Loss of cheap energy harmed EU economy

The bloc saw oil and natural gas prices soar after it drastically reduced Russian imports over the Ukraine conflict European Commission President Ursula von der Leyen has acknowledged that the loss of cheap energy imports has dealt a blow to the EU economy and that the bloc now faces prices far above those of its main competitors. The EU drastically reduced Russian oil and gas imports following the escalation of the Ukraine conflict in 2022, while Brussels has committed to completely phasing out Russian fossil fuels by 2027. Energy costs have since surged across much of the bloc, with the US-Israeli war on Iran adding further pressure. Speaking at the La Rencontre des Entrepreneurs de France (REF) business conference in Paris on Thursday, von der Leyen said that"for a long time, the European economic model relied on"several key factors, including inexpensive energy imports. However, the pillars that once underpinned the bloc's prosperity have now"disappeared,"she added. Without addressing the reasons behind the rise in energy costs, von der Leyen noted that"European prices remain two to three times higher than in the United States and China." German Chancellor Friedrich Merz acknowledged last month that Berlin's self-imposed embargo on Russian energy was the main cause of the"ongoing energy crisis"that has eroded the competitiveness of German industry. Before 2022, Russia supplied approximately 55% of Germany's natural gas imports. French President Emmanuel Macron similarly warned earlier this year that the EU was in"emergency mode"over soaring energy costs after replacing Russian pipeline gas with more expensive liquefied natural gas (LNG) from the US. The Financial Times reported in June, citing projections by consultancy Wood Mackenzie, that the EU could enter the coming heating season with its lowest gas reserves in 15 years. Some member states have since balked at further restrictions on Russian LNG as Brussels pushes to end long-term imports beginning next year. Against this backdrop, the bloc has recently stepped up purchases of Russian LNG, Bloomberg reported earlier this month. Despite the resistance and renewed purchases, the European Commission has maintained that it will proceed with the total phase-out of Russian energy imports, even in the event of physical shortages or the threat of power cuts. Moscow has repeatedly described EU sanctions, particularly those targeting its energy sector, as self-defeating measures that undermine the bloc's competitiveness. Russia, meanwhile, has redirected much of its energy exports elsewhere, primarily Asia.