Germany launched three Phase 2 “warning stages” of the country’s emergency methane-based gas program on Thursday, after Russia’s Gazprom curtailed deliveries by 60%. Phase 3 will allow the government to implement energy distribution. Germany’s economic minister, Robert Habeck, told reporters that the cut was a direct political attack in retaliation for German sanctions on Russia and military support for Ukraine.
“We’re in a gas crisis, even if we don’t feel it yet,” he said. “Winter will come.” Following this news, European gas prices have risen again. Habeck warned that this could have a “Lehman Brothers effect” and said, “[t]At some point the entire market is in danger of collapsing. “
The spillover effects of limited gas supplies and rising gas prices in Europe, exacerbated by the explosion at the Freeport LNG plant in Texas earlier this month, are becoming even more serious around the world. Pakistan is facing a power outage as very high gasoline prices have forced it to refuse to buy three times in June towards the hottest month. The Australian gas market is in turmoil as suppliers scramble to secure gas to meet winter demand. Meanwhile, China is increasing its purchases of methane gas from Russia, linking the assets of both countries more closely.
Source: German Emergency Plan: Reuters, New York Times $, Wall Street Journal $, Reuters Fact Box; Lehman Brothers: Fortune; Euro Ripple Effect: Bloomberg $, Reuters, Bloomberg $, Reuters; Freeport Explosion: Reuters; Pakistan : Bloomberg $; Australia: Reuters; China: Wall Street Journal $
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