The recent surge in gas prices across Europe, sparked by the conflict in Ukraine, has created a whirlwind of activity, with Russian fuel sales skyrocketing beyond the total aid that the EU and US have provided to Kyiv. Analysts are predicting that this trend will only widen the gap between what European countries are paying Russia for fossil fuels and the financial support offered to Ukraine.
Since Russia’s invasion of Ukraine in February 2022, EU countries have shelled out a jaw-dropping €200 billion for Russian oil and gas. This staggering figure stands in stark contrast to the €185 billion in total aid provided by the EU and US to Ukraine, as meticulously tracked by the Kiel Institute for the World Economy.
To add to the drama, gas prices unexpectedly soared by 13%, causing Russian revenues from fuel sales to skyrocket. The surge in prices is a direct result of Ukraine’s bold counter-invasion of the Russian province of Kursk, sparking fears of potential disruptions in gas supply and sending traders into a frenzy of speculation.
While this price surge has raised concerns about possible disruptions in supply, some experts suggest that it may be an overblown and temporary phenomenon. Yet, despite European efforts to reduce reliance on Russian energy, the surge in gas prices sheds light on the ongoing flow of European funds to Russia in exchange for energy.
Between July 29 and August 4, EU countries splurged over €400 million on gas and oil from Russia, bolstering the Kremlin’s ability to sell these commodities at higher prices due to the recent rally. Though this amount has significantly decreased from previous levels, it serves as a reminder that while progress has been made in reducing dependence on Russia, there is still much ground to cover.
While Europe has completely banned Russian coal, the same cannot be said for other energy sources. Despite a notable decrease in Russian gas and diesel imports, Russia remains a major supplier of both pipeline and LNG gas to Europe. The European Parliament has called for a ban on all Russian energy commodities, but as of yet, no concrete steps have been taken, despite the upcoming implementation of new gas market rules in the EU.
In essence, the recent surge in European gas prices following the conflict in Ukraine has laid bare the continuing flow of European funds to Russia in exchange for energy. There is still a long way to go in order to fully break free from this reliance, and urgent action and tough decisions are needed to curtail Europe’s support of the Kremlin’s war machine.
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