Trump's Policies and Influence: Potential Rise in Energy Prices in Europe?
In the wake of the Russian attack on Ukraine, Europe is taking decisive steps to reduce its reliance on Russian energy supplies. Until recently, cheap oil and gas from Russia had been a significant part of the energy mix for many EU countries, including Germany.
However, the situation is changing. In 2021, despite a significant decrease, 13 million tons of oil still came from Russia to the European market. This figure is set to decrease further, as the European Commission President, Ursula von der Leyen, has announced an initiative for a faster stop to all Russian oil and gas supplies to Europe.
The EU has already imposed far-reaching import bans on Russian energy carriers such as coal and oil. However, gas sanctions have been avoided due to dependencies. The goal is to gradually phase out and completely end the import of Russian gas by 2028. A complete import ban on oil is planned by the end of 2027.
The EU's current plan aims to increase economic pressure on Moscow and make it more difficult to finance the war against Ukraine. Critics argue that Europeans still pay billions for Russian energy supplies, thereby filling Russia's war chest. Ukraine, in particular, has been vocal about this issue.
The member states and the European Parliament are currently negotiating the proposal presented by the Brussels authority in June for ending Russian gas and oil imports. If approved, the rules would need the approval of 15 of the 27 EU countries, which together make up at least 65 percent of the total EU population, at the national level to come into force.
The faster the exit from Russian energy supplies, the better, according to the Commission. However, it is conceivable that both exit deadlines could be brought forward by one year. The gas industry believes that the EU's goal of ending imports by the end of 2027 is achievable, but without clear replacement strategies, Europe risks rising prices and market instability.
Consumers should ideally not have to worry too much about new burdens for heating, refueling, and electricity due to the gradual and coordinated implementation of the measures. Remaining gas supplies could run out without compromising supply security, according to an analysis by a Brussels agency.
Meanwhile, Trump could potentially be aiming to improve sales opportunities for US liquefied natural gas in Europe. This could provide an alternative to Russian gas, but the question remains if von der Leyen's plan will be enough to deter Trump from imposing new US sanctions against Russia.
Gas from Russia mainly comes to the EU as liquefied natural gas (LNG) and via the TurkStream pipeline. The goal in Germany is to end dependency on Russian fossil fuels by prohibiting imports from new contracts starting January 1, 2026, and from existing long-term contracts by January 1, 2028. This would support the energy transition towards climate neutrality through diversified and renewable gas sources like hydrogen.
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