IT WAS CUTE WHEN THE TRUMPISTS THOUGHT VLAD HELD THE WHIP:

European countries depended on Russian energy products, especially natural gas, for their basic economic health and welfare, hence why energy was largely excluded from the original sanctions against Russia. Then, as the country's military offensive in Ukraine began deteriorating, Russia began drastically reducing the amount of natural gas it sent to Europe in a bid to inflict economic pain on its foes and to gain the leverage necessary to reduce EU support for Ukraine. Today, the EU is being forced to decouple from Russian energy as gas exports to the EU have fallen by nearly 90% compared to pre-pandemic levels.

However, thanks to a rapid buildout of liquefied natural gas capacity, new sources of energy imports, reduced consumption, and fortuitously warm weather, the EU has significantly improved its energy outlook since this summer--and the worst possibilities for this winter look to have been avoided. The energy crisis is still a significant drag on European growth and a massive contributor to inflation, and markets still anticipate elevated natural gas prices until 2026, but the situation now poses less of an existential risk. Critically, European economies have been able to buy themselves more time--the most valuable resource in their efforts to become independent of Russian energy.

Before 2022, Germany received more than 150 million cubic meters per day of Russian natural gas from the Nord Stream pipeline and had no capacity to import any seaborne liquefied natural gas (LNG). Today, the opposite is true: nothing flows through the Nord Stream pipeline after its apparent sabotage earlier this year, but Germany has just started importing LNG through the newly built terminal at Wilhelmshaven and has more LNG import capacity on the way.

The trend is the same across the continent--Europe (in the above chart, including the UK) has been able to replace practically all of the lost Russian energy imports by drawing record amounts from global LNG markets and getting some assistance through rising pipeline imports from Norway, North Africa, and other areas.

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