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European energy prices soar after Russia cuts off a natural gas pipeline to Germany

A MARTINEZ, HOST:

Throughout Europe, energy prices have soared, and there's talks of rationing and blackouts. This comes after Russia cut off a key natural gas pipeline to Germany. It's a move seen as retaliation by the Kremlin for Western sanctions on Russia over its invasion of Ukraine. This energy crisis, though, is not limited to Europe alone. As NPR's Jackie Northam found, countries around the world are also feeling the impact.

JACKIE NORTHAM, BYLINE: Energy markets are highly integrated networks. A disruption in one part of the world, like Europe, is going to have a knock-on effect across the globe.

DANIEL YERGIN: The war in Ukraine has destabilized and is reshaping global energy markets.

NORTHAM: Daniel Yergin is an energy specialist at S&P Global and author of "The New Map: Energy, Climate And The Clash Of Nations." He says before the Ukraine war, oil and gas markets flowed in response to supply and demand. He says now it's become more fragmented and politicized, and it's felt across the board.

YERGIN: You have factories shutting down in Europe. You know, this affects airlines as their prices go up. Seventy percent of the cost of food is energy, whether it's fertilizer, whether it's processing, whether it's transportation. So an energy crisis affects food prices, so this does feed into inflation.

NORTHAM: At the heart of the crisis is Europe. Many countries there decided to wean themselves off Russian energy after the February invasion of Ukraine. Russia has retaliated, curbing or cutting off oil and natural gas to many parts of Europe. Henning Gloystein with the Eurasia Group says that's created a race for new sources of energy.

HENNING GLOYSTEIN: Because the Europeans are trying to replace every single fossil fuel source from Russia with anything else, they are hoovering the market for gas, for coal, for oil. And that has driven up the prices for all these products from China to Japan and India.

NORTHAM: Gloystein says the European buying spree has left other countries struggling to get their own critical supplies.

GLOYSTEIN: That is Africa and access to gasoline and diesel. It is Pakistan and access to natural gas. And it is Brazil - access to fertilizer for their agricultural industry. We're focusing on rich countries at the moment, but the hardest pain is happening in poor countries.

NORTHAM: Kristine Berzina with The German Marshall Fund says replacing natural gas in particular will be tough. You just don't turn on the taps to increase production.

KRISTINE BERZINA: The U.S. isn't able to suddenly export a lot more because it takes about two years to construct an export facility for liquefied natural gas. The same is true of Qatar, Nigeria, Australia, elsewhere.

NORTHAM: Even before the war, there was a looming energy crisis, in large part because of years of underinvestment, says Amena Bakr with Energy Intelligence, an industry publication. Speaking from Dubai, she says Western countries should have thought about that before sanctioning Russia.

AMENA BAKR: A lot of people will have the view that Russia is at fault here, but why don't they look at their response from the Western states? The sanctions were just announced without a plan B. They're just scrambling right now.

NORTHAM: Daniel Yergin says the energy shortages are forcing countries to do things they didn't expect to or said they wouldn't do.

YERGIN: Japan is starting up more of its nuclear power plants. Germany, which was going to shut down its last three nuclear power plants, is considering keeping them operating. And, of course, people are burning coal as an alternative to Russian gas right now.

NORTHAM: Yergin says things are likely going to get more difficult in the next few months as winter sets in and more energy is needed.

Jackie Northam, NPR News, Washington.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

Jackie Northam is NPR's International Affairs Correspondent. She is a veteran journalist who has spent three decades reporting on conflict, geopolitics, and life across the globe - from the mountains of Afghanistan and the desert sands of Saudi Arabia, to the gritty prison camp at Guantanamo Bay and the pristine beauty of the Arctic.
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