Continues after advertisingFour decades ago, I spent a year working in the United States government, on the staff of the Council of Economic Advisers.(For those wondering: yes, this was the Reagan administration; no, I was not a Republican.) It was technocratic work.I was the leading international economist;the top domestic economist was a guy named Larry Summers.What happened to him?Anyway, I spent most of my time in the office, crunching numbers.However, I did attend a few cabinet meetings, and I remember in particular one involving European plans to build a gas pipeline that would greatly increase gas imports from the Soviet Union.Some employees were looking for ways to stop the project, but no one had any good ideas.But these officials were not wrong to worry that dependence on Soviet – later Russian – gas would create a strategic vulnerability.Indeed, Europe's dependence on Russian gas has become the biggest risk now facing the world economy.Russia is a third-rate economic power, but it and Ukraine are, or were, major suppliers of some important commodities.When Vladimir Putin invaded his neighbor, prices for wheat – much of which is grown in the “Black Earth” belt that stretches across Ukraine, Russia and Kazakhstan – and for oil, much of it extracted in the Ural Mountains, soared.More recently, however, much of the price shock of the war has receded.According to the Food and Agriculture Organization of the United Nations (UN), world food prices gave up most of their rise during the war.And oil prices have also dropped substantially from their peak.Continues after advertisingWhat is happening in these cases is that both agricultural commodities and oil are essentially traded on world markets, which, for better or worse, allows for a lot of flexibility.For example, Russia can sell its oil to India instead of Europe, and Europe can, in turn, buy oil from the Middle East that would otherwise have gone to India.Add in a good US wheat harvest and factors like weak oil demand from a troubled China, and the overall commodity price shock is turning out to be less than many feared.There is, however, one exception, and that is incredible: European natural gas.Understand how Putin is winning the energy war against EuropeMoscow is making millions of dollars every day to finance the invasion of UkraineHeatwave in Europe worsens energy supply already affected by war in UkraineDrought prevents France from cooling nuclear reactors, Germany from transporting coal across the Rhine and Norway from generating hydroelectric power.Energy crisis in Europe forces countries to prepare for 'terrible winter'Germany approves limits on heating public buildings to save energy and France prepares population for 'sacrifices'Unlike the oil and wheat markets, the gas market is not entirely global.The cheapest way to ship gas is typically through pipelines, which divides the world into separate regional markets defined by where the pipelines pass.The main alternative is to ship liquefied gas, which is how it reaches markets not served by pipelines, but this requires shipping and specially designed terminals, which cannot be added quickly in the midst of a crisis.Which brings us to the current moment.Russian gas deliveries to Europe are down by around 75% from the previous year.The Russians claim to be experiencing technical difficulties, but no one believes this;this is clearly a de facto embargo designed to pressure the West to cut support for Ukraine.And the result was an incredible rise in gas prices in Europe.If you want a historical comparison, the recent roughly tenfold increase in European gas prices outweighs the oil price shocks of 1973-4 and 1979-80, which played a big role in the stagflation of the 1970s.It's probably no coincidence that the last price increase started in mid-June.That was about when it became clear that Russia's second offensive in Ukraine - the one that followed its disastrous initial attempt to take Kiev - would not achieve decisive results, and that the military balance would likely shift in Ukraine's favor as weapons from the West arrived.So Russia turned to economic warfare.Continues after advertisingEurope is making up the shortfall in part by importing liquefied natural gas, especially from the United States, which produces a lot of shale natural gas.But capacity for transporting LNG is limited, which is why US natural gas prices, while rising, have not risen as much as European prices.How will all this unfold?Sophisticated and advanced economies have an enormous capacity to adapt, and Europe has been accumulating its gas stocks to face the winter;the continent will find ways to manage, even if it is getting very little Russian gas.But a bout of high inflation is inevitable, and a European recession seems extremely likely.That said, macroeconomic considerations are likely secondary to the question of how Europe will deal with the extreme hardship that many households will face with rising energy bills.Governments will have to find ways to alleviate this burden – a tricky problem when they also want to preserve the incentives to save energy.Gas pricing policy is likely to be extremely turbulent in the coming months.Will Putin's economic blackmail succeed in undermining Western opposition to his aggression?Probably not.Among other things, the countries that seem less resolute in the face of Russian pressure — hello Germany — have also done the bare minimum to support Ukraine, so it doesn't matter much if they lose heart.But whatever happens now, we are receiving a practical lesson in the dangers of becoming economically dependent on authoritarian regimes.Economists have long been skeptical of national security arguments for limiting international trade, which have often been abused in the past.But Russia's actions lent much more force to these arguments./ TRANSLATION LÍVIA BUELONI GONÇALVESComments are exclusive to Estadão subscribers.