According to a Bloomberg analysis, European energy prices could be at record levels, but there is still room for prices to run.
Of course, natural gas prices are skyrocketing everywhere, not just in Europe. The reference price for natural gas in the United States has nearly doubled over the past year, with Henry Hub’s first month prices hitting $ 4,690 / MMBtu on September 6, despite record natural gas production in hot basins with Appalachia.
But U.S. gas exports soar more, reaching historic records.
For Europe, which has pandemic restrictions, rising demand for natural gas and electricity as people return to work causes higher prices and therefore inflation. Germany has been battling the highest inflation since 2008, thanks to higher energy prices.
Normally, the demand for natural gas at this time of year is still low.
Current high prices, at a time when demand is usually low, are worrisome for Europe, which is now having a difficult winter, with inventories of natural gas at painfully low levels.
Nor does the situation help wind energy, because low wind speeds and high storms reduce renewable energy production and, in the process, pave the way for higher coal consumption.
And if Europe still expects its own fossil fuels to prevent a reduction in energy prices in the winter, it would be wrong. According to Bloomberg, several falls in production and declining gas fields have helped make natural gas prices traded with a crude oil premium.
Some estimates see retail consumers paying 20% more for utility bills.
Julien Hoarau, head of Engie SA’s analysis unit, EnergyScan, said Europe’s problems have not even begun.
By Julianne Geiger for Oilprice.com
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