Have you ever turned on a European soccer game and noticed the ads that are on the side of the field? One of the ads you see a lot is for Gazprom. Gazprom is the Russian government owned energy production company from which a large number of European countries receive a bulk of their oil and natural gas supply. The problem that a lot of Europe now faces, is that their supply chain is controlled mainly by one company, which is turn is controlled by the Russian government. This allows the Russian government to apply economic pressure in order to achieve their political objectives. From a security perspective, this is far from a good situation in that a rival country has potential sway over political decisions within their sovereign government. The European dependence on Russian energy exports has the potential of negative long-term security ramifications unless drastic changes are made to how they satisfy their energy needs.
First, a little history on how Europe became such a large consumer of Russian energy products. The Russian monarchy decided in the late 1800s that the energy sector had great potential for turning in to a massive income generator, but the did not have sufficient capitol to get started (Goodrich, 2013). They invited outside investment and by the time the 1900s rolled around, had become one of the largest producers, accounting for 31% of the total oil exports in the world (Goodrich, 2013). They continued to produce at a massive rate, exporting energy throughout both world wars. The end of World War 2 left the Soviet Union as one of the last remaining producers that were unaffected by the devastation left on the continent from the war. This made it easy for the Soviets to continue increasing exports to both Eastern and Western Europe through ease of access due to having physical land borders with the European plain. Due to the Communist use of cheap labor to work the oil fields, the Soviets were able to market their product to Europe at up to half the price of the Arabic countries (Goodrich, 2013). This government subsidization of their prices led to European countries flocking en masse to buy oil from the Soviets at a cheaper price. These practices continued through the rest of the twentieth century until Vladimir Putin came into power in 2000. One of his main policy changes was bringing the entire Russian energy sector back under state control (Goodrich, 2013). This led to them renegotiating new energy deals at higher rates with European countries who had no other choice but to accept the prices due to the monopoly Russian energy had on their supply chain (Goodrich, 2013). Today, Russia supplies 40.6% of the gas and 28% of the oil exports to the European Union, more than any other source from within the EU or out of it (EU imports of energy products – recent developments, 2018).
Russian exports of energy products to Europe is facilitated by one important piece of infrastructure, pipelines.
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