Historical Energy Trade Deficit of the European Union in 2022
Econovis Team
The conflict in Ukraine and the subsequent sanctions imposed by the European Union on Russia, a major exporter of gas and oil, have initiated a second significant energy crisis, reminiscent of the world oil crisis of 1973–1974 stemming from the Arab Petroleum Exporting nations' oil embargo.
The energy crisis of 2022 had a profound impact on the European economy, with the energy trade deficit to GDP ratio escalating from 1.9% in 2019 to 4.1% in 2022. This crisis triggered widespread shutdowns among energy-intensive European industries, particularly in the chemical and metal sectors. Governments responded by nationalizing utilities and allocating billions of euros to subsidize energy costs for households.
The EU's energy trade deficit experienced a substantial surge, escalating by 131% from Euro 281 billion in 2021 to Euro 649 billion in 2022. Notably, natural gas imports emerged as the primary contributor to the EU's energy trade deficit in 2022, comprising 56% of the total, followed by oil and related products at 37%.
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Meanwhile, the average annual prices of crude oil and U.S. natural gas rose by 41% and 65%, respectively, in 2022. In contrast, Europe's natural gas prices soared by a remarkable 150%, from $16/mmbtu in 2021 to $40/mmbtu in 2022. Significantly, the escalation in natural gas prices in Europe began in the months leading up to the Ukraine war, when compared to pre-pandemic levels. The conflict itself exacerbated the situation, fostering concerns about potential disruptions to Russian gas supplies. Consequently, natural gas prices in Europe reached unprecedented record highs. However, by mid-2023, European natural gas prices had retreated to levels similar to the first half of 2021 at around $10/mmbtu.
In 2023, the value of fuel imports for the European Union decreased by around one-third. The quantity of the European Union's imports from Russia for oil and products and natural gas dropped by less than one-fifth and half, respectively, in 2023 compared to 2018. Meanwhile, imports from the United States surged substantially for oil and products nearly two times and for natural gas four times in the same period.
After overcoming the energy crisis in 2022, the European Union is poised to enter a new era in energy. The United States has assumed a prominent role as the primary fuel supplier, particularly for natural gas, replacing Russia. To diversify energy sources and reduce dependence on Russia, the EU is actively seeking suppliers for crude oil and natural gas from regions such as Africa and the Middle East. Additionally, partnerships with countries like Azerbaijan, Brazil, and Kazakhstan are being explored.
This transition involves a shift towards renewable energy sources, greater energy efficiency, and a concerted effort to reduce overall energy consumption. The goal is to decrease energy intensity across the board, signaling a strategic move towards a more sustainable and resilient energy future for the European Union.
Source of data: Eurostat