The price being paid by the EU for the reckless pace of its “transition” from fossil fuels and, of course, the reliance of many of its members on Russian natural gas (the U.K. is guilty of the former, not the latter) continues to rise.
Bloomberg, August 22 (my emphasis added):
European gas and power prices surged as panic over Russian supplies gripped markets and politicians warned citizens to brace for a tough winter ahead.
Benchmark gas settled at a record high, while German power surged to above 700 euros ($696) a megawatt-hour for the first time. Russia said it will stop its key Nord Stream gas pipeline for three days of repairs on Aug. 31, again raising concerns it won’t return after the work. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month . . .
The cat is, once again, playing with the mice. My guess continues to be that Russia will not cut off the (significantly) reduced gas flow just yet. The “maintenance” will be completed on time — or, perhaps, to make a point, just afterwards — and the pipelines will reopen, although (and Gazprom has said as much) the flow of gas through them will continue to be at 20 percent of normal.
Back to Bloomberg:
In one of the most dire warnings yet, Belgian Prime Minister Alexander De Croo said Europe could face up to 10 difficult winters. It would put sustained stress on major economies and leave thousands of households struggling to pay their bills. Concerns over the economy pushed the euro currency to a two-decade low on Monday, while inflation is at the highest in years . . .
French President Emmanuel Macron warned people of the potential hardships in the coming months, and asked them to “accept paying the price for our freedom and our values,” he said in a speech Friday commemorating the liberation of a town in southern France in World War II.
Macron’s comment is, of course, a reference to the fact that Europeans are paying a high price for their support for Ukraine. That’s a price worth paying, given Russia’s longer-term ambitions, but European voters are also entitled to wonder why they should continue to support politicians who left them so exposed to Russian blackmail in the first place.
And to get an idea of the size of the price increases (note these prices may not reflect the cost of gas being supplied under longer-term contracts), Bloomberg has some numbers:
The Dutch front-month contract, the European benchmark, settled 13% higher at 276.75 euros a megawatt-hour. Prices are about 15 times the average for this time of the year.
Meanwhile, Bloomberg (August 23):
French output is contracting for the first time in a year and a half, mirroring the trend seen in Germany as Europe’s biggest economies succumb to record inflation and increasing uncertainty from the war in Ukraine.
A gauge of French private-sector activity by S&P Global dropped in August to its lowest level since the pandemic-related disruptions of early 2021. It fell more than economists had expected, dipping below the threshold that separates expansion from contraction…
In Germany, which relies more than most on the Kremlin for natural-gas supplies and is facing the prospect of shortages this winter, output began to shrink in July and contracted again in August, S&P Global said in a separate release.