capacity, as the following chart from the IEA highlights.
The reason gas prices were already high before Russia’s invasion of Ukraine is a lack of cheap gas to put into pipelines and LNG terminals, not a lack of import capacity. It’s the gas that’s missing, not the import pipelines (though some interconnection infrastructure is missing). That is a point that is seemingly impossible for policy makers to understand but very much at the crux of high energy prices. Remember, natural gas prices are just as high in Asia and other large importing regions and have been high for a year.
The Nord Stream 2 has only ever been about rerouting gas flows away from Ukraine.
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