The energy crisis hitting Europe is rooted in a number of factors, including geopolitical tensions, dependence on fossil energy, and a failure to invest in renewable energy sources. Since the last few years, Europe has faced major challenges in meeting the energy needs of its citizens, especially after Russia’s invasion of Ukraine. Sanctions against Russia, which is Europe’s main supplier of gas and oil, contributed significantly to the dramatic spike in energy prices. Energy price spikes have been seen in various sectors. Natural gas prices soared, reaching new records in European markets. In addition, electricity prices also increased, following the increase in raw material costs. Many European countries reported increases of more than 50% in energy prices compared to the previous year. As a result, household and industrial consumers are starting to be burdened with increasingly unaffordable energy bills. Governments in many countries are trying to reduce the impact of this crisis. Several countries implement subsidies to ease the burden on consumers. For example, Germany and France introduced energy aid packages with the aim of maintaining people’s purchasing power. However, this kind of support is not always wise, because it requires the government to take over costs, which can actually drain the budget and increase public debt. Europe’s energy infrastructure also faces serious challenges. Many countries have not yet fully transitioned to renewable energy, despite progress in increasing wind and solar energy capacity. Delayed energy transition projects have resulted in Europe failing to achieve the expected energy security. Delays in the construction of power grids and energy storage have led to increased dependence on natural gas, further exacerbating the situation. This energy price volatility has a long-term impact on inflation. When energy prices rise, the costs of other goods and services also soar. Europe’s central bank has now responded by raising interest rates to tackle inflation, but this move could also curb already sluggish economic growth following the COVID-19 pandemic. As a result, people began to lose confidence in long-term economic stability. In this context, energy companies are struggling to adapt to rapidly changing conditions. Many companies have reduced production and focused on efficiency in an effort to survive amid surging prices. Additionally, there has been a shift in interest towards investment in clean energy projects and technological innovation. However, to achieve a successful energy transition, clear policy guidance and support from governments is needed. Overall, the energy crisis in Europe is a stark reminder of the importance of diversifying energy sources and investing in renewable technologies. Sustainable energy policies are becoming very relevant in responding to the challenges faced by European countries. Many analysts believe that these rising prices force Europe to accelerate the transition to green energy and reduce dependence on a single energy source, such as natural gas.