Just four years ago, the ghost that walked the halls of Brussels wore an ushanka and spoke Russian. The invasion of Ukraine in 2022 caused an energy trauma that Europe swore not to repeat, launching into a frantic race to cut ties with Gazprom. Today, the anguish has returned, but the fear no longer looks to the East, but to the West. Europe is experiencing a painful déjà vu: fleeing dependence on Moscow, the continent has fallen into the arms from Washington, and the hug begins to suffocate.
this winter is not giving up. Gas storage levels in Europe have fallen to their lowest point since that 2022 crisis, standing at around 44% at the end of January, an alarming figure when compared to the average of 58% over the last decade. according to data from the Financial Times. The complacency of the markets contrasts with the physical reality explained by Ron Bousso in Reuters– Underground caverns become dangerously empty and strategic vulnerability is exposed.
The return of the “Old Kings”: Drill again. This market apathy in the face of empty warehouses has a technical explanation: the inverted pricing structure (backwardation). Right now, future gas is trading cheaper than current gas, which eliminates the economic incentive to save fuel: no company wants to buy at a high price today to have an asset that will be worth less in the summer. Faced with this market failure and the precarious supply, Europe has decided to stop waiting and dust off the drills. What five years ago was a climate taboo is today a national security priority. Oil and gas exploration has returned to the European agenda with force.
Claudio Descalzi, CEO of the Italian energy giant Eni, has given voice to this paradigm shift. As explained for a report in the Financial TimesEurope must abandon the “ideological” approach that stopped domestic investments in fossil fuels. For the manager, the refusal to exploit its own resources has not saved the planet, it has simply forced Europe to buy that same energy abroad, at higher prices and from competitors who now use the supply as a political weapon.
This vision aligns with what financial analysts already detect: pragmatism prevails over idealism. Simon Edelsten investment expert columnistargues that the “net zero investment bubble” has already burst. Governments and fund managers, which previously penalized any fossil asset, are making a 180-degree turn. “The rate at which fossil fuels are replaced depends more on their price than on government decrees,” says Edelsten, recalling that, without cheap alternatives, the world continues burning gas.
The dependency trap. The European diversification strategy had its own name: the United States. At the start of this year, the data already reflects that Washington has supplied 60% of all the Liquefied Natural Gas (LNG) that the European Union imported, consolidating its dominant position. However, this solution has become a major geopolitical problem due to the president’s rhetoric about the purchase of greenland and threats to impose tariffs.
“The risk is not that the United States will cut off supplies tomorrow,” analysts cited by the New York Times warn“the risk is that he uses his dominant position to pressure or condition.” Unlike Russia, Washington does not need to turn off the tap; It is enough to play with tariffs or prioritize other markets. Furthermore, Europe has stopped buying cheap gas by pipeline to buy the most expensive gas on the market: American LNG, hindering the competitiveness of its industry.
No easy plan B. The search for alternatives is desperate but fruitless, as detailed in Bloomberg. The EU is looking towards Qatar, but military tensions between the US and Iran in the Strait of Hormuz put that route at risk. Norway, for its part, is already producing at the limit of its capacity.
The question that hovers above is inevitable: why not cover that gap with renewables? The short answer is that infrastructure and technology are not keeping pace with politics. The wind sector, once the great hope, has been the great victim of the bursting of the green bubble. Leading companies such as Ørsted or Vestas have seen their shares plummet and their debt skyrocket because the windiest places are already exploited. Although solar energy resists storms better thanks to improvements in the efficiency of the panels, as Edelsten highlightsits intermittency makes it incapable on its own of covering winter demand peaks.
Even in the best renewable deployment scenario, gas is not going away. Consulting reports like McKinsey They project that global gas demand will increase by 26% until 2050. The reason It’s technical: Renewables need a backup, a “bodyguard” that keeps the electrical grid stable when there is no sun or wind. The energy transition, paradoxically, has turned gas into a permanent strategic pillar.
Emergency engineering and the Spanish wall. Faced with the impossibility of bringing gas by land from the East, Europe has turned to the sea. The emergency solution have been the FSRU (Floating Storage and Regasification Units), gigantic ships that act as “mobile plugs” to process liquefied gas. Its rent is around $155,000 a day, a price that Europe gladly pays to avoid a blackout.
However, the gas hits a physical wall when it reaches land. Spain illustrates this European dysfunction perfectly: it has the regasification plants and the gas on its coasts, but it lacks the pipelines (interconnections) to send it to the north of the continent. With an export capacity to France limited to 8,500 million cubic meters per year, the Iberian Peninsula remains an energy islandunable to alleviate Germany or Central Europe’s thirst for gas.
A “hyperactive” market and the shadow of Russia. Gas is no longer a simple commodity to become a high-speed financial asset. Today it operates 22 hours a day, with hedge funds and algorithms reacting in milliseconds to any global news. This “financialization” has brought extreme volatility: a late-night headline about Iran can alter the price of heating in Berlin before dawn.
And while Europe watches the stock charts, Russia continues to slip through the cracks. Despite promises of full disconnection by 2027, Russian gas flows through the TurkStream pipeline increased 10% in January from a year earlier, according to Reuters. Brussels also fears the existence of a “ghost fleet”: ships that hide the origin of Russian gas through transfers on the high seas, repeating the scheme that already works with oil.
Independence under construction. Europe closes this winter with a lesson in humility. The promise of rapid, green energy independence has run into the reality of physics and geopolitics.
While politicians try to bury their past statements about the immediate end of fossil fuels, the continent is once again drilling its soil and signing long-term gas contracts. The question hovering over Brussels is no longer whether Europe can live without Russian gas, it is whether it will be able to do so without falling into a new dependence before renewables arrive in time. For now, the answer is in the drilling.
Image | freepik
GIPHY App Key not set. Please check settings