Europe has been able to keep the lights on by using cheap natural gas from Russia.
Europe's energy security is under threat. There is pressure to cut Russian natural gas because of the war in Ukraine. Russian President Vladimir Putin has threatened to cancel existing energy contracts if payment is not made in rubles, a move that could be a violation of sanctions.
In March, US President Joe Biden promised to deliver more liquefied natural gas to Europe this year to help with the energy crisis, a move that could potentially provide some relief to Europe.
America has a strong position in the gas industry compared to Europe. The two got there.
The US used to have to import a lot of its natural gas. According to the US Energy Information Administration, America's natural gas imports peaked in 2007.
The US has become a net exporter of liquified natural gas, the supercooled version of the fuel that can be transported on ships. The shift can be attributed to the large-scale deployment of technology in the US. The US is in a race with Australia and Qatar to be the top exporter of liquified natural gas.
The natural-gas market in the US came about as a result of a worldwide shift from coal to cleaner fuels. Natural gas is seen as a clean alternative to coal and oil.
Natural gas output from Europe and the UK fell by more than half from 2010 to 2020 due to a conscious effort to phase out the fossil fuel. Concerns about the environment contributed to a fall in exploration activity in the North Sea.
Matthew Pitzarella, a coleader of the energy industry team at law firm Buchanan Ingersoll Rooney, told Insider that Russian natural gas was easy to get and cheap so as countries began turning from coal and nuclear, they increased their natural gas usage.
Europe was not going to depend on Russian natural gas or any other fossil fuel forever.
The continent will be carbon neutral by the year 2050. It was looking to natural gas as a transition fuel in order to generate all of its energy from renewable sources.
There was a global shift away from fossil fuels due to climate concerns. Saudi Aramco CEO Amin Nasser said in a May 23 interview that energy companies became more cautious about long-term projects.
This led to underinvestment in traditional fuel sources to ensure energy security during the transition to renewable sources.
What happened in Russia-Ukraine masked what would have happened.
Davide Oneglia, a senior economist at London-based consultancyTS Lombard, told Insider that Europe was facing an energy supply crunch due to weak winds last summer.
The war in Ukraine is causing a rethink of the transition to renewable fuels.
Oneglia said that you always have to rely on something that can produce energy.
The European Commission said in a document that the EU would have to burn coal for longer.
After years of shunning the sector, some big investors like pension funds and endowments are starting to look at putting money into it.
The energy transition is going to be more complicated, according to energy historian Daniel Yergin, who spoke at the World Economic Forum in Davos on May 24.
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