- European factories are shutting down due to soaring global energy prices, The WSJ reports.
- Rising prices are making it difficult for European factories to stay competitive.
- Russia supplied around 40% of the European Union's natural gas in 2021.
- For more stories go to www.BusinessInsider.co.za.
Some European factories have shut down due to soaring global energy prices and insecurity over Russian gas supplies.
High energy costs, caused in part by the Russia-Ukraine war, are making it hard for European factories to compete with countries where energy prices are lower. Natural gas is three times more expensive in Europe than in the US, as per the WSJ.
Insider previously reported that energy prices have reached a 13-year high after rising 50% in 2022.
Energy-intensive industries such as steel, chemical, and fertilizer manufacturing are shutting their European factories amid rising costs and concerns that Russia may cut off its supply, as per the WSJ.
Europe has been preparing to ration gas if Russian supplies are cut off. Finland, Bulgaria, and Poland already had their supply of Russian gas cut off by state-owned company Gazprom PJSC after the countries refused to pay for gas in rubles.
Much of Europe's industry is reliant on cheap Russian oil and natural gas. Russia supplied around 40% of the European Union's natural gas in 2021, according to EU data. Germany, the region's largest economy, is one of the most reliant on Russian gas.
Europe is also one of the most prominent buyers for Russia, Insider reported that Europe was responsible for 50% 0f Russia's crude oil exports and 75% of its natural gas exports in 2021. In the first two months of the Ukraine war, the EU accounted for 70% of the country's exports.
Some European countries are trying to phase out Russian gas.
Robert Habeck, Germany's economic minister, said on March 25 that the country planned to wean itself off Russian gas by 2024. The European Union has also set clean energy targets in an attempt to end the bloc's reliance on imported oil and gas. However, the Centre for Research on Energy and Clean Air (CREA) said in March that the targets wouldn't be an immediate fix.