Europe is being hit by unprecedented recovery-related energy price spikes, prompting growing alarm about whether families will be able to stay warm as the Northern Hemisphere winter approaches.
Politicians are also worried about the election results and how the rise in prices will lead to inflation.
The jump in natural gas prices is mainly due to an increase in demand in Asia and short supply in Europe, which has seen an astonishing 280 percent increase in bulk gas prices. Electricity prices are also rising as natural gas is used to generate a substantial percentage of its electricity across the continent.
Moscow’s decision to refrain from promoting natural gas shipments through Ukrainian pipelines is compounding the crisis and claims that Russia is using its European neighbors’ energy needs to ransom them.
Some European politicians are accusing the Kremlin of deliberately worsening Europe’s energy crisis in order to pressure the EU to speed up certification of the Nord Stream 2 gas pipeline, which bypasses Ukraine and runs from Russia to Germany under the Baltic Sea. Lasts till
The International Energy Agency has called on Russia to boost gas exports. “The IEA believes that Russia can do more to increase gas availability in Europe and ensure that storage is filled to sufficient levels in preparation for the warmer winter season to come,” it said in a statement. Go.”
US officials have also called for increasing gas exports from Moscow. “The reality is that there are pipelines with enough capacity through Ukraine to supply Europe. Russia has consistently said that it has enough gas supplies to be able to do so, so if this is true, they should , and they should do it quickly through Ukraine,” Amos Hochstein, senior adviser for energy security at the US State Department, told Bloomberg TV this week.
Some members of the European Parliament want the European Commission to investigate Russia’s majority state-owned energy company Gazprom. “We call on the European Commission to launch an investigation by Gazprom into possible deliberate market manipulation and possible violations of EU competition rules,” a group of lawmakers said in a letter.
Moscow aside, Europe will still face an energy price crisis, which has prompted factories and businesses to cut production and warn of food shortages.
In Britain, ministers are holding emergency talks with industry representatives about a rise in wholesale gas and electricity prices, which have been blamed on high global demand, maintenance issues and lower-than-expected solar and wind power generation.
Seven British natural gas suppliers have declined over the past six weeks, resulting in a more than 70% increase in wholesale gas prices in August alone. There are fears that the other three suppliers may declare bankruptcy. The suppliers are unable to provide the full escalation to the customers as the government has imposed a price cap on what can be charged from the consumers.
However, British consumers will face a price hike of several hundred dollars per household this winter. British officials are considering offering state-backed loans to some of Britain’s biggest energy retail companies to help them tide over price volatility.
But there is a reluctance to use taxpayer money, and midweek, Britain’s business secretary, Kwasi Quarteng, told a parliamentary panel that the energy industry should “look for itself” for a solution first.
Some observers believe Boris Johnson’s ruling Conservative government will remain his hand. It has already intervened and provided emergency state aid to avert poultry and meat shortages due to rising gas prices. Ministers this week agreed to pay a major US company, CF Industries, to reopen one of its two fertilizer plants in Britain, which also treats carbon dioxide, a key byproduct to the country’s food industry. produces.
CF Industries closed both plants, which supply 60% of the CO2 needed to stun animals for slaughter and are used to extend the shelf life of packaged fresh, chilled and baked goods. Is. It is also used to make carbonated drinks and to keep stored beer fresh. UK supermarkets warned of imminent shortages as plants closed.
Even with emergency interventions worth hundreds of millions of dollars of public funding running out, British ministers warned on Wednesday that food producers need to prepare themselves for a 400% increase in carbon dioxide pricing.
Other European governments are also considering how to intervene in energy markets to keep homes warm and lit, and factories running in the winter. They also fear a domestic political fallout from a sharp jump in domestic costs and are considering billions of dollars in aid. EU energy ministers will meet this week to discuss national responses, amid concerns that the energy crisis will severely hamper the bloc’s post-pandemic recovery.
In Spain and Portugal, average wholesale electricity prices are more than triple the level half a year ago, at $206 per megawatt-hour. Spain’s government plans to cut taxes on utility bills.
Norway offered some relief this week by announcing that its state-owned energy company would boost production of natural gas from two North Sea fields.
In Italy, ministers have warned of a 40% jump in electricity prices in the last quarter of 2021 and – like their southern European neighbors – are drafting emergency plans for consumers to cushion the fall in prices. . Some officials say $5.27 billion is being earmarked to support families with their costs, on top of the $1.17 billion the government has already spent to protect consumers and businesses from the rising costs of energy imports. has done. Italy imports two-thirds of its energy needs.
Last week, Ecological Transition Minister Roberto Cingolani prompted outcry from climate action groups when he said carbon taxes contributed to higher energy costs for homes and businesses. Carbon pricing and taxes are used to discourage the use of fossil fuels. Faced with increasing criticism, Singolani later “emphasized the need to expedite with the installation of renewables, so that we can wean ourselves off the cost of gas as quickly as possible.”
Information from Reuters and Ansa was used in this report