Energy and Our World

This article originally ran on Forbes.com on January 7, 2025. All rights reserved.

Daniel B. Markind is a Forbes.com energy column contributor. The views expressed in this article are not to be associated with the views of Flaster Greenberg PC.

As I predicted might happen in a previous article, Ukrainian President Volodymyr Zelenskyy stopped Russia from exporting oil and natural gas pumped in Russia through pipelines traversing Ukraine to Austria, Hungary and other European countries. This ended a longstanding energy partnership between Ukraine and Russia that, until Zelenskyy’s recent announcement, is one of the few areas of cooperation that had survived Russian President Vladimir Putin’s now almost three-year-old invasion of his neighbor and the commencement of the Ukrainian war. However, if anyone thought the situation caused by the war could not get more out of control than it already is, not only for Ukraine and Russia themselves but also for the rest of Europe, things are about to get very real as an Arctic cold front bears down on Europe and much of the Northern Hemisphere. (Source).  

In the first trading day after Ukraine ceased the flow of Russian gas and oil, benchmark natural gas prices in Europe surged 4%. (Source). And that was before the extent of the anticipated cold front had even become clear. Now, as many more people throughout the Northern Hemisphere brace for the anticipated, record breaking cold, the availability of gas for heat will likely become a life and death issue for hundreds of thousands, if not millions of people. Under these circumstances, historically speaking, spot prices in the affected areas will often surge, making the availability and affordability of gas used for heating all the more problematic. 

Already, European leaders are worried about the effect of natural gas prices on industry as a whole. (Source).  Despite the constant news for the last few decades about “global warming,” Europe has seen consistently colder temperatures on average since 2016. This has resulted in Europe depleting its natural gas reserves to a point where, in early 2025, they now are at dangerously low levels over most if not all of that continent.  Already, spot market prices for electricity are at their highest levels since February 2023, and this is before the real cold begins.

Into this mix Ukraine’s recent action now adds the unavailability of Russian crude and natural gas for parts of Europe that remain dependent on Russian energy. Austria, Slovakia, and Moldova (a non-EU country) are or will be the most likely nations affected by this Ukrainian stoppage, which the most reliable estimates say will probably cost Ukraine $1B annually in lost transshipment fees alone. However, for Gazprom, Russia’s largest energy company, the predictable loss of revenue will be much more than that, as much as $5B in lost revenue annually. (Source).  While none of Austria, Slovakia, or Moldova is a European power, the loss of Russian gas will mean more competition on the spot market, resulting in higher prices on the European benchmark exchange, the Dutch TTF Natural Gas Futures. That will no doubt mean even more pressure on both Russia, and especially Ukraine, to find a way to end their war, which, as previously noted, is now almost three years old.

Meanwhile, on January 20 Donald Trump will be inaugurated President of the United States for a second term. Mr. Trump has made no secret of his desire to get this war over with as quickly as possible, and he has many times expressed his disdain for the idea of NATO countries, especially the United States, not to mention the EU generally, continuing to fund Ukraine with no discernible end in sight to the war. Thus, many foreign policy analysts predict that there will be more pressure put on Mr. Zelenskyy to find a way to reach compromise with Mr. Putin, and to end all of the fighting once and for all. (Source). In recent days, Zelenskyy has approached the EU countries asking for more support as the Trump inauguration nears. (Source).  However, Ukraine’s European neighbors may be less receptive to Mr. Zelenskyy’s requests for more military largess if their people are virtually freezing in their homes and their budgets are being eviscerated by massive natural gas cost increases.

With only two weeks remaining until the Trump inauguration, the weather has added itself into the unpredictability of European affairs. For Volodymyr Zelenskyy and Ukraine, this cold front could prove to be the proverbial straw that breaks the camel’s back in how any cease fire negotiations with Russia might ultimately play out. Having stopped the flow of Russian natural gas through his country, Zelensky may feel he is striking a huge blow against Russia, and he certainly is. However, he is also making both Europe and him more vulnerable to weather events the longer that the war continues.

Mother Nature has now taken up the challenge. We will be seeing how humans react to a force mightier than any known to date, even counting the massive economic and military support that the West has been supplying to Ukraine since the war with Russia commenced.