Question

Russian war: gas supply and demand Not long after Russian forces invaded Ukraine, another mobilization began. European energy ministers and diplomats started jetting across the world and inking energy deals - racing to prepare for a rough winter should Russia choose to cut off its cheap gas in retaliation for Western sanctions. Since then, President Vladimir V. Putin of Russia has fiddled with the gas tap to Europe repeatedly. Through Gazprom, the Kremlin-controlled gas monopoly, Russia has vastly reduced supplies or suspended them for days at a time - until last week, when it announced that it would indefinitely halt flows through the Nord Stream 1 pipeline that supplies Germany, and through it, much of Europe. Yet when the blow finally came, it provoked more ridicule than outrage among European leaders, who say that by now they would expect nothing less from Mr. Putin and that they have accepted that the era of cheap Russian gas is over, unimaginable as that might have seemed just months ago. In some corners, even as Europe's leaders scramble to blunt the blow from lower gas supplies and higher prices, there is a growing sense that perhaps Russia's weaponizing of gas exports is a strategy of diminishing returns - and that Mr. Putin may have overplayed his hand. Even if liquid natural gas imports to Europe from other sources continue at their record high rate, a study released this week by the research institute Bruegel estimated that a complete stop to Russian supplies would require all of Europe to cut its consumption by 15 percent. European nations that used to rely on Russian gas imports for big chunks of their domestic energy production have been racing to fill gas storage facilities. Germany's are now at 86 percent capacity, Italy's at almost 84 percent. Germany has also leaned heavily on Norway and the Netherlands, which agreed to extend the life of its biggest gas field to combat the energy crisis. As a result, Germany's dependency on cheap Russian gas - once more than half its overall gas imports - decreased to less than 10 percent in August. In Italy, consumption from Moscow has dropped to 23 percent from 40 percent. By Melissa Eddy, Erika Solomon and Anton Troianovski, NYT 1.1 Questions Answer the questions below with no more than 100 words (each question). 1. What happened to gasoline supply in Europe due to Russian invasion of Ukraine War? 2. Provide two examples for complement and substitute for gasoline. 3. What are the effects of the Russian gas supply change on the prices of the complements and substitutes in the previous question. 4. What are the European countries' strategies or reactions against the gas supply and price change, and how this will shift the demand curve of gasoline?

Answer 1

The Russian invasion of Ukraine has drastically reduced Europe's gasoline supply, causing prices to increase and leading to a strategic push for energy diversification and conservation. Substitutes like electric vehicles have become more sought after, while complements face higher operating costs, affecting their demand.

Step-by-step explanation:

The gasoline supply in Europe was significantly reduced due to Russia's invasion of Ukraine. As a result, European countries have been compelled to find alternative sources of energy and become less dependent on Russian gas, leading to efforts in stockpiling other gas reserves and investing in renewable energy. This strategic shift has repercussions on the demand and prices of gasoline substitutes and complements.

Examples of a substitute for gasoline would include electric vehicles (EVs) that use electricity instead of gas, or biofuels like ethanol. Complements to gasoline might include motor oils and tires, which are essential for the operation of gasoline-powered vehicles.

The Russian gas supply change has caused an increase in the prices of these substitutes and complements. As gasoline prices rise, demand for substitutes like EVs may increase, while the higher operation costs could potentially decrease the demand for complements. European nations have resorted to diversifying their energy sources, filling gas storage facilities, and pushing for energy conservation measures. These strategies have the potential to shift the gasoline demand curve to the left, indicating a reduced quantity demanded at each price level.