Europe pays a bill to Russia of almost one billion euros a day. It is the sum of what the Old Continent has paid – in just 24 hours – to Moscow for gas (660 million) and oil (350 million). An astronomical figure, calculated in an ad hoc study by Simone Tagliapietra, Bruegel’s researcher and professor at the Cattolica in Milan.
“This is a historic record, which is being beaten day by day”, explains Tagliapietra to AGI. To understand how much the costs are rising, it is necessary to make a comparison with the beginning of the year: for example, on January 1, Europe paid 190 million to Russia for gas but “with the increases of these days, which reach up to 60%, this figure is destined to rise again “, says Tagliapietra.
As for oil, he explains, “the estimate is much more complex because there is no real-time data on European imports from Russia. However, we took the average of the volume referring to last year and multiplied by the value of the Russian crude oil barrel “.
Russian oil now travels with a 20% discount “because traders are afraid of sanctions”. Today Europe spent 350 million on Moscow’s ‘black gold’, “about 30-40% more than at the beginning of the year”. How to get out of this crisis? Tagliapietra offers various suggestions. In the report, Bruegel’s researcher explains that “the crisis scenario will require improvisation and entrepreneurial spirit. The main message is: if the EU is forced or willing to bear the cost, it should be possible to replace Russian gas as early as next winter without economic activity being devastated, people frozen or the electricity supply cut off. But on the ground, dozens of regulations will need to be reviewed, routine procedures and operations revisited, a lot of money spent quickly and difficult decisions made. ”
But one thing is important: “If we put the embargo on Russian energy, we can do without Russian gas for next winter but only by implementing some strategies”. In short, this involves three challenges:
- Bring as much gas as possible to Europe and not overpay for it;
- distribute gas in Europe
- distribute the cost of this operation.
This epochal challenge is made even more difficult by the uncertainty about which scenario Europe will find itself, as well as the fact that Europe plans to drastically reduce gas imports in the coming decades. Thus, there would be a substantial risk to Europe if it went blindly all-in, signing every available gas contract.
“Public intervention will be needed to ensure sufficient imports in the coming months. This could take the form of a task force to coordinate purchases and prevent companies from outdoing each other,” Tagliapietra says.
In short, “politicians should support the activation of potential supplies and offer political deals to secure additional volumes of LNG “explains the researcher. These efforts are necessary but not sufficient and indeed, the report reads,” exceptional measures are possible to reduce demand “.
The immediate challenge is to fill the stockpiles as much as possible before next winter. “We still need – explains Tagliapietra – a drastic cut in industrial demand”. And, as already mentioned in Italy, “a switch to coal”. Any action, Tagliapietra underlines, “is certainly expensive but inevitable” but certainly prepares us to face this “unprecedented scenario”.
Moreover, in the six months preceding the attack, Russia had reduced its flow to Europe by 40% and now instead “has returned to normal levels”. “Faced with a game of this type – Tagliapietra points out – Europe must be able to respond and overcome this ‘problem'”.