Topline
Germany’s economy minister Robert Habeck said the country’s federal government is attempting to stabilize energy supplies but warned of potential industry shutdowns and job losses if gas reserves run low in the winter, a day after he said Russia’s throttling of natural gas supply to Germany could ripple into a Lehman Brothers-style collapse of the energy sector.
Robert Habeck, Federal Minister for the Economy and Climate Protection, speaks at a press statement … [+]
Key Facts
In an interview with German magazine Der Spiegel, Habeck said Germany has never been in a situation like the current “gas crisis” adding that the government was trying to procure replacements and expand its natural gas infrastructure to counteract the drop in supply from Russia.
Habeck once again urged the German people to cut back on gas consumption wherever possible.
The minister said if the government’s efforts to resolve the crisis fail and there is not enough gas some industries that consume the fuel will have to be shut down, which could be “catastrophic.”
He added that the impact of such a shutdown will be felt for a long time, not “two days or weeks” and many people would lose their jobs.
Habeck also noted that more people will feel the pinch of the gas shortage and high prices as the cost is gradually passed down to the consumers.
On Putin’s plan, the minister said the Russian leader was gradually throttling gas supply volumes and keeping prices high in an effort to increase “insecurity and fear,” fan populism and undermine democracy.
Crucial Quote
Speaking at a press conference on Thursday, Habeck pointed to a chart projecting a depletion in the country’s gas storage levels and said: “If this minus gets so big that they can’t carry it anymore, the whole market is in danger of collapsing at some point… a Lehman effect in the energy system.” Drawing parallels with the collapse of the Lehman Brothers investment bank in 2008 the fallout of which snowballed into the 2008 global financial crisis and the Great Recession.
Key Background
Habeck’s grim warnings come just a day after Germany triggered the second phase of its three-stage gas emergency plan in response to a reduction in the flow of gas from Russia through the Nord Stream 1 pipeline since June 14. Habeck said the security of supply was still guaranteed as the country has 58% more gas available in storage compared to last year. Despite this additional moves were needed to ensure that the German government meets its target storage level of 90% by December. The minister labeled the drop in gas supplies as an “economic attack” by Putin. If the requisite supply of gas is not secured, Germany may be forced to trigger the final “emergency phase” of the plan, where the federal government takes over the distribution of gas and carries out rationing. The Russian state-run gas giant Gazprom has attributed the reduction of supplies to equipment issues and suggested that a fix may not happen anytime soon. Gazprom previously suspended supplies to Poland, Bulgaria, Netherlands, Denmark and Finland after they refused to comply with Moscow’s mandate to pay for the gas using a rubles bank account.
Further Reading
‘Putin wants our country to disintegrate’ (Der Spiegel)
Germany Decries ‘Economic Attack’ By Putin As It Inches Towards Gas Rationing (Forbes)
Source: https://www.forbes.com/sites/siladityaray/2022/06/24/german-minister-warns-of-catastrophic-industrial-shutdowns-and-mass-unemployment-if-gas-crisis-continues/