Economist describes the causes of the gas crisis in the EU

17.11.2021, Moscow.

The gas crisis in Europe showed the advantages of economic planning over the market, economist, head of the Department of Macroeconomic Forecasting and Planning at the Financial University under the Government of the Russian Federation Sergey Tolkachev said in his commentary to Rossa Primavera News Agency.

The cost of gas futures on the EU exchanges is increasing again – on November 17th, the gas price on the ICE Futures reached $1150 per thousand cubic meters. That’s one and a half times lower than the record $1900 at the beginning of October, but four times higher than at the beginning of the year.

The economist Tolkachev noted that the European Union’s own policies – hopes for “green” energy and liquefied gas supplies from the United States, as well as the fear of a monopoly of Russia’s Gazprom – led to the gas supply crisis in the first place.

“The gas crisis has once again demonstrated the advantages of a planned economy over a market economy,” economist Tolkachev said. “Gazprom traditionally promotes the ‘planned’ economy of long-term contracts. European ‘advocates of the market economy’ perceive this line as a manifestation of Russia’s diktat.”

According to the expert, in the EU, as a response to Russia’s “diktat,” they relied on market factors, on “liberalization and pluralism” of gas supplies – “and this is how they end up with their market.”

“Fearing the Leviathan in the form of Gazprom promoting planned economy, they nurtured their market Leviathan – in the form of stock speculators, who raised the market price of gas to the sky in pursuit of their speculative profits,” Tolkachev concluded. The economist noted that the “frightening” prices above 1000 euros per thousand cubic meters of gas characterize the futures trading and not always such contracts can reach execution at such high prices, they still had a strong impact on the market.

Source: Rossa Primavera News Agency

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