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'The whole market is in danger of collapsing': Germany warns of a 'Lehman moment' if Russia
Fortune via Yahoo NewsGermany is one step closer to having to ration its gas usage as supply from Russia starts to dry up, and the country’s top economic affairs official is warning that it could lead to an even larger economic spillover effect.
As of Thursday, Germany has entered the second alert level of its emergency gas plan, according to Robert Habeck, Germany’s minister for economic affairs and climate action.
At this level, “security of supply is currently ensured, but the situation is tense,” Habeck’s ministry announced, after gas supplies along the Nord Stream 1 pipeline connecting Russia to Germany began drying up on June 14.
“Even if we don’t feel it yet, we are in the midst of a gas crisis. From now on, gas is a scarce asset,” Habeck said in a statement accompanying the ministry’s announcement.
Habeck added that if supply continues to fall, and prices continue to rise, it could create ripples that would do irreparable and wide-reaching damage to the energy market, in what he likened to a “Lehman Brothers effect,” referring to when the Lehman Brothers investment bank declared bankruptcy in 2008, sending economic shock waves through the global financial system.
“The whole market is in danger of collapsing at some point,” Habeck said.
German markets have been among the hardest hit by the war in Ukraine and Russia’s willingness to use energy exports as a weapon owing to the country’s heavy reliance on Russian gas imports. Russia accounted for 55% of Germany’s gas imports in 2021, and 40% in the first quarter of 2022.
As of Thursday, Germany has entered the second alert level of its emergency gas plan, according to Robert Habeck, Germany’s minister for economic affairs and climate action.
At this level, “security of supply is currently ensured, but the situation is tense,” Habeck’s ministry announced, after gas supplies along the Nord Stream 1 pipeline connecting Russia to Germany began drying up on June 14.
“Even if we don’t feel it yet, we are in the midst of a gas crisis. From now on, gas is a scarce asset,” Habeck said in a statement accompanying the ministry’s announcement.
Habeck added that if supply continues to fall, and prices continue to rise, it could create ripples that would do irreparable and wide-reaching damage to the energy market, in what he likened to a “Lehman Brothers effect,” referring to when the Lehman Brothers investment bank declared bankruptcy in 2008, sending economic shock waves through the global financial system.
“The whole market is in danger of collapsing at some point,” Habeck said.
German markets have been among the hardest hit by the war in Ukraine and Russia’s willingness to use energy exports as a weapon owing to the country’s heavy reliance on Russian gas imports. Russia accounted for 55% of Germany’s gas imports in 2021, and 40% in the first quarter of 2022.
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