Germany girds for gas rationing, Europe on edge in Russian standoff

[beijingwalker]

Germany girds for gas rationing, Europe on edge in Russian standoff​

By Joseph Nasr and Vera Eckert

March 30, 2022

• Europe fears Moscow will turn off gas supplies
• Kremlin says rouble payments a good idea for other commodities
• Kremlin says it will not immediately demand roubles for gas
• Economic standoff raises risk of recession in Europe

BERLIN/FRANKFURT, March 30 (Reuters) - Germany triggered an emergency plan to manage gas supplies on Wednesday that could see Europe's largest economy ration power if a standoff over a Russian demand to pay for fuel with roubles disrupts or halts supplies.

Moscow's insistence on rouble payments for the Russian gas that meets a third of Europe's annual energy needs has galvanised others in Europe: Greece called an emergency meeting of suppliers, the Dutch government said it would urge consumers to use less gas and the French energy regulator told consumers not to panic. read more

The demand for roubles, which has been rejected by G7 nations, is in retaliation for the West imposing crippling sanctions on Russia following its invasion of Ukraine. read more

Moscow, which calls its actions in Ukraine a "special military operation", says the Western measures amount to "economic war".

Russia's most senior lawmaker said on Wednesday Russia could widen the demand for rouble payments to other commodities including oil, grain, fertilisers, coal and metals, raising the risk of recession in Europe and the United States.

Moscow is expected to make public its plans for rouble payments on Thursday, although it said it would not immediately demand that buyers pay for gas exports in the currency. read more

Western countries have said payment in roubles would breach contracts that can take months or more to renegotiate, a prospect that has driven commodity markets higher.

It would also soften the impact of sanctions on Russia by bolstering the currency after it was hit by Western restrictions on Moscow's access to its foreign exchange reserves.


Berlin's unprecedented move is the clearest sign yet that the European Union is preparing for Moscow to cut gas supplies unless it gets payment in roubles. Italy and Latvia have already activated warnings.

Germany Economy Minister Robert Habeck implemented the "early warning phase" of an existing gas emergency plan, meaning that a crisis team from the economics ministry, the regulator and the private sector will monitor imports and storage.

Habeck told a news conference that Germany's gas supplies were guaranteed for now but urged consumers and companies to reduce consumption, saying that "every kilowatt hour counts".

INDUSTRY FIRST IN LINE FOR CUTS

If supplies fall short, Germany's network regulator can ration gas, with industry first in line for cuts. Preferential treatment would be given to private households, hospitals and other critical institutions.

Even without the threat of gas shortages, Germany could face recession and energy costs have already forced companies, including makers of steel and chemicals, to curtail production.

German industry is at particular risk, the BDI association said on Wednesday, asking for measures, including loans and state participations, to prevent firms from going bust.

This could cause industrial production to shrink by as much as 9%, depending on the length of any disruption, Deutsche Bank senior economist Eric Heymann told Reuters.

The government's council of economic advisers on Wednesday more than halved its growth forecast for this year to 1.8%. {nL2N2VX1PL]

Reuters Graphics Reuters Graphics
Half of Germany's 41.5 million households heat with natural gas while industry accounted for a third of the 100 billion cubic metres of national demand in 2021.

Russia is Germany's top gas supplier, accounting for 40% of imports in the first quarter of 2022. Berlin has pledged to end its energy dependency on Moscow but it will not achieve full independence before mid-2024, according to Habeck.

Europe faced an energy crunch even before Russia invaded Ukraine. Gas storage levels in the European Union are about 26% of total capacity, below normal levels at this time of year.

The European Commission, which said on Wednesday it would work closely with member states to prepare for any gas shortages, has proposed legislation requiring countries to fill levels to at least 80% by November but that would be almost impossible if Russia halts supplies.

The target to fill storage would not apply if the European Commission declared an EU-wide or regional gas supply emergency - which it can do if at least two countries declare an emergency first.

'EVERYTHING WILL BE FINE'

Jean-François Carenco, head of the energy regulator in France, which is far less reliant on Russian gas than Germany, due to pipeline and liquefied natural gas from other origins and a predominance of nuclear for power generation, said the country should not encounter any supply issues.

"Everything will be fine, the gas storage facilities are well filled, we'll make it through the winter," he told BFM TV.

Greece was set to hold an emergency meeting of its energy regulator, gas transmission operator and its biggest gas and power suppliers on Wednesday to assess its supply security in case Russia stops supplies.

The Dutch government said it would launch a campaign to get consumers to use less gas.

Investors are watching to see how the dispute over Russia's insistence on rouble payments plays out as consumers in Europe grapple with energy prices that have forced governments to announce fiscal relief measures.

This month has been the most expensive month for power prices in European history, although markets are set to end the month at lower levels than at the start of March.

After Germany's announcement, German year-ahead wholesale electricity set a three-week high of 185 euros per megawatt hour, up 6.3%. .

Kerstin Andreae, head of the Federal Association of the Energy and Water Industry (BDEW), said Germany should have clear plans for how the government would deal with a gas delivery stoppage that forced rationing.

"We must now take concrete measures to prepare for the emergency level, because in case of a stoppage things would have to move fast," Andreae said.

Germany girds for gas rationing, Europe on edge in Russian standoff

Germany triggered an emergency plan to manage gas supplies on Wednesday under which Europe's largest economy could ration power if a standoff over a Russian demand to pay for fuel with roubles disrupts or halts supplies.

www.reuters.com

 

[beijingwalker]

Germany rocked as 'merciless' inflation smashes forecasts to reach 40 year high​

INFLATION in Germany has pushed past expectations to reach levels not seen since the 1980s - in a further blow to Europe's largest economy.​

By TOM HILL
15:14, Wed, Mar 30, 2022 | UPDATED: 15:14, Wed, Mar 30, 2022

According to official statistics, headline inflation reached 7.3 percent in March, a 2.5 percent increase on the previous month. Energy has continued to have considerable impact with inflation in costs swelling to 39.5 percent - compared to 22.5 percent in February. According to statistics body Destatis, delivery bottlenecks due to disrupted supply chains are also adding to pressures on goods prices.

Germany has been suffering from supply chain issues in key manufacturing components such as semi-conductors for some time now, with outbreaks of Covid and increases in energy costs adding to the problems for suppliers.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, described Germany's inflation as "merciless".

He predicted: "Core and headline inflation will advance further in the near term, though the energy component is a wildcard.

"A European embargo on Russian gas, or a reduction in supply due to spat over whether to pay Russia in roubles or euros, would drive energy inflation up even further."

Carsten Brzeski, global head of macro at ING Think, predicted average inflation of eight percent for the year with double digit territory possible over the summer.

Writing in a briefing note, he said: "Looking ahead, with the war in Ukraine and continued tension and upward pressure on energy, commodity and food prices, headline inflation in Germany will accelerate further in the coming months.

"The pass-through to all kinds of sectors is in full swing.

"Add to this the additional price mark-ups in the hospitality, culture and leisure sectors once the current round of restrictions is over and it is hard to see inflation coming down significantly any time soon."

The surge in inflation comes as figures recently revealed plummeting consumer confidence in Germany, with GfK's much followed consumer sentiment survey finding increasingly pessimistic views on the outlook for the economy and spending plans.

A major fear for Germany, and much of the Eurozone, now is a period of stagflation with surging inflation and stalling growth combining.

In Germany's case, the economy actually shrank in the final months of last year - with fears the country could enter recession this year if trends continue.

Speaking today, Christine Lagarde, President of the European Central Bank, acknowledged the Eurozone faced "significant risks to growth" due to the war on Ukraine.

She said: "Europe is entering a difficult phase.

"There is considerable uncertainty about how large these effects will be and how long they will last for.”

Inflation figures for the Eurozone are due on Friday, April 1.

Mr Vistesen warned "investors should brace for another consensus-busting inflation report", adding "risks are now certainly tilted towards EZ inflation soaring past seven percent in March".

German inflation reaches 40 year high

INFLATION in Germany has pushed past expectations to reach levels not seen since the 1980s - in a further blow to Europe's largest economy.

www.express.co.uk

 

[fitpOsitive]

Ruble

 

[Shehryar Ashraf]

europe likes sanctioning but doesnt like getting sanctioned.
who knew?

 

[beijingwalker]

'Welcome back to the 1970s': Oil, gas prices push German inflation above 7%​

MARCH 30, 2022

BERLIN (Reuters) -German annual inflation rose to its highest level in more than 40 years in March as prices of natural gas and oil products soared following Russia’s invasion of Ukraine, preliminary data showed on Wednesday.

Consumer prices, harmonised to make them comparable with inflation data from other European Union countries (HICP), rose 7.6% on the year, a steep increase from 5.5% in February, the Federal Statistics Office said.

The national consumer price index (CPI) rose 7.3% year-on-year after recording an inflation rate of 5.1% in February, as companies and service providers passed on the massive rise in energy prices to customers.

Analysts polled by Reuters had expected the CPI rate to rise to 6.3% and the HICP figure to grow to 6.7%.

“Welcome back to the 1970s! At least as far as food, goods and energy prices are concerned,” said Jens-Oliver Niklasch at Landesbank Baden-Wuerttemberg.

“The European Central Bank has no choice but to start tightening now,” said KfW chief economist Fritzi Koehler-Geib in a view echoed by other experts, including Thomas Gitzel at VP Bank Group.

“If currency regulators stay relaxed, there is a risk that their later reaction will have to be all the more drastic. The U.S. Federal Reserve had this painful experience in the early 1980s,” Gitzel said.

A similarly high inflation rate in Germany was last recorded in autumn 1981, when oil prices had jumped as a consequence of the first Iran–Iraq War, the statistics office said.

Economists said the inflation problem was not unique to Germany. Spain, for example, reported an inflation rate of just under 10% for March earlier on Wednesday.

“The ECB’s mantra that inflation rates would be back to the ECB’s target level of 2% from next year no longer works,” Gitzel said. “For the first time since it was founded, the ECB is in danger of losing its credibility.”

Preliminary inflation data from the German states of Saxony, North-Rhine Westphalia, Bavaria, Hesse, Brandenburg and Baden-Wuerttemberg had suggested annual consumer price inflation (CPI) in a range between 7% and 8%, coming to an average of 7.54%.

'Welcome back to the 1970s': Oil, gas prices push German inflation above 7%

German annual inflation rose to its highest level in more than 40 years in March as prices of natural gas and oil products soared following Russia's invasion of Ukraine, preliminary data showed on Wednesday.

www.reuters.com

 

[PakFactor]

lol

 

[beijingwalker]

LOL.. Now we see who got sanctioned really really hard...

 

[hualushui]

 

[beijingwalker]

Russian gas: What happens if Germany runs out of it? | DW News​