Watching the daily number of COVID cases and holding our breath that we don’t hear about a new dangerous variant have become daily routines for all of us in the travel industry. Could there be a bigger threat coming this winter to recovery?
Nord Stream 2. If you haven’t heard of it you will. Energy supplies are already tight around the world and they could be getting much tighter and exorbitantly expensive. Bear with me, this really is about the recovery of the travel industry
When I took my oral exams to get a Master of Science degree from Georgetown University, I was asked one question. What do you know about the Soviet (it was 1984) gas pipeline by a panel of State Department experts? In one of the luckiest moments of my life, I was able to not only describe the implications of it but the diameters and exact paths it would take. Most importantly, I added the geopolitical implications for the world. Why lucky? I had just finished drafting a chapter for a book on this very subject for one of the Directors of the Export-Import Bank during my internship there. The same info may serve me equally well in my current career of promoting the recovery of international travel for over 11,000 expert travel advisors. It’s all about energy again.
Just as air traffic is recovering and all are predicting a boom in international travel, we are also facing a current shortage of physical energy commodities (oil, gas, and coal). Unlike the PPP loans and government assistance to get us through COVID, you can’t print oil which we would all need to replace gas supplies.
President Putin has promised to provide more gas immediately through the original Nord Stream pipeline (opened in 2011) that flows from Russia (Vyborg) to Lubmin in Germany to ease a tight market in the EU if the EU approves Nord Stream 2 (which will follow roughly the same path.) Nord Stream 2 will allow Russia to provide more gas to Europe, mainly Germany, bypassing Ukraine and Eastern Europe where current pipelines now flow. Ukraine and Eastern Europe fear that this would allow Russia to strangle them by cutting off fuel supplies so they are urging the EU not to approve.
Geopolitics and Travel
So how does all this geopolitical positioning impact travel? You already guessed, if the EU does not approve Nord Stream 2, and Russia does not provide more supplies through the first pipeline, or worse reduce supplies, this winter will see soaring (and I mean soaring) energy prices all over Europe, the UK and in the US.
Energy prices impact everything we consume from production to delivery. The US will not be immune from the impact of Europe’s troubles even though our domestic production has increased. Inflation will soar and the cost of jet fuel will raise the cost of flights. Shortages may cancel more, and it will trickle down from there to every sector of the travel industry and daily life.
So here we are again. Back to the future of the early 1980s., yet it might be Russia in addition to OPEC this time who holds the cards. My original career focussing on the geopolitics of energy collides with my current work of promoting the recovery of the travel industry post-COVID. Keep an eye on it. I think energy prices, not another COVID variant are our biggest threat this winter.