Economy: ROUND: Nord Stream 1 without gas

BERLIN / LUBMIN Industry Feels Prepared – Fear of Recession

Gas supply in Germany is currently still stable. Even a permanent shutdown of Nord Stream 1 would likely not have immediate consequences. However, in the event of a shortage, the industry would be the first to feel the effects of downtime. On the other hand, private households, public institutions, and the healthcare sector such as hospitals are considered protected.

Especially in the energy-intensive chemical and pharmaceutical industries, the concerns about gas shortage are high. According to the Chemical Industry Association (VCI), the sector is Germany’s largest gas consumer with a 15% share. It needs gas as an energy source and as a raw material for further processing into products – such as plastics, drugs and fertilizers. Gas prices are “breathtaking,” said VCI president Christian Kullmann. In order to be able to deliver, the industry stocks up so that it can continue to supply customers in the event of a crisis.

“We are preparing to limit or even stop gas imports,” said VCI Managing Director Wolfgang Große Entrup. Companies in the south and south-east of Germany will suffer first from the pipeline system. In the north and west, however, port supply is easier.

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Other companies have also long prepared for emergencies. However, the Union of German Chambers of Commerce and Industry fears a deep recession in Germany if the supplies of Russian gas are completely lost. President Peter Adrian told the German news agency that DIHK did not rule out that in the winter months, economic output could in such a case fall by as much as double-digit percent. Adrian called on the federal government to provide assistance so companies can use alternatives to gas more quickly.

Scientists cautiously optimistic

How high is the actual risk of a bottleneck? Looking at the recently published calculations of the Federal Network Agency, you can certainly be worried, because at least three of the seven scenarios resulted in a gas shortage in the coming winter.

In turn, the more recent joint diagnosis of several German economic institutes leads to the conclusion that even if Nord Stream 1 is immediately and completely stopped, this year there is no risk of gas embolism, even in the worst case, and in the coming year only in quite unfavorable scenarios.

Economists have calculated 1,000 combinations of 26 factors, explains Stefan Kooths of the Kiel Institute for the World Economy (IfW). This simulates various scenarios. Halfway through the forecasts, scientists see no more gas gaps this or next year. This is mainly because the tanks have become full. However, they do not give everything clear. A complete halt to supplies in July would result in a gas gap of 157,600 gigawatt hours for the coming year in the worst of 1,000 scenarios. Considering the 200 worst case scenarios, only 23,800 gigawatt hours are missing.

Warning against a social “test”

But what about high energy prices? “Even if we don’t fall into a gas emergency, the gas will remain expensive,” Bundesnetzagentur chief Klaus Müller told Focus. The consequences of the current gas shortage have not yet reached consumers in terms of price. “This can quickly mean an extra burden of 2,000 to 3,000 euros a year for the family. Often, the next vacation trip or a new washing machine is not possible anymore. ” Germany is threatened with “gas poverty”.

If prices do rise to such an extent – for example because the Federal Grid Agency allows energy suppliers to pass higher prices on to consumers – Consumer Minister Steffi Lemke (Greens) believes that a moratorium on electricity and gas cuts is necessary . On the one hand, it is important to ensure that suppliers are able to maintain energy supplies domestically, Lemke told Bild am Sonntag. “And on the other hand, in such a crisis, no one should cut off electricity or gas because they are in arrears with the bill.”

The president of the German Institute for Economic Research (DIW), Marcel Fratzscher, warned of a “social ordeal.” Movements like the yellow vest in France are also possible in Germany, said Fratzscher “Handelsblatt”. “The current crisis may be the last straw that will break the camel’s back in increasing social divisions.” The head of DIW called for a wage increase and a steady increase in social benefits. Politicians should not try to “silence people with placebos, such as one-time payments.”

In an interview with Deutschlandfunk, Federal Economy Minister Habeck also spoke of the upcoming “trial”. If the “nightmare scenario” of gas shortage becomes a reality, he expects heated debates, Habeck said. “This will put Germany on a decisive test that we haven’t had in a long time,” he added. “This will burden social solidarity to the limit and possibly even beyond.”

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