Lambert here: The article does make some assumptions about the relative autonomy of European governments who are America’s “allies.” Who’s to say whether this “exodus” is unintended?

By Irina Slav, a writer for with over a decade of experience writing on the oil and gas industry. Originally published at

  • Very high energy costs are forcing European companies to cheaper places like the U.S.
  • The Inflation Reduction Act could benefit chemicals, batteries and clean energy industries.
  • Industries such as manufacturing and fertilizer production are especially vulnerable to high energy prices.

Soaring energy costs in Europe are shutting down businesses and threatening a bloc-wide recession. Yet not everyone accepts this fate. Some companies are moving to cheaper locations: the U.S.Steel giant ArcelorMittal earlier this month that it would slash by half production at a steel mill in Germany and a unit at another plant, also in Germany. The company said it had based the decision on high gas prices.

Separately, ArcelorMittal more recently warned it expected its steel output for the fourth quarter of the year to be 1.5 million tons lower than it was in the final quarter of 2023, again citing excessive prices along with slumping demand.

At the same time, ArcelorMittal earlier this year announced it had plans to expand a Texas operation, describing the state as a “region that offers highly competitive energy and, ultimately, competitive hydrogen.” It is just one of the Europe-based companies that are beginning to see the benefits of growing in the United States, according to a report by the Wall Street Journal’s David Uberti.

Uberti cites industry executives as saying that it has not exactly been a difficult decision to make. Basically, according to the report, it comes to a simple dilemma between folding in the face of exorbitant energy bills and moving to a much cheaper energy environment, complete with fresh incentives for certain industries.

Chemicals, batteries, green energy—these are all areas set to benefit substantially from the Inflation Reduction Act passed last month. No wonder, then, that companies active in these areas see it as a good idea to either move or expand in the United States.

Meanwhile, in Europe, more and more companies are switching into survival mode. That’s because, for a lot of them, the time is coming to renew their electricity supply contracts with utilities. Thanks to energy inflation, these are set to be much higher than the contracts for the current year, with front-year prices reaching over $1,000 in France and Germany.

The New York Times’ Liz Alderman wrote in a recent story that energy-intensive industries such as manufacturing and fertilizer production were especially vulnerable precisely because of their higher energy needs. She cited the case of a glass-making major, Arc International, which is also shutting down production units to cope with higher energy costs.

The European Commission has promised to help by capping the revenues of electricity generators that use a primary source of energy other than gas, and taxing the “excessive” profits of oil, gas, and coal companies. According to the EC, raking in cash under the current circumstances was wrong, even though profits in themselves were something good.

Plans are to collect some 140 billion euros—almost equal to the same sum in dollars—to distribute among households and struggling businesses. Critics, however, note that this will not be enough to save companies from going under. European Aluminium, the industry association, even said energy costs could result in the breakdown of the aluminum industry in Europe.

“I think we’ll muddle through two winters,” the chief executive of refractory products maker RHI Magnesita told the Wall Street Journal. However, if gas doesn’t get cheaper, Stefan Borgas said, “companies will start to look elsewhere.”

It looks like businesses packing and leaving for cheaper jurisdictions is yet another unintended consequence of the policies favored by European governments, especially in the energy department. It is also one more risk for the survival of the bloc as a competitive industrialized formation in the future. And this risk presents one more conundrum for governments and the administration in Brussels to solve in short order.

This entry was posted in Energy markets, Guest Post on by Lambert Strether.

About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.