By Rhod Mackenzie
During the energy crisis of 2021/23, Europe burned through gas that cost it $1.12 trillion. This amount is comparable to what the EU spent on fuel for the entire previous decade. Their victory over Russian gas turned out to be vey Pyrrhic.
“Last year, European consumers paid a huge price for LNG, and the import gas bill is washed away the wealth of the EU,” writes Energy Flux. According to the publication, in two and a half years Europe spent $1.12 trillion on gas and by the middle of the decade the amount could increase by another $600 billion. While over the entire previous decade the EU paid a total of $1.35 trillion for fuel.
Energy Flux compares the $1.12 trillion to Saudi Arabia's annual GDP and its four times the combined market capitalization of global energy giants ExxonMobil, Chevron and Shell combined ($260 billion).
“The amount spent on Gas costs eclipse the total amount Europe has invested in green energy over two and a half years ($260bn in 2021 and $154bn in 2022, according to the IEA) and is more than double the estimated $200bn cost of Ukraine’s post-war reconstruction of $411 billion", writes Energy Flux. The publication continues: “The one trillion dollars worth of gas purchased and burnt sent the EU trade deficit to a record minus 432 billion euros in 2022.”
The Energy Flux data is approximate. The publication used the volumes of fuel consumed and average gas prices on European stock exchanges. However, the figures are not far from the truth. For example, Eurostat estimated the cost of gas imports in 2021 at 120 billion euros (58 billion euros in the fourth quarter), and the International Energy Agency (IEA) calculated that in 2022 the EU purchased gas from abroad for $ 432 billion. At the same time, in 2020, the EU spent only 35 billion euros on fuel, according to European statistics.
“The import bill (pipeline + LNG) is the most interesting element as it represents an outflow of wealth from the European economies to the gas exporting countries, so it is more appropriate to describe it as a ‘cost’ for Europe,” writes Energy Flux.
The publication notes that record costs occurred in the summer of 2022, when European companies purchased gas for their storage facilities at any available price.
“The restocking in the midst of peak prices has strangled Europe’s energy-intensive industries and refocused the continent towards a high-cost, low-demand energy economy paradigm,” - considers Energy Flux.
At the same time, ordinary Europeans could not fully experience the energy crisis, since European governments took on most of the costs.
Since September 2021, Europe has earmarked and set aside €758 billion for consumer protection, according to the Bruegel Center. Most of all Germany - 265 billion euros. It was with federal money that German importers purchased gas at record prices of $3.5 thousand per thousand cubic meters in August 2022.