What would happen if Putin shut off the gas to Germany? The scenarios that the Economics Minister has ready are sometimes drastic.
In view of the gas crisis and rising energy prices, there is growing concern in the cities that municipal utilities will run into serious economic difficulties – and that security of supply would be jeopardized. “The pressure on the municipal utilities increases every day,” said the general manager of the German Association of Cities, Helmut Dedy, the German Press Agency. If the public utilities were to pass on the sharply rising prices, many households would be overwhelmed by the costs. If they don’t pass it on, many municipal utilities could face bankruptcy, he warned. “The supply of many households would no longer be safe”.
Federal Minister of Economics Robert Habeck had also warned of a “price explosion” for gas. He was referring to a possible total failure of Russian gas supplies. Russia invaded Ukraine at the end of February and has since been at odds with the EU states that support the government in Kyiv.
Annual maintenance work on the Nord Stream 1 pipeline, which usually lasts ten days, begins on July 11. Then no gas flows through the line. The big concern is that Russia won’t turn on the gas tap again after the maintenance. The gas flows from Nord Stream 1 are already only at 40 percent of the maximum capacity.
Federal Network Agency warns of rising gas prices
The Federal Network Agency warns on its website: “Companies and private consumers must be prepared for significantly increasing gas prices.” It is important to save as much gas as possible.
Dedy called for the federal and state governments to prevent municipal suppliers from getting into serious trouble. “Otherwise the security of supply in Germany would be in danger.” It is predominantly the municipal utilities, from which many households obtain gas and electricity, water or heat. The pressure to act grows every day.
The federal government must immediately put the municipal suppliers under the protective umbrella for companies. He also called for affected municipal utilities to be quickly granted liquidity aid through guarantees and loans. In his opinion, an insolvency moratorium must also be initiated in the short term in order to suspend the obligation to file for insolvency.
Transport companies, municipal hospitals, schools, baths and other public facilities would also feel the consequences of the energy crisis. In addition, Dedy called for an honest debate: “We have to talk about it: What comfort can we do without and what remains necessary on site? It’s about street lighting and traffic light switching, hot water in public buildings, museums and sports halls, fans in schools or air conditioning. »
Habeck: Quasi “economic warfare” dispute
In order to assess the risk of a lack of gas, one would have to be able to look into the head of Russian President Vladimir Putin, Habeck said on Saturday evening at an event of the weekly newspaper “Die Zeit” in Hamburg. “But you see a pattern, and that can lead to this scenario.” You are dealing with “a quasi-economic warfare dispute”.
Habeck said the Russian calculation was to keep prices high in Germany in order to “destroy the country’s unity and solidarity”. He referred to the beginning of the steps from stopping gas supplies to Poland and Bulgaria to the current situation.
Germany is trying to react to this with energy-saving campaigns and the use of coal. Logically, the next step could follow the previous reduction in Russian gas.
Minister sees two options
With a view to suppliers such as Uniper, the largest German gas importer who got into trouble, Habeck said: The companies that have imported a lot of Russian gas “have a real problem”. They would have to fulfill their supply contracts with public utilities, for example, but they would have to buy much more expensive gas elsewhere.
There are two options: Either the state supports the companies with tax money. “Or you allow the companies to pass on the prices.” This is provided for in the Energy Security Act, which introduced the so-called car-free Sunday in the 1970s. Discussions about a necessary change in the law were ongoing.
A paragraph that would allow companies to pass on prices outside of the contract has not yet been activated. Because this is “a very, very sharp sword”. The company’s customers would then get the full price adjustment immediately. The government is still working on other options “that may not drive the wedge so sharply into society”.