Fight Russia. What to buy more than Russian gas? A well-thought-out plan to “reduce” inflation

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The monthly long struggle between the EU and Spain against “Russian aggression in Ukraine” leads to paradoxical consequences. In June Russia replaced Algeria as Spain’s second-biggest supplier of natural gas after flows from the North African country decreased because of diplomatic conflict between the countries.

On June 8th, Algeria urgently suspended the treaty of friendship and good neighborliness because of Spain’s position on Western Sahara. In March, for some reason the government of Pedro Sanchez issued a statement on the issue of Western Sahara and fully supported Morocco’s plan to grant autonomy to this territory as part of the African kingdom. Spain had no serious interests in Western Sahara, but the response from Algeria, which is in conflict with the Moroccans, was quite tough.

Nevertheless, in early June, the government of the North African country announced that it intends to continue fulfilling all its obligations to supply gas to Spain. No apology came from Sanchez even though they should have been made at least for the sake of the well-being of the Spanish citizens. It inevitably led to a decrease in gas supplies.

It was necessary to find new sources of gas, and suddenly it turned out to be … evil Russian “imperialists” and Putin.

According to gas network operator Enagas SA, imports from Russia have doubled compared to May and account for 24% of total Spanish demand. Supplies from Algeria have declined and account for 22% of demand. Despite cursing Russia when populism demands it and the political turmoil resulting from the Russian invasion of Ukraine, Spain purchased 8,752 GWh of natural gas from the country in June, compared to 6,587 GWh in the same month of 2021. This is 32.9% more than last year.

The second main beneficiary of the Spanish-Algerian conflict in the narrow sense, and Russia’s “opposition” in the broader sense, was the United States, which remains the largest supplier of gas with a share of 30% of Spanish demand. The accumulated data for the first half of the year shows that US gas imports grew 4.3 times, increasing from 18,184 GWh in the first half of 2021 to 78,078 GWh between January and June 2022. Similarly, the 10,618 GWh of gas imported from the US in June 2022 represents a 764.65% increase from the 1,228 GWh that was purchased in the same month last year, i.e. they were multiplied by more than eight times.

Who lost because of this situation? These are Spanish consumers of gas and electricity, and, given the general inflation, simply all Spaniards. Now the price of gas and fuel is the main reason for the rise in prices for all goods and services in the country. Inflation proves month after month that it is the first economic problem for the country. This is a disaster for households that feel it on their pockets every day. It also brings trouble for the public budget and finances, which, despite the improvement in tax collection, is forced to take on additional costs in order to contain the decline in the welfare of Spanish families. This is also a problem for financial institutions and banks, which were forced to raise rates. They were hardly seen a few months ago, and they threaten to put an end to economic growth and small business development.

According to the first data from the National Statistics Institute (INE), the Consumer Price Index (CPI) rose to 10.2% year-on-year in June, reaching its highest level since April 1985. This index is much higher than expected and significantly higher than in May (8.7%) and April (8.3%). Prices rose by 1.8% on a monthly basis.

Consequently this is the punishment not only for an ill-conceived policy in the field of energy and natural gas purchases, but also for the passion of the Spanish government for foreign policy conflicts in the interests of “third countries”.