While the rest of the globe struggles with rising energy costs, Europe is being put through the wringer, requiring hasty improvisation from European leaders in the form of rescue plans and emergency measures to protect consumers from a potentially devastating economic hit this winter.
The rising cost of natural gas has caused widespread economic distress throughout the continent, sparking fears of hyperinflation and driving businesses and households alike to cringe at the prospect of receiving their monthly utility bills.
The current price of natural gas in Europe is around ten times higher than the average price in Europe over the last decade and roughly ten times higher than the price of natural gas in the United States.
One consultant, Alex Munton of Rapidan Energy Group, an authority on global gas markets, compared the price of natural gas in Europe to that of a barrel of oil at $500 a barrel.
The situation is dire, Munton said:
"Gas costs are over the roof, and the winter driving season hasn't even started yet. The availability of enough gas to fulfill wintertime demand is a genuine concern.
Russia's conflict in Ukraine significantly contributes to the gas crisis since it has halted gas deliveries to Europe and increased prices worldwide. It's not just the war, though; alternative gas sources are pricey, climate change has caused river levels to drop to the point where many of Europe's nuclear plants have been forced to shut down, and European policymakers have been at a loss for more than a decade as to how to incorporate shock absorbers.
Germany and France:
Germany and France also saw record-high electricity costs this week (again), which is indicative of the continent's worsening power crisis. Britain imposed a challenging 80 percent hike in the ceiling for home energy expenditures, while Germany boosted prices by roughly 500 euros as countries crumbled under economic constraints.
Alternatively, "vast sectors of the European energy market" would have collapsed, as German Minister Robert Habeck put it.
Refilling their gas storage tanks in the summer allows Europe to coast during the winter when demand is highest. European politicians have been racing against the clock to fill their gas tanks at eye-popping rates as the colder months approach, and Russia tightens its chokehold on natural gas shipments. According to experts, the European countries have been following their plans rather well so far, but that doesn't imply they'll be safe this winter.
To get through the colder months, Europe "uses a lot of what it has in storage while at the same time importing gobs of gas from other sources," Munton added. Both are required. Typically, Russia provides roughly 40% of Europe's gas imports, but this winter, there is a severe chance that there may be none.
Munton continued by saying that without Russia's supply in the winter, European countries would have to depend even more on LNG imports from sources like the United States. The issue is that Asia, a bigger LNG market, is competing for the same supplies, which implies that Asian piped gas will always be more expensive.
'That is the issue that Europe and the globe face,' he said:
European governments have been scrambling to secure new energy arrangements and supplies as the continent cuts ties with Moscow. While other countries like Azerbaijan, Norway, and Qatar have turned to them for gas, Italy has instead looked to Algeria.
Canada's outlook on a potential new LNG contract with Germany has been far less hopeful. The Netherlands, Finland, and Italy are all getting ready to import gas with additional floating units, while Germany is rushing to construct five floating LNG terminals.
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