Germany, with a large energy-consuming economy, imports up to 90% of its LNG from the US. Berlin has no control over prices. Before the Russian invasion of Ukraine, Russia was the source of 50% of Germany's natural gas imports. In general, the EU is dependent on imported gas and, after the war in Ukraine, on imported LNG, which makes it more vulnerable to price volatility on international markets, as is the case now. Is a new crisis coming? most people ask. The crisis is already here, say the pessimists. It is a crisis when problems become acute and persist. For a new European crisis with high energy prices and high and out-of-control inflation, the main ingredients already exist, and the warnings about its installation are multiplying. Romania has not even managed to get out of the previous nightmare, remaining with the strongest inflation in the EU, although it has been four years since Russia invaded Ukraine and cut off Russian energy flows to the Union. The difficulty in assessing the situation is given by the fact that the war in the Middle East, since it began three weeks ago, has escalated from one day to the next. If initially the problem was how long Iran would be able to block the passage of ships with oil and liquefied natural gas through the Strait of Hormuz, now the gravity is given by the systematic destruction with Iranian missiles and drones of the energy installations of the neighboring states that produce and export gas and oil. The crisis in Hormuz will end when ships can run, but a destroyed refinery is more difficult to repair. A burning oil or gas field will not be easily brought back into operation. Gas and oil from burnt deposits mean energy missing from the markets. Under these conditions, Europe must prepare for an extended energy shock, warns Michael Stoppard, former top strategist at S&P Global, in an opinion published by the Financial Times. Oil and gas flows will not recover by simply turning on the tap. He believes that the severity of the energy crisis created by the conflict in the Middle East is underestimated. The Qatari authorities estimated after the first Iranian strikes on the largest LNG processing facility in the world that the repairs would take a few weeks or months at most. But other strikes followed, and the damage is so extensive that it could take 3-5 years until the installations are put back into operation, say Qatari officials. It is about both production and export. In such cases, the tendency is to dramatize. More expensive gas benefits the exporter, Qatar. But the fact that the country's LNG facilities will not be able to operate for a long time should make Europeans think. Expensive gas is a pain for the EU, primarily because it is dependent on imports and has no control over production and prices. Last year, Qatar contributed no more than 4% to the Union's natural gas supply. The largest amounts came from Norway (31%), the USA (25%), North Africa (13%) and Russia (13%). Although Qatar has a small share in the case of the EU, it is a top player in international markets. His exit from the competition leaves a huge void and intensifies the struggle between nations for the resources that remain. On the other hand, from 2022 until 2025, the EU reduced its gas consumption by 20%, partly due to economic stagnation, partly thanks to efficiency. But LNG imports have increased by more than 100%, according to the EC. The war has a «material impact» on inflation, Christine Lagarde, president of the ECB, the central bank of the euro zone, warned last week. Until the conflict began, inflation in the region seemed to be brought under control. Without conflict, the ECB's baseline scenario was 2.6% inflation in the euro area in 2026, above target. Energy shocks could lead the indicator to 3.5-4.4%, depending on the persistence of supply chain disruptions. When inflation rises beyond the target, central banks raise interest rates to bring it back under control. This is what the ECB did in the previous energy crisis, torturing consumption with expensive credit at record levels. American bank JPMorgan sees interest rates in the euro area rising in April and July due to inflationary risks. Barclays sees growth in June as well. High interest rates mean slowing down the economic advance, and so weak in many EU states, to none at all in large economies like Germany, whose weakness is holding Eastern European countries like Hungary in place. Low economic growth or stagnation accompanied by high inflation means stagflation. Now, the European Commission is preparing a package of temporary and targeted measures to curb rising energy prices, including reduced electricity taxes, greater flexibility of state aid and lower network tariffs. The measures taken by the EU in 2022 regarding the loss of Russian gas were of four types: replacement, replenishment, protection and capping, recalls the former strategist of S&P Global. Replacement meant looking for alternative sources of gas supply. Vast flows of LNG, particularly from the US, have been successfully secured. It is an undeniable success, but the subsequent struggle between countries and continents for the finite reserves of resources at the global level has inevitably led to higher prices. Poorer developing countries were also excluded from the markets, leading to blackouts and shortages elsewhere. Poverty means holding back development and purchasing power, which matters for the prosperity of an exporting world like the EU. Replenishment meant filling Europe's empty warehouses during the summer in preparation for the following winter. A sensible and probably necessary obligation – but, again, one whose impact was to raise prices even more. Government mandates to utility companies to fill gas stocks by autumn, at any price, were perceived by traders as permission in the sense of «you make the price». Protection meant offering price cuts to economically vital consumers and the vulnerable – in some cases, massive blanket subsidies for millions of households. The impact was the maintenance of high wholesale prices, to which the unchanged consumption habits contributed. The ceiling was intended to impose limits on European gas prices on trading exchanges. But a price ceiling below global market prices meant that limited LNG resources would not reach European shores, but would be sold elsewhere. Therefore, the ceiling was «flexible». In addition to all this, more attention should have been paid to consumption management. In practice, market forces and prices were left to rationalize supply, and the effects on European industry were probably less than optimal. A better answer would have been to first identify the sectors and places that could be asked to consume less, with a focus on moderating demand where it hurts the least – two degrees less in the temperature in the hotel lobby, cooler water in the pool. The head of the OMV also emphasized consumption moderation, who advised drivers to leave their cars at home for two days – the consumption of these two days representing the fuel blocked in Hormuz, as well as the Energy Intelligence Agency. Moderation would not solve Europe's structural problems, but it would help. In the last days, Spain is given as an example of a country that is doing well in the EU, it is afraid of the price of electricity. And the Spanish prime minister insists on this. Spain's strength would lie in the development of wind and solar energy. But this led to the collapse of the energy system last year. And this year Spain increased its LNG imports by 20%, the biggest source being the USA, an «unfriendly» state, considering the war of declarations between the Spanish Prime Minister and the American President Donald Trump.
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