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Russia shuts off Nord Stream natural gas pipeline to Europe

Yahoo Finance Live anchors discuss the latest surrounding Europe’s energy crisis.

Video Transcript

[WHOOSHING]

- So here is something that is not very happy for most of the people, unfortunately, in Europe who are paying their energy bills. The energy crisis in Europe has been worsening. Russia has now turned off its supply of natural gas into the rest of Europe. And Russian officials say the Nord Stream pipeline will stay off until sanctions against Moscow are lifted.

Now, there are a lot of ins and outs here. Initially the Nord Stream was closed down for maintenance. Then they were going to start it up again. Then they said there's a leak. And they are blaming Siemens equipment for that, that they need to fix it. Siemens is saying but the gas could still flow even, with this leak. So there's some back and forth here.

But the bottom line is we have seen natural gas supply dwindle. We have seen prices spike. And now we are starting to see European nations really step in in a big way to try to help their citizens and help companies with all of these higher costs.

- Yeah, it's a big problem, at a time where the eurozone continues to grow at a slow rate and continues to battle very high inflation, coming into an event like this. And a good note by Krishna Guha-- he follows the Fed and central banks around the world-- noting that despite what is happening, or just in addition to what's happening now with natural gas and energy costs, you still have an ECB that is likely to meet later this week and jack up rates even more. So that is compounding, I think, the pain, or likely to combat the pain on households.

- So just to give some background here on the acuteness of this problem here, Finland is calling this an energy industry Lehman Brothers moment with these costs going higher. Goldman Sachs out with a note saying that energy bills for European households will go higher by 2 trillion euros, which at current rates is about $2 trillion, at their peak early next year. So we are talking about huge, huge increases in people's energy bills over in Europe. And how badly this will bite depends to some degree on how cold the winter and how severe their winter will be.

Well, there's a new prime minister in the UK, Liz Truss, who has just gone to visit the queen. And so she's now officially--

- Most be cool, right?

- --prime minister. Sure. So she is now looking at a package in the multibillion-dollar-- multi tens of billions of dollars, around $46 billion in US dollars, to support consumers there, to cap the energy bills. And other nations, like Finland, like Sweden, are trying to put some money out there, too, not just for citizens, but again, for corporations, because we talk about individual energy bills, but natural gas is used heavily in manufacturing. And, obviously, companies need to heat their facilities as well.

- Yes, they do. And if you're wondering, if you're seeing this news and you're like, well, why are Julie and Brian talking about this, keep in mind companies are global. They're multinational. They do a lot of business in the eurozone and various parts over there. And if those businesses are being hurt in terms of profits, best believe it's going to be reflected in their overall financial statements, and maybe their stock prices.

- Well, and not only that, you can look at what's happening in Europe now as potentially a precursor of what could happen around the globe in the years to come, not because of necessarily geopolitical conflict, but because of when you have stressed energy grids, stressed energy supplies, and that are sort of on the edge, and then you have something to push them over the edge. And California is an example of it right here in the United States, where there's a heat wave there. The power grid has been under stress. It looks like that California regulators have pulled back just from requiring rolling blackouts. But that is an example of what can happen not when you have a war necessarily that's cutting off supply, but weather events and climate change events that are affecting the supplies as well.

- It has to be solved, too. Look, you have California wanting to go to all electric vehicles, what, by 2030? I mean, it's something they have to figure out. I mean, you can't put people on a schedule to charge their cars. If they need their car, they need their car.

- OK, I got to mention one more thing here. OPEC+ is also cutting production by 100,000 barrels a day. And this was something that was preceded by some comments from the Saudi oil minister last week or two weeks ago. So not entirely a surprise, but nonetheless something else that is going to put upward pressure on oil prices.