Ukraine just stopped Russian gas flows to Europe. Here’s who’s most at risk
The Mitte Combined Heat and Power (CHP) natural gas power plant, operated by Vattenfall AB, in Berlin, Germany, on Wednesday, Jan. 1, 2025.
Bloomberg | Bloomberg | Getty Images
Ukraine halted the flow of Russian gas to several European countries on New Year’s Day, bringing an end to Moscow’s decades-long dominance over Europe’s energy markets.
Russia’s state-owned energy giant Gazprom confirmed gas exports to Europe via Ukraine stopped at around 8 a.m. local time (5 a.m. London time) on Wednesday.
The widely expected move marks the end of a five-year transit agreement between Russia and Ukraine, with neither side willing to strike a new deal amid the ongoing war.
Ukrainian President Volodymyr Zelenskyy said last month that Kyiv was not prepared to prolong the transit of Russian gas, adding: “We will not give the possibility of additional billions to be earned on our blood.”
Russia, which has transported gas to Europe via Ukrainian pipelines since 1991, says European Union countries will suffer the most from the supply shift. Moscow can still send gas via the TurkStream pipeline, which links Russia with Hungary, Serbia and Turkey.
Ukraine will lose up to $1 billion a year in transit fees from Russia due to the stoppage, according to Reuters, while Gazprom is poised to lose close to $5 billion in gas sales.
The European Commission, the EU’s executive arm, said it had been working with EU member states most impacted by the end of the gas transit agreement to ensure the entire 27-nation bloc was prepared for such a scenario.
Slovakia, Austria and Moldova are among the countries most at risk from the stoppage. They were the European countries most dependent on transit volumes of Russian gas in 2023, according to Rystad Energy, with Slovakia importing roughly 3.2 billion cubic meters that year, Austria receiving 5.7 billion cubic meters and Moldova getting 2 billion cubic meters.
In this pool photograph distributed by Russian state agency Sputnik, Russia’s President Vladimir Putin (R) shakes hands with Slovakia’s Prime Minister Robert Fico (L) prior to their talks in Moscow on December 22, 2024.
Gavriil Grigorov | Afp | Getty Images
Austria has insisted it is well prepared for the stoppage, but others were much more concerned.
Slovakia’s Prime Minister Robert Fico warned that Ukraine’s termination of the gas transit agreement would have a “drastic” impact on the EU, without harming Russia. Fico also threatened to cut electricity supplies to neighboring Ukraine.
The prime minister, a vocal critic of the EU’s support for Ukraine in the ongoing war, made a surprise visit to Moscow for talks with Russian President Vladimir Putin shortly before Christmas.
Moldova, which is not a member of the EU, declared a 60-day state of emergency last month over energy security fears.
A total of 56 lawmakers of Moldova’s 101-seat parliament voted in favor of a nationwide state of emergency, which the government said at the time would allow the country to apply a series of measures to prevent and mitigate the threat of insufficient energy resources.
‘A historic event’
Ukrainian Energy Minister Herman Galushchenko described the cessation of Russian gas flows via Ukraine as a “historic event.”
“Russia is losing markets, it will suffer financial losses,” Galushchenko said via Telegram on Jan. 1, according to a Google translation.
“Europe has already decided to abandon Russian gas. And the European initiative Repower EU provides for exactly what Ukraine has done today,” he added.
Separately, Polish Foreign Minister Radek Sikorski hailed the development as a political victory, accusing Russia’s Putin of having tried to “blackmail Eastern Europe with the threat of cutting off gas supplies.”
Steam clouds from the OMV refinery plant rise into the morning sky in Vienna’s suburban town of Schwechat, Austria on November 18, 2024.
Joe Klamar | Afp | Getty Images
The latest data compiled by industry group Gas Infrastructure Europe shows the EU’s gas storage facilities are around 73% full. In Germany, Europe’s biggest economy and largest gas consumer, inventories are currently at nearly 80%.
“Without Azerbaijan or another third party transiting the gas following a swap deal with Russia, the EU will require about 7.2 [billion cubic meters] of gas to be sourced from the LNG market,” Christoph Halser, gas and LNG analyst at Rystad Energy, said in a research note.
“Terminals in Poland, Germany, Lithuania and Italy could forward these volumes to the most affected counties, such as Slovakia and Austria.”
Europe’s energy security
Henning Gloystein, practice head of energy, climate and resources team at Eurasia Group, said Ukraine’s decision to halt the flow of Russian gas to the EU is no surprise given that both Kyiv and Moscow have long said they would not be willing to renew a deal under current war conditions.
In a research note, Gloystein said the expiry of the deal does not threaten EU winter energy security, citing steps taken by EU importers to prepare for the cut in supply and the mild winter weather seen across most of Europe.
Eurasia Group’s Gloystein said gas price moves over the coming months would likely hinge on political developments in the Russia-Ukraine war and remaining winter weather conditions.
“On the political front, there are ongoing talks between some EU members (e.g. Slovakia, where many of Ukraine’s pipelines enter the EU), Russia, and Ukraine to find a compromise that may allow for some resumption of supplies. However, there has been no progress during negotiations around the turn of the year,” Gloystein said.
“On the weather front, expectations are currently for above average temperatures for the remainder of Europe’s winter, which implies the impact of the cuts will be limited,” he added.
The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was last seen up 1.2% at 49.49 euros ($51.1) per megawatt-hour on Thursday, according to New York’s Intercontinental Exchange.
Environment
Ford CEO warns Trump tariffs will ‘blow a hole’ in the US auto industry like we’ve never seen
As automakers brace for new tariffs on imports from Mexico and Canada, Ford’s CEO Jim Farley is warning the extra costs would be “devastating.” Farley said the additional tariffs, which could go into effect as soon as March 1, would be a “blow a hole” in the US auto industry.
Ford CEO says Trump tariffs would be devastating for the US
After Trump imposed an extra 25% tariff on imports from Canada and Mexico earlier this month, Ford’s CEO is speaking out, saying the impacts will be devastating, not only for automakers but also for buyers.
Although the tariffs are on hold for now, Farley said the threats are already creating “chaos” and “a lot of costs” for the US auto industry.
During a Wolfe Research investment conference on Tuesday, Ford’s CEO explained that “President Trump has talked a lot about making our US auto industry stronger, bringing more production here, more innovation to the US, and if this administration can achieve that, it would be one of the most signature accomplishments.”
So far, however, “what we’re seeing is a lot of cost and a lot of chaos,” Farley added. Ford is looking for ways to build up inventory in the US to soften the blow of Trump’s tariffs.
Although Ford is less exposed than rivals like GM and Jeep maker Stellantis, it is still expected to take a hit from suppliers that will be impacted, executives explained at the event.
On the company’s fourth-quarter earnings call, Farley said, “There’s no question that tariffs at 25% level from Canada and Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profits wiped out and an adverse effect on the US jobs.”
Electrek’s Take
The US auto industry is already falling behind China, which Farley called “a major force in our industry.” China is by far the world’s largest EV market, but domestic leaders, like BYD, are quickly expanding overseas, stealing market share from legacy automakers.
BYD sold over 4.25 million vehicles last year. For the first time, BYD sold more vehicles than Honda and Nissan, which are now scrambling to keep up.
Trump’s decision to withdraw federal support for electric vehicles and impose tariffs on our biggest trade partners will only put the US further behind.
Ford, GM, and several others have already pushed back new EV launches and other projects in anticipation, opening the door for overseas automakers to take advantage.
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Environment
Trump tariffs on Canadian oil expected to raise U.S. gasoline prices if enacted next month
A person fills up a fuel tank at a pay-at-the-pump gasoline station in Edmonton, on January 30, 2025, in Edmonton, AB, Canada.
Artur Widak | Nurphoto | Getty Images
President Donald Trump‘s threatened tariffs on Canadian crude oil imports could raise gasoline prices for U.S. drivers if the levies are enacted next month, according to major refiners and energy analysts.
Trump issued an executive order on Feb. 1 imposing a 10% tariff on Canadian energy imports to the U.S., in addition to sweeping 25% levies on goods from from Canada and Mexico. The tariffs are currently on hold until March 4 after Mexico City and Ottawa reached an agreement with the White House.
Refiners particularly in the Midwest have become reliant on Canadian crude imports despite the fact that the U.S. is the largest oil producer in the world, outpacing Saudi Arabia and Russia. This is because Canadian crude is heavier, lower quality and therefore cheaper to purchase, according to Wells Fargo analysts.
Marathon Petroleum processes a significant amount of heavy crude and expects costs to increase if the tariffs on Canadian energy go into effect, CEO Maryann Mannen told investors recently.
“We believe that the majority of that would be borne by the producer and then frankly to a lesser extent the consumer,” Mannen said on the company’s Feb. 4 earnings call. “We’re working with the administration. We’re working with agencies as well as the trade associations to ensure the right people understand the implications of these decisions.”
The U.S. imports nearly 6.6 million barrels per day of crude oil with about 60% coming from Canada, according to Andy Lipow, president of Lipow Oil Associates. Midwest refiners in particular are heavily dependent on these imports with 70% of the crude they process into diesel and gasoline coming from Canada, according to Lipow.
How much fuel prices would rise due to the tariffs depends on how Canadian producers and U.S. refiners respond. In general, a 10% tariff passed to the consumer would increase gasoline and diesel prices by about 15 cents per gallon, Lipow said in a Feb. 2 note.
Canadian prime minister candidate Chrystia Freeland, who previously served as finance minister, has warned that oil producers in Canada have alternatives to the U.S. market.
“There is a danger here for the U.S., and that is Canadians are really angry,” Freeland told CNBC in a Feb. 4 interview. “We will retaliate if we have to. You should be glad that you have us as a reliable energy supplier. We do have alternatives.”
U.S. refiners, however, have “few economically and politically viable alternatives” to Canada’s heavy crude, Mason Mendez, investment strategy analyst at Wells Fargo, told clients in a report Monday. Domestic production could replace some lost Canadian supply but U.S. crude is generally lighter than Canadian oil, Lipow said. Many U.S. refiners have physical limitations on switching totally to light crude oil, he said.
Canadian producers could divert exports from the U.S. East and West Coasts to Europe and Asia instead, Lipow said. This would force U.S. refiners on the East Coast to seek more expensive alternatives in West Africa and West Coast refiners to buy from South America or the Middle East, he said.
In the case of the Midwest, Canada does not have the logistics in place to divert all its exports away from the region, Lipow said. But they would probably try to find other buyers to the extent that they can, he said.
Traders might bid up the price of U.S. crude oil to cover any shortfall in region. Fuel prices might rise by up to 15 cents per gallon as a consequence, Lipow said. But if the tariffs cause local shortages, prices could spike by more than 30 cents per gallon.
The Midwest also does not have easy access to imports through the Gulf Coast because the pipeline system in the U.S. generally runs north to south and west to east, Lipow said.
With few alternatives, U.S. refiners will likely continue to purchase crude from Canada despite the higher cost, Mendez said. They may be able to convince Canadian producers to absorb part of the tariff rather than pass all of it on to the U.S., the analyst said.
“However, even if they split the effects of a 10% tariff, U.S. gasoline prices will likely still rise modestly,” Mendez said.
Environment
Lucid (LCID) CEO predicts ‘exponential’ growth, and it’s not just from selling luxury EVs
Can Lucid (LCID) make 1 million EVs a year? CEO Peter Rawlinson said this is his vision, and Lucid has ambitious plans to achieve it. After launching its first electric SUV, the Gravity, Lucid will enter the mass market with its midsize platform starting at around $50,000. Rawlinson said this is “finally when we compete directly with Tesla,” but the EV maker has even bigger plans to drive growth.
After delivering the first Gravity models in December, Lucid’s CEO claims the electric SUV is “destined to be a landmark product” with an EPA-estimated range of 450 miles.
During the BloombergNEF Summit in San Francisco last week, Rawlinson explained how the company plans to become a powerhouse in the EV space.
Although the Gravity is an impressive-looking vehicle, loaded with tech and a true 7-seater (not a 5-seater, plus two kids in the back, as Rawlinson said many of its rivals offer), it’s what you can’t see that makes the electric SUV so unique.
The Gravity achieves up to 450 miles of driving range with a 123 kWh battery. Rawlinson said the fact that it can achieve such a long driving range with so few batteries is a testament to Lucid’s technology, which he claims is the “most advanced technology in the world.”
Lucid was the first to launch an EV with 520 miles range. At the Summit, Rawlinson claimed that “nobody today is within 100 miles of range of where we were three years ago,” referring to its luxury Air sedan.
Lucid delivered over 10,200 vehicles last year, up 70% from the 6,001 in 2023 and roughly 3,500 in 2022. Rawlinson said the company is seeing “exponential sales growth,” but he expects to see things pick up over the next few years.
Lucid is launching new EVs and tech to boost growth
Following the Gravity, Lucid will launch its midsize platform. The platform will underpin a sedan and crossover, starting at around $50,000. According to Rawlinson, this is when Lucid will “compete directly with Tesla” as direct rivals to the best-selling Model Y and Model 3.
However, as Rawlinson explained, “Lucid does not exist to be a niche luxury manufacturer.” Lucid is in the luxury space “at the moment” because it needs to be for financial support.
It’s the company’s tech that will be Lucid’s trademark. With some of the most advanced tech on the market, it will “cascade down,” reducing the cost to mass produce EVs.
“We want Lucid to be huge,” Rawlinson said. By the early 2030s, he envisions Lucid producing one million cars annually.
Lucid plans to achieve it through progressive steps. After launching the Air, Lucid’s first electric SUV is now hitting the market. In late 2026, Lucid is scheduled to begin production of its midsize platform.
Rawlinson believes Lucid will have a significant advantage by then. Since the battery is by far the biggest cost to make an EV, with some of the most efficient technology, Lucid will be able to offer a competitive range at a lower price point.
Not only that, but Lucid is also developing a new affordable “Atlas” drive unit. Rawlinson claimed the new drive unit will be “an absolute breakthrough” for Lucid and the planet to bring down EV costs.
The company is already licensing its technology to other automakers, which could be an even bigger business for Lucid than selling vehicles.
Last year, Lucid secured a tech partnership with Aston Martin to supply its proprietary powertrain tech for the British automaker’s upcoming electric cars.
Rawlinson said Lucid is in talks with several others about similar licensing partnerships. According to Lucid’s CEO, EV adoption will continue to climb over the next few years, and some OEMs will be left behind. “The train is leaving the station,” he said, and that’s why Lucid is open to strategic alliances through licensing its technology.
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