Russian President Vladimir Putin attends an awarding ceremony for Russian team members who won medals at the Winter Paraltmpic games on March 17, 2014 in Sochi, Russia.
Photo by Sasha Mordovets/Getty Images
Russian efforts to upend the European gas market are on the brink of backfiring, according to Yale’s Jeffrey Sonnenfeld.
He said Monday that thr relationship between Russia and European buyers is shifting in the EU’s favor.
“Gas is becoming a buyers market,” he wrote.
Russia’s plan to wreak havoc on the European gas flows could sharply backfire as the market shifts in the European Union’s favor, according to Yale professor Jeffrey Sonnenfeld.
Sonnenfeld wrote in a Financial Times column Monday that the relationship between Russia and Europe has changed, and Europe no longer depends on the Kremlin’s energy flows. However, he says, Moscow still depends on European buyers.
“Much attention has been focused on the demand side of the market equation: the reduction or destruction of demand, rationing and switching away from natural gas,” Sonnenfeld said. “Basic economic reasoning, however, means we should not forget the supply side.”
Sonnenfeld added that upon further analysis, Europe is actually fully capable of replacing Russian supply “without any need for demand destruction or even substitution away from gas.” Europe is already purchasing enough gas and liquefied natural gas from alternative sources to make up for the loss of Russian flows. Europe is taking advantage of strong purchasing power over smaller countries in Asia, however, to secure the alternative LNG and outbidding competitors.
Still, analysts have warned that the coming winter will be difficult for Europe as energy prices remain high at a time when households are dealing with a broader cost of living crisis.