For several months now, gas has been rising exponentially on the international market. Hate demand in Asia and empty warehouses in Europe continue to push prices up, and the Nord Stream 2 pipeline has returned to the spotlight, according to a Deutsche Welle analysis.
Prices have skyrocketed since the national economies of the most industrialized countries restarted their engines after the collapse in 2020, as a result of the coronavirus pandemic. The high demand for goods and goods has been pushing up the global producer price for several months, and consumer prices are also rising with some delay. International supply chains are strained, and there is a shortage of ships and transport containers on global trade routes. Hundreds of thousands of truck drivers are also missing in many countries, not just in post-Brexit Britain.
But above all, rising energy prices catapult producer and consumer prices to unprecedented heights. Especially gas has become more expensive since January 2020. On the virtual market Title Transfer Facility (TTF) in the Netherlands, one of the most important in the world, the price of gas per Megawatt / hour (MWh) has increased from 17 euros on January 4, 2021, to 65 euros today. It is a record increase of more than 320 percent. For comparison, the average multiannual average price is between 15 and 20 euros.
Complicated calculations
However, the comparisons are a bit complicated in the case of natural gas. Because in spot markets, where gas changes ownership in the short term, the price increase seems less dramatic. There, it is true, the price doubled between January and August, but this increase is less exponential than the stock market, where gas rose by 450 percent in one year.
But no matter on what basis the gas is traded, the value is calculated and the evolution of prices is compared, this resource is becoming more and more expensive for industry and private consumers and any new increase means breaking a new record.
“There has never been such a rise in gas prices in such a short time,” said expert Fabian Huneke of the consulting firm Energy Brainpool for the German economic publication Handelsblatt. Private households are threatened with paying 150 to 200 euros more, according to the Office of Consumer Protection, if they have to heat themselves with gas next winter.
Energy-intensive industry and rising CO2 prices
But the biggest problem is with industrial customers who are dependent on gas. The chemical industry is a major consumer of this fossil energy source. More than a third of industrial gas consumption goes to this industry. To which are added the steelmakers who need gas for the production of special steels.
“And in the long run, consumers should expect oil and gas heating to become more expensive in Germany, as the national price of CO2 for fossil fuels will rise by more than 100% next year,” warned energy expert Thorsten. Storck. “These costs will be transferred by gas distributors to customers,” he added.
Consumers suffer, Putin takes advantage
An important reason for the galloping price of gas is the huge demand in Asia, where not only the Chinese economy has recovered after the first year of the pandemic. Meanwhile, liquefied gas (LNG) ships in the US are heading to Shanghai or Osaka, because the price is better there than in Europe.
This development is of course to the liking of Russian energy giant Gazprom and the Kremlin’s political allies. No other country benefits more from rising prices than Vladimir Putin’s Russia. German environmentalist Oliver Krischer believes that Russia is the central factor in this increase of gas. Russia exports 20 percent less gas to Germany this year. In his opinion, “the shortage is artificial”, because Russian gas exports have just increased enormously in Turkey or China, for example.
“At least half of the increased gas price goes to Gazprom and Vladimir Putin. This is also a tactical accompaniment for forcing the commissioning of the gas pipeline Nord Stream 2“Krischer explained.
The tanks are empty than usual
Germany risks becoming blackmailable regarding the approval that is still delayed for the commissioning of the new pipeline through the Baltic Sea. Normally, the country’s supply of gas in winter is guaranteed through existing pipelines, if the storage capacities are full. But this year they are not really full.
Especially the German storage capacities controlled by Gazprom, which represent a quarter of the total, are practically empty. And “there are no indications that the situation will change in the coming months,” Krischer said. “If the weather in February is really frosty, important warehouses will be empty and Nord Stream 2 will not be put into operation, shortages may occur at the regional level. Then the houses will remain unheated and the gas-fired power plants will stop their production “, he warned.
EU gas storage capacity is currently 71 percent full. In Germany, their filling rate is 64 percent. Gas consumption will increase as the weather cools. And to reach the normal level of 90 percent filling, storage capacity operators will have to buy gas before entering the winter, at the current price, very high. And increased demand will cause the price to rise further. (Photo Unsplash)
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