Europe may have dodged the bullet of gas outages for this winter, but surging prices for natural gas in Europe is quickly becoming a worrisome signal for the EU economy.
The front month gas price at the Dutch TTF hub, the benchmark gas price for Europe, has doubled just this week alone, and now sits at $204.32 per MWh as Russian gas supply fears continue to grip the market.
On Thursday, prices were trading at $221 per MWh, which was a new all-time high.
The higher prices come not only as Russia invades Ukraine, but after reports that the flow of Russian gas through the Yamal pipeline had stopped, and as pressures mount on world governments to cease all energy trading with Moscow in light of the invasion.
For Europe, who has lived through a year of high energy prices, the new heights to which nat gas prices have reached could be devastating—and all eyes are now moving onto next winter.
Next winter could see shortages, as Europe attempts to replenish scant natural gas coffers at today’s high prices—all while the threat of Russia turning off the taps hangs over its head.
Europe is expected to emerge from this winter with just 259 TWh of gas, significantly below the five-year average of 315 TWh, according to Gas Infrastructure Europe data cited by Reuters.
In the days that follow, Europe will attempt to increase its stockpiles—but it must do so at near-record prices. If Europe shuns Russian gas, its job will be significantly harder. Not only will it make it more difficult, but it would raise gas prices even more, wreaking more havoc on European households and businesses who have already been squeezed by soaring energy prices.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.