Energy prices are soaring in Europe, with prices rising up to 10 times the decade average. That could lead to financial disaster and political turmoil, said Will Rhind, founder and CEO of GraniteShares.
Europe’s high energy prices come as Russia, which supplies 40 percent of the European Union’s gas needs, shut down the Nord Stream gas pipeline, citing maintenance.
Rhind said Europeans were in for “very unpleasant surprises” when looking at their gas and electricity bills.
“This is a real problem for people who come in the winter season,” he said. “A lot of these inflationary effects that we’ve seen in the economy will really bite towards the end of this year and early next year.”
Rhind spoke with David Lin, Anchor and Producer at Kitco News.
Political turmoil over energy
The European energy crisis is expected to hit the UK hardest, with its residents expected to lose 8.3 percent of their spending power due to rising energy costs alone. Rhind said “grassroots organisations” had been launched across the UK as Britons refused to pay their energy bills.
“Mass numbers of people are rebelling against paying their fuel bills,” he said. “I think you’re going to see that escalate if something doesn’t happen to reduce the impact of those costs on households.”
He warned that these trends could spill over into political unrest and instability.
“It’s already happening,” Ride said. “Almost on every political agenda was talk of capping fuel prices, talk of some kind of intervention in energy markets.”
Underinvestment in Conventional Energy
Although Russia’s disruption of natural gas supplies to Europe is a major factor behind Europe’s higher energy costs, Rhind pointed out that underinvestment in conventional energy sources such as oil and gas played a role in Europe’s malaise .
“There’s been a serious lack of investment in traditional development particularly oil and gas over the last decade, and that’s actually just making things worse,” he said.
He pointed out that European policymakers had invested in so-called green energy programs such as wind and solar, but that “it hasn’t come online fast enough, to the kind of magnitude that’s needed, to offset these losses that we’re seeing in traditional sources.” energy.”
Rhind added that nuclear power has come “back into the limelight” after many years of being “trapped by the political establishment” and is now considered a “new and reliable source of energy”.
To learn how Rhind thinks higher energy and food prices will affect the global economy, watch the video above
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