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Wholesale natural gas prices across much of Europe are now about five times more than they were in 2019, pushing up consumers’ electric bills in Spain by as much as 40 percent, the Financial Times reported.
The price has risen from about $4 per million British thermal units to $18, the FT noted.
Soaring prices during the warm summer months bodes ominously for what prices will do during colder weather when demand rises.
If the winter is especially cold and gas prices rise significantly more, some factories could shut down, the FT said.
“The electricity price hike has created a lot of indignation and this is, of course, moving onto the streets” with mass protests, Maria Campuzano, spokesperson for the Alliance Against Energy Poverty, which helps poor households pay their power bills, said to the FT.
Britain’s regulatory agency has permitted electric utilities to raise their limit on electric rates by 12 percent.
A resurgent European economy, higher gas demand than expected, and a cold front late last winter that drained national gas reserves have created “a perfect storm” for higher prices, CEO Marco Alverà of Snam, Milan’s largest electric company, said in comments cited by the FT.
Also, closing of coal-fired electric generating stations around Europe has left countries with fewer sources of power, putting more demand pressure on natural gas supplies.
In addition, after gas reserves were depleted after last winter’s late cold snap, companies were reluctant to rebuild their supplies when gas was so expensive.
As a result, reserves are now at the level usual at winter’s end instead of as winter is approaching, the FT noted.
Unlike the U.S., where gas prices have risen only about a quarter as much, Europe has no domestic supply and must import its gas.
Some comes from Algeria and Libya, but most comes from Russia, which previously has used gas supplies as a political bludgeon to keep European leaders from objecting to Russia’s expansionist policies and actions.
TREND FORECAST: Europe’s high gas prices will rise, not ease, with supplies already short going into winter and with Russia’s hand on the spigot.
The high prices will ripple through the continent’s economy, slowing growth, fueling inflation, and retarding any full economic recovery by at least six months.