As power providers face $1.5 trillion in margin calls, Europe might see a terrible “Lehman Brothers” scenario. Here’s how regional governments are responding.

European power companies are under pressure due to the wild swings in natural gas prices, which have been made worse by the suspension of supplies from the Russian Nord Stream 1 pipeline. These power producers are now facing liquidity issues and margin calls from brokers.

The most important supply line to Europe, Nord Stream 1, may not be able to provide any natural gas during the impending winter, therefore governments there are considering their options to assist the producers. This will be crucial in keeping the continent warm.

The majority of Europe has united in opposition to Russia’s invasion and months of attacks in Ukraine, and in reaction, Russia has repeatedly indicated that it is prepared to halt Nord Stream 1. Since that has happened, the markets have reacted accordingly by becoming volatile. Cost certainty has become, well, a pipe dream as prices have soared and dropped with astounding speed.

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Nord Stream 1, a crucial connection that connects the Russian city of Vyborg to Greifswalk in northern Germany, might further exacerbate Europe’s energy problem at a time when the continent is just emerging from a scorching summer that stressed the system.

Gas price increases were brought on by Russia’s decision to halt Nord Stream, compounding the continent’s problems in the face of a falling Euro and collapsing financial markets.

The risk for European utilities is more complicated than Nord Stream running dry. Considering the 2008 housing crisis in the United States, when risky loans became due on mortgages that purchasers eventually couldn’t afford, some are speculating that this represents a type of “Lehman Brothers” moment for Euro power providers.

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