The Great Recession caused the disappearance of 20 businesses in the United States. Soon another one may be added to them, but already in Russia.
In the context of shortages, rising prices and sanctions, gas exports become illogical. This product begins to acquire such great benefits that the sale ceases to be the most profitable option for its use.
Gas is becoming a means of attracting new industries to Russia.It’s about industries which are located in countries that previously bought Russian gas.
Instead of euros and dollars, which are difficult for the Russian leader to own due to sanctions. Putin can get technology, intellectual capital, modern equipment, new jobs and the ability to create added value. In addition, Russia will be able to weaken hostile countries.
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All this is much more profitable than the money of states that are actually fighting against Russia.
Paradox. But the opinion that gas has risen in price is wrong. Gas has risen in price not everywhere and not for all consumers. The cheapest gas for businessmen is in Russia. In 2022, the average cost of gas for industrial consumers in Russia is $70-80 per 1,000 cubic meters. Compared to 2021, the price increase is 3-5%. Prices are controlled by the Russian government.
For comparison, the most expensive gas for European businessmen who buy it on the exchanges. In August, the average price of such gas was $2.121 per thousand cubic meters. From October 2021 to August 2022, the exchange price of gas in Europe increased by 231%. On some days, the price of gas may increase by 30% in the short term. And the peak price level can reach $3,500 per thousand cubic meters. Which is almost 50 times more than in Russia!
Between super-cheap gas in Russia and super-expensive gas on the stock exchange in Europe, one could choose an average price. This average price depended on the ability to negotiate between the seller and the buyer. For example, Serbia bought pipeline gas from Russia under a long-term contract at $270 per 1,000 cubic meters . But Moldova first bought for 1882 dollars. And then the country lowered the price to $1,060 per 1,000 cubic meters.
Putin’s message to European businessmen
However, the opportunity to get the average price in the past. And all because the opportunity to get a low cost of gas did not become the basis for the Europeans to provide political concessions to Russia. Europeans thought that gas was just a commodity. The Russians thought gas was a political tool.
First, the Russians stopped supplying gas through pipelines. And then two of the five Russian gas pipelines to Europe were blown up. As a result, gas cooperation between Russia and the EU has actually ended. But the debate about what gas is continues. Having failed to reach an agreement with European politicians, Putin turned to European businessmen. To do this, he created a gas hell in the EU.
The reaction of European businessmen to Putin’s message
Now each of the European businessmen independently decides whether gas is a commodity or a political instrument. It will be possible to understand what the majority of businessmen think only in a couple of years. However, it is already clear that not all entrepreneurs think that gas is only a commodity. When the choice is between closing a business and relocation, many choose relocation. Recognizing thereby that gas is a political tool. So far, European businessmen are replacing European politicians with American ones. European companies have begun moving production to the US.
But in the US, gas is more expensive than in Russia. In the US, the average cost of gas for industrial enterprises is about $240 per thousand cubic meters. For comparison, in Russia the price is $70-80 per thousand cubic meters. The US also has different logistical and tax conditions than Russia.
The war in Ukraine will end sooner or later. The level of enmity with the Russians will decrease. Therefore, over time, European businessmen may prefer Russia to the United States. Especially when you consider that Putin can increase the attractiveness of Russia.
He has no other choice but to act out of the box. In conditions when more than 5 thousand sanctions have been made against Russia the economy cannot be improved by conventional methods. The EU has done everything to hinder the functioning of the Russian economy.
The Russian economy cannot work in its former form. So she will work in a new form. The actions of European businessmen moving business to the USA confirm this. Business moves away from politicians who interfere. Russian gas businessmen left European politicians. But European businessmen retained the opportunity to turn to Russian politicians.
Every European businessman can now become a politician and decide whether to negotiate with the Russians or not. In conditions when it comes to the life or death of a business, the answer is obvious. The US will not satisfy all the fugitives from the EU gas hell. Some businessmen will secretly or openly go to Russia. As a result, the EU can be deindustrialized. This can happen even if European politicians think that gas is just a commodity!
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