Europe’s energy crisis shows no signs of abating. Natural gas markets, the crux of the problem, remain on edge as supplies are tight, and traders doubt whether the continent has enough fuel to survive the cold winters without disruption.
The build-up of Russian troops on Ukraine’s border, through which Russian gas flows west, has also added to concerns about whether the gas will run out. Small amounts of gas from Russia, Europe’s main source of fuel imports, have helped drive prices up in recent months.
“There is a risk of a supply shortage that could destroy economic growth and trigger public discord,” said Henning Gloustein, director of energy and climate at political risk firm Eurasia Group. Blackout is possible in the worst case. Mr Gloustein said that if the situation worsens, governments could order factories to cut their gas use to ensure there is enough to keep homes warm.
On Tuesday, gas at the TTF trading hub in the Netherlands hit a record low of about $60 per million British thermal units, as a pipeline that brought Russian gas to Germany was being switched back east. . (European gas prices have doubled this month and are nearly 15 times higher than gas sales in the United States.)
Mr Gloystein said this change of direction may reflect opportunistic trading activity rather than a sinister maneuver on the part of Moscow, but the fact remains that natural gas markets in Europe are set to climb at the slightest stimulus.
Tensions between Russia and the West over Ukraine are unlikely that the massive Nord Stream 2 pipeline from Russia to Germany will open up and bring relief anytime soon.
In a call with reporters on Tuesday, Karen Donfried, the assistant secretary for European and Eurasian Affairs, said Washington considers Nord Stream 2 “a Russian geopolitical project that undermines energy security and the national security of a significant portion of the euro.” does. -Atlantic Community.”
Ms Donfried said the United States is working closely with the new German government to strengthen Europe’s energy security. However, analysts say that although higher prices are attracting an influx of liquefied natural gas into Europe, shipments may not be enough to replace Russian gas or ease the crisis.
Since gas is a major fuel for generating electricity, electricity prices are also rising across Europe. For example, in the UK, static electricity was trading at around £340, around $450 per megawatt-hour, a wholesale metric, on the Apex spot exchange on Tuesday. This is almost three times the average cost of electricity over the year.
Higher gas prices in recent months will eventually lead to an increase in energy costs for households in the UK and other countries. In a recent note to clients, Martin Young, an analyst at the securities firm Investec, predicted that British consumers, who have been protected by price caps, could cut their energy bills by 50 percent when the adjustment is announced early next year. may increase by more than
In recent days, the shutdown of three French nuclear plants to investigate faults has further fueled the electricity market.
“It’s becoming the new normal for this winter,” Mark Devine, a trader at energy firm Sembcorp, said of the price hike.