By Iris An
(Image: creative common license)
As the temperature drops below 60°F this week, heaters, hot tea, blankets, sweaters, and hot air from air conditioners are returning to our lives in Nashville.
At the same time, our European friends don’t seem to be enjoying a longer summer: temperatures in London fell below 51°F, with Berlin at a slightly better 59°F, and Amsterdam at 56°F, while the Nordics are facing an autumn well below 40°F.
With winter approaching Europe, it is simple to see how a significant energy crisis resulting from the Russian-Ukrainian war would make this winter much more unpleasant. However, shifting your perspective to a micro-economic view, it is less likely to imagine how products that have long fallen out of favor with customers will resurface as a last resort for surviving the long winter: electric blankets.
A few decades ago, electric blankets were once called the “secret power” for the old generation of Chinese to drive away the cold in the winter, warming the cold beds of countless people. However, electric blankets have steadily gone out of favor in China due to the abundant supply of energy and the popularity of heating devices such as air conditioners and electric heaters.
Because of their small scale and poor market demand, several domestic firms producing electric blankets have been labeled as a “sunset industry,” a declining industry that has past its peak or boom times.
Who would have expected that the primary business for the electric blanket in China, the Rainbow Group, would see a stock price surge?
According to customs data, the monthly quantity of Chinese electric blankets imported into the EU27 in January this year was 189,000, which increased to 521,000 in June and quickly rose to 1.29 million in July: a nearly 150% year on year increase, and online searches for the products have increased nearly 470%. A typical double electric blanket costs approximately 200 rmb ($28) in China, while on the Amazon platform, the cheapest can be sold for about 40 euros (about $39)and the most costly can cost up to 100 euros ($97). Wholesale is undoubtedly less expensive than retail, but because of mass production, manufacturers’ costs will be lowered, and profit margins will inevitably expand.
“I’ve been making electric blankets for 35 years and have never seen such a surge in orders,” said Niu Rushe, founder of Beijiren, one of the leading electric blankets producers in China.
Although the price of electric blankets in Europe is often greater than the price on the Chinese e-commerce platform, it is still less expensive than using natural gas in European countries.
Since the beginning of the Russia-Ukraine crisis, Western European countries have begun to cut off Russian energy supplies as a way to penalize Russia. Natural gas is not only in low supply in Western Europe, but its price is also skyrocketing, surging from approximately 1,297 euros(about $1260) per 1,000 cubic meters in June to roughly 2,632 euros (about $2560) per 1,000 cubic meters in August this year.
Heating accounts for up to 62.8% of residential energy use in the EU, followed by domestic water (15.1%), and then lights and appliances (14.5%). Previously, the monthly gas expenditure of European homes was essentially less than 100 euros (approximately $98), but in the last year, as a result of the Russian-Ukrainian conflict, gas prices have risen dramatically, and ordinary household spending has climbed to 300 euros (about $291). This is still in the backdrop of winter not having fully come.
Nonetheless, the EU maintains that even without Russian gas, Europe will be able to survive the winter. However, the current scenario in Europe appears poor despite the harsh tongue of the politicians. In the face of an impotent government, cold-stricken Europeans can only help themselves by purchasing electric blankets and heaters from China in order to survive the winter. Unfortunately, because energy has a conduction effect, a lack of natural gas in Europe has immediately caused the price of electricity to soar. According to Sky News, one-third of British homes are having difficulty paying their energy bills.
Today, the typical European pays more than 400 euros ($389) per megawatt-hour per month on power, nearly twice as much as last year. Although the price of power is increasing, when compared to the cold and bone-chilling experience, Europeans can only pick the former. In China, Europeans are buying not only electric blankets, but also electric heaters and induction cookers.
According to GFK figures, 600,000 electric heaters were sold in Germany from January to June, an increase of about 35% over the same time last year; in July, German merchants reported a 500% rise in electric heater sales. Electric heating, as opposed to electric blankets, consumes significantly more power. As a result, several European restaurants have learnt from Chinese restaurants to import induction cookers from China to cook vegetables and soup in order to save on gas expenses. Because burning natural gas or electricity is still expensive, many European families can only turn to another heating fuel — wood.
As the market price of wood doubled, many Europeans forewent their weekends and went to the forest to harvest wood and fuel for their homes. However, these forest resources are protected by regulation; collecting some firewood is allowed, but cutting trees is not. The most significant consequence of the surghng natural gas price in Germany, in Berlin, Stuttgart, and other places, is that all types of wood theft conduct have become a new focus of the police department with the highest number of unlawful cases, despite repeated prohibition.
To be fair, the Russian-Ukrainian crisis is not the only variable impacting Europe’s energy issue: since years ago, the EU has been supporting the use of sustainable sources of electricity in order to protect the environment.
The idea sounds solid, but unfortunately not solid enough to create power.
Take, for example, Germany, which is promoting the EU’s proposed worldwide climate target, plans to phase out nuclear and coal power by 2030 with new sustainable energy sources providing 80% of the electricity supply. During this time, Germany intended to supply energy during the transition phase by using natural gas, foreign power purchases, and renewable energy generation. However, while wind, solar, and other new energy sources are beneficial, their growth will indeed take time. As of 2020, Germany’s reliance on coal power generation still amounts for 25% of total, making it difficult to totally forsake coal power in the medium future.
Germany’s bottom line is that it has an adequate supply of natural gas and electricity during the transition period: natural gas from Russia and the majority of energy from nuclear power from France. However, Russia has now blocked the supply of natural gas to Europe, leaving Germany defenseless; France, which has been suffering from severe drought and is now running low on energy, could barely afford to export electricity to Germany. At the same time, Switzerland is purchasing electricity from German power firms at a high cost this year. All factors added together result in a widespread dearth of power in Germany, while a considerable amount of electricity is exported to Switzerland and other countries.
If the lack of electricity is bearable, as internal cooperation still can possibly provide basic supply, natural gas is something money cannot purchase. As a result, Germany’s position as the “class representative” of European environmental policy is very awkward: ambitions can hardly match with the assault of winter.
Since early September, the temperature in Berlin has dropped to 45 °F. Under the impact of this year’s meteorological trends, the weather will likely become colder with the onset of winter. Germany’s total stored natural gas capacity as of September 20 was 221.1212 terawatt hours (TWh), according to EU statistics. Although Germany has previously agreed with the UAE to acquire around 137,000 cubic meters of natural gas by sea via LNG, this is significantly less than Nord Stream 1’s one-day capacity, which is a drop in the bucket. Germany, on the other hand, utilizes 955.27 TWh of natural gas every year. This means that Germany’s natural gas supplies will be depleted before the end of the winter.
In the face of all these genuine issues, the energy crisis will be the most significant test for Germany this winter, and it is also a concern for the rest of Europe.