Jan 25, 2022 - Podcasts

Europe needs Russia's gas, but at what price?

The U.S. has warned Russia of crippling sanctions if it invades Ukraine. But it might be hard to get Europe to support that, considering Russia provides almost 40% of its natural gas supply.

  • Plus, understanding this week’s stock market boomerang.
  • And making babies in outer space.

Guests: Axios' Ben Geman, Matt Phillips and Miriam Kramer.

Credits: Axios Today is produced in partnership with Pushkin Industries. The team includes Niala Boodhoo, Sara Kehaulani Goo, Julia Redpath, Alexandra Botti, Nuria Marquez Martinez, Sabeena Singhani, Lydia McMullen-Laird, and Alex Sugiura. Music is composed by Evan Viola. You can reach us at [email protected]. You can text questions, comments and story ideas to Niala as a text or voice memo to 202-918-4893.

Go deeper:


NIALA BOODHOO: Good morning! Welcome to Axios Today! It’s Tuesday, January 25th. I’m Niala Boodhoo. Here’s how we’re making you smarter today: understanding yesterday’s stock market boomerang. Plus, making babies in outer space. But first, today’s One Big Thing: Russia’s energy leverage over Europe.

The US has warned Russia of crippling sanctions if they invade Ukraine, but as Europe's main natural gas suppliers, it might be hard to get Europe to support that because Russia provides almost 40% of its natural gas supply. Axios energy reporter Ben Geman has been reporting on how Europe's energy reliance is a crucial shield for Vladimir Putin. Hi Ben.

BEN GEMAN: Hi, thanks for having me back on.

NIALA: Ben, 40% reliance on Russia for natural gas for Europe seems Significant. Can you put that in context for s?

BEN: Yes. So the situation in Europe, vis-a-vis energy and natural gas, in particular was already very fragile and difficult for the Europeans, even before this crisis with the Ukraine, right? So last year for a whole variety of reasons, we saw these record natural gas prices in Europe, so the reasons range from weather to demand bouncing back from the pandemic to Russia already having lower supplies. And for all those reasons, Europe has already been feeling a lot of economic pain, so this is a really fraught time from an energy standpoint for Europe, and that is one reason why gaining unity on how to respond to this Russian aggression is going to be very difficult, given the tough position that the Europeans are in because approximately 40% of Europe’s natural gas does come from Russia, which is just a gigantic mega supplier.

NIALA: How did Europe become so reliant on Russian energy? Why haven't they been able to diversify?

BEN: So to some extent they have, right? So Europe has significantly increased its use of renewable electricity. And Europe has also been increasingly to some extent importing natural gas from other countries, including from the United States, which has emerged as a significant supplier of liquified natural gas exports. But look, I mean, Russia, and the US and a few other countries are just the kind of big gas heavyweights. So despite efforts to diversify Europe is still quite reliant.

NIALA: If Russia did cut off Europe from its natural gas supply, what would the consequence be?

BEN: The consequences would be tremendous in the near term there would be just massive price spikes. Um, you know, I think to some extent the Russians are cognizant of the fact that they do not want to lose a major consumer of their gas. So if they simply become too unpredictable, then that would hasten the efforts to find alternative suppliers elsewhere. Russia needs to make these calculations between wielding its leverage, which Vladimir Putin has certainly not been hesitant to do in the past, with also recognizing that it is going to need to want to maintain such a large scale customer.

NIALA: Is the US working, especially now during this crisis, to try to increase that supply?

BEN: I mean, this is a tough situation because here's the thing, US exporters have already been redirecting some of their flows toward Europe. It's not so clear how much US LNG exports can expand, especially quickly enough to sort of address the sort of immediate crisis that we're sensing, but it does seem like the US in concert with other countries wants to try and create some kind of buffer. It is certainly nowhere close to being a silver bullet. There's a whole number of reasons why LNG is both extremely important to the leverage of, um, other countries, including the US in navigating this crisis, while at the same time, simply not sufficient to make up for any large, certainly make up for any large scale shortfall.

NIALA: Ben Geman is Axios’ energy reporter. Thanks, Ben.

BEN: Thanks for having me back on.

NIALA: In 15 seconds, we’re back with why the stock market was so volatile on Monday.


NIALA: Welcome back to Axios Today. I'm Niala Boodhoo. It was a wild day with the stock markets yesterday. With a selloff for the S&P 500 first seeing its sharpest daily drop in a year. The last time we saw the index in this territory was at the beginning of the pandemic, and market watchers started the day calling this a correction. But by the end of Monday, the market made a comeback. What does this boomerang mean? Axios’ markets correspondent Matt Phillips is here to explain. Hey Matt, welcome to Axios Today!

MATT PHILLIPS: Hey, it's great to be here. Thanks for having me.

NIALA: So, what happened yesterday?

MATT: Oof. Uh, it's uh, it's anybody's guess actually. You know, this is all sort of happening in real time, and nobody really knows exactly what went on. It seems like what's happening is a real showdown between the investors and The Fed. The Fed has made a lot of noises about trying to raise interest rates. They're starting their meeting today that is expected to end in an announcement tomorrow. And, the markets are really focused on what they're going to do.

NIALA: As you mentioned, The Fed starts meeting today and we're going to not hear more about that until Fed chair Jerome Powell has a news conference tomorrow. What are market watchers wanting him to say?

MATT: Starting during the pandemic, The Fed has printed trillions of dollars and essentially pumped that money into financial markets. And that has helped stocks go up. Now, The Fed is starting to make noises about cutting back on some of that support, which has been important to the economy, but really important to the financial markets. So they would love to hear Mr. Powell say, oh, well, we're going to take our time. And the expectation is that he might turn around and sort of soften the kind of really inflation-focused language that he's had over the last few months might have been behind the real turnaround yesterday.

NIALA: Matt, at the beginning of the pandemic, the markets recovered really quickly, even as unemployment was skyrocketing. It was like the market was in a different reality than everyone else. Is the same thing happening now?

MATT: It exists in this constant state of expectation about the next 12 to 18 months. So in that sense, it is always less concerned about what's actually happening right now than what's going to happen in the future. You know, we hadn't seen legitimate inflation in decades, you know, and now we have this searing experience of price increases that none of the really smart people at The Fed expected to happen. And stick around as long as they have. So that really throws a wrench into the expectations.

NIALA: So Matt, what's the bottom line here?

MATT: Look, the, you know, financial markets go up and down, you know, far more than the actual activity in the economy. Hopefully you have some automatic buying options set up on your 401(k). And you're going to be buying some of these stocks at a discount, and that's going to help you over the long term. At least that's the theory.

NIALA: Matt Phillips is one of the co-authors of Axios’ Markets newsletter. Thanks, Matt.

MATT: Thanks a million

NIALA: Before humans can settle off earth, scientists need to figure out how, even if, people can reproduce in space. So wrote Axios space reporter Miriam Kramer. So I asked her here to tell us more. Hi Miriam.

MIRIAM KRAMER: Hi, thanks for having me.

NIALA: Miriam, there's a lot of billionaires who want us to eventually start colonizing other planets - but we can't really live in space if we can't reproduce right?

MIRIAM: Yeah, exactly. So, Jeff Bezos has this idea of millions of people living and working in space, on space stations and, you know, settlements around the solar system. You know, if you're going to have a self-sustaining population, you need to figure out reproduction at some point, and you have to do it with plenty of time before you're actually creating those cities and creating those space stations. Now is sort of the time to start asking these questions in a lot of ways.

NIALA: And so what do we know about reproduction in space right now?

MIRIAM: So the studies that have come out have been pretty limited. At the moment we know that sperm of bovine - so, cows - swim in the same way they do in space as they do on earth and that radiation doesn't seem to harm them, at least on the international space station. There was a study done on a Russian satellite that actually had a group of rats that were able to mate but no live births resulted from that, even though some of the rats did get pregnant. It's really stressful to be in space. And when you're under a lot of stress like, mammals don't really like to reproduce. There are many more unknowns than there are knowns at this point.

NIALA: Part of the reason why we're talking about this is because you are about to go on maternity leave. And we know we're not going to see you on the podcast for a while, but this is a good story to keep thinking about for a while.

MIRIAM: Thanks. I can't wait to come back.

NIALA: Miriam Kramer is Axios’ space reporter. Thanks, Miriam.

MIRIAM: Thanks as always.

NIALA: That’s it for us today. We love to get your feedback. Thanks to Craig in Salt Lake City who tweeted at me about yesterday’s segment on hyper partisan candidates and redistricting - you can too! my handle is Niala Boodhoo. Thanks for listening - stay safe and we’ll see you back here tomorrow morning.

Go deeper