Germany's inflation remains high The gas crisis is still difficult to resolve

【Reporter's Connection: The World Under the Influence of the Russian-Ukrainian Conflict】

Since the Russian-Ukrainian conflict, Germany's inflation and energy crisis have intensified. At present, the price of all kinds of food and daily necessities in Germany is rising, and the demand for state subsidies is getting louder and louder. Various options, such as tax cuts and wage increases, are being debated among different interest groups. In an interview with the German media, German Chancellor Scholz called for people to unite and cope with price increases. Recently, Scholz invited senior representatives of employers and trade unions to discuss coordinated responses at the Chancellery. Still, he set the tone before the meeting: "The current crisis will not end in a few months." ”

Some time ago, the fear of food price increases has just calmed down, and a new wave of price increase panic has followed, mainly from concerns about natural gas supply. Germany's Federal Network Administration, which is responsible for the supply of natural gas pipelines, has warned that Russia could completely interrupt gas transmission to Germany. This is because, recently, Russia has been gradually reducing the supply of natural gas through the Nord Stream-1 pipeline for technical reasons. In a few days, the pipeline will usher in an annual maintenance period. Annual maintenance work will begin on July 11 and usually lasts about 10 days. At this time, the natural gas flowing through Nord Stream-1 will be interrupted. At present, germans are very worried that Russia will not open the gas pipeline faucet again after repairs. German Economy Minister Habeck has repeatedly expressed such concerns.

Germany has always had a large dependence on lower-priced Russian gas. In order to alleviate the pressure of gas supply and ensure supply, the second gas pipeline "Nord Stream-2" built between Germany and Russia has just been completed thanks to the efforts of previous German governments. But against the United States, as well as some European countries, Germany had to abandon the pipeline. Since taking office, Habeck has firmly opposed Germany's energy dependence on Russia. His most important job after taking office was to find suppliers around the world that could replace Russian gas, but the effect was not obvious, and the proportion of expensive American LNG in Germany rose sharply.

Germany wanted to fill up its tanks when natural gas was running low in the summer to ensure a normally warm winter at least a few months later. But things are changing rapidly, and no one can guarantee that this plan will be realized. German politicians have no better way to do this, except to give the people a "preventive shot" and warn in advance, and calling on people to save energy has become the preferred solution.

Klaus Mueller, chairman of the Federal Networks Administration, which carries out gas pipeline transmission, worries that the upcoming regular maintenance of the Nord Stream-1 gas pipeline could "turn into more protracted political maintenance." The implication is that whether Russia can send gas over and how much it can send is still unknown. Mueller called on all home and apartment owners to quickly inspect and repair gas boilers and radiators and adjust the settings. Doing so, he says, could reduce gas consumption by 10 to 15 percent. Hubbeck's advice is more specific, he solemnly advises people to reduce the time they take showers, saying that he never showers for more than 5 minutes, and mainly washes only the three key parts of the body.

Germans are also worried about being "legally" frozen this winter. Because German politics considers that if there is insufficient energy, it will reduce the legal temperature of winter heating and reduce the heating time. Hamburg's environment minister, Kelstein, said domestic hot water supplies could be reduced. He told Le Monde: "In the event of a severe gas shortage, hot water can only be supplied at certain times of the day in an emergency. "This is bad news for most Germans who lack independent hot water supply equipment for their homes."

At present, German energy supply companies are still struggling, and they have to buy expensive energy everywhere in order to ensure supply. The German government is amending the Energy Security Act, and if parliament passes the amendment, energy supply companies will be allowed to pass on the high costs of energy imports to consumers, but this will lead to larger social problems.

More than 55% of Germany's 40 million households use natural gas for cooking and heating. Jens Sudekum, professor of international economics at the Düsseldorf Institute for Competitive Economics and member of the Scientific Advisory Board of the Federal Ministry of Economics, told the German media that if there is an energy shortage, the original 100 euros a month gasoline fee of ordinary households will rise to 500 to 600 euros, and ordinary families will spend 3,000 to 4,000 euros a year to pay for additional gas, which will be a matter of survival for them.

The energy problem and the gas crisis will also directly affect the basis of Germany's affluent life after the war. Household gas can quickly be diverted to other energy sources, but German industry struggles to leave natural gas, which is both an energy source and a feedstock. One-third of Germany's industrial products need to be supported by a stable supply of natural gas. Before the pandemic, 37% of German gas imports were directly used for industrial production. Germany's important chemical production uses more than 15% of Germany's natural gas imports, and 4% of the imported natural gas goes to the chemical company BASF.

Experts believe that if there is a third stage, which the economy minister said, that is, the highest stage of natural gas tension, Germany will have to ration natural gas supply, restrict the use of natural gas by private and corporate enterprises, and price spikes will be inevitable, possibly 5 to 7 times higher than they are now. That could mean some factories have had to shut down, shortening working hours or even laying off workers, Sudekum said. Most economists are not optimistic about the possibility of a 3.2 to 8 percent recession in Germany. Unemployment, poverty and the size of the national debt will all rise significantly as a result. The German economy, while not collapsing, will clearly falter.

Uniper, Germany's largest importer of natural gas, turned to the government for help because it was overwhelmed. Fears of a gas crisis in Germany are becoming increasingly apparent. Habeck, who personally interrupted the approval process for the Nord Stream-2 gas pipeline and called on the German people to "freeze for freedom", does not seem to have prepared enough for the current situation. Experts here believe that only calling on the German people to reduce the use of natural gas can not fundamentally solve the problem, and the most critical thing at present is to quickly find alternative energy sources. Today, Green Party leaders, who have long opposed the use of coal, have also had to support the start-up of coal power generation. There is also speculation that Green Party leaders may change their position on Germany's use of nuclear power in the future.

(Berlin, July 8 , 2017 - Wang Huaicheng, reporter of this newspaper in Berlin)

Source: Guangming Daily