Germany Faces Economic Explosion: What Is the Cause?

Amid reductions in gas supplies from Russia, Germany may be on the brink of industrial outflow and a social explosion due to the continued rise in energy prices. Bloomberg reports on this situation.

Fuel prices in Germany have doubled in just a few months, and the forecast for electricity prices has risen to €570 per megawatt hour for the year, up from around €40 just two years ago.

The article notes that Berlin had intended to rely on Russian gas to power its power plants and factories, but is now facing unprecedented pressure with a decline in industry and business due to a sharp decrease in supplies after the imposition of anti-Russian sanctions.

The energy shortfall is significantly contributing to a dramatic decline in industrial indicators for the European Union's largest economy. In June, chemical production in Germany collapsed by eight percent.

The publication highlights that Europe is experiencing a severe energy crisis, as Russia's main gas pipeline, the 'Nord Stream,' is operating at only 20 percent of its total capacity. Additionally, on August 19, Gazprom announced that gas supplies through the pipeline would be halted for three days, from August 31 to September 2, for planned maintenance of the only operating gas pumping station.

Supply issues have arisen among EU countries due to improper maintenance and delays in the return of turbines from the German company Siemens, which were used to supply fuel to the Portovaya compressor station (CS).