Sporadic Gas Flows from Russia to Germany

After ten days of maintenance, gas flows from Russia to Germany were turned back on three days ago. Flows were only at 40% of capacity, but there was nevertheless relief in the market. It could have been worse. Russian officials declared force majeure at one point, and it wasn't until Putin interfered on behalf of the Germans that it was clear that there would be gas.

However, the flows have now been cut by half. They are currently at 20% of capacity. The officials were right, it appears. It's impossible to keep the gas flowing at anything near full capacity. Putin may insist on giving the Germans what they need, but reality is getting in the way.

It's impossible to say how much of this is political theatre. But I suspect that this is mostly staged, as I predicted two weeks ago. We're being fed plausible stories that we have no way of checking. The only surprise is that the Russians are playing a meaner game than I foresaw. They are putting more pressure on the Germans than I had expected. But there's a logic to this that I overlooked. Now, rather than winter, is the best time to play hard ball.

It's summer, and there's not much need for Russian gas. The negative effect of reduced gas flows can be mitigated by drawing on reserves. The public is spared at the present by drawing on savings for the future. When winter comes, and the Germans find themselves unable to meet demand, Russians can rev up supply to 100%, and there will still not be enough.

This game plan would make Putin look relatively good both now and during winter. Putin is playing a game in which he's on the side of the German people. He's fighting hard to keep the gas flowing. It's the German politicians, and faceless bureaucrats both in Germany and Russia that are the problem.

When blame is passed around this coming winter, Putin comes out clean and pristine because he has managed to increase the gas flows from 20% to near full capacity. It's not his fault that German reserves are depleted so much that there has to be rationing.

Putin understands the effect of time on people's perspective. Most people don't think much beyond the present, so it will be very difficult to explain to the German public that shortages during winter has to do with reduced deliveries during summer, especially if deliveries from Russia are at near full capacity when agony hits.

Vladimir Putin

By Kremlin.ru, CC BY 4.0, Link