This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Energy Crisis in Europe Intensifies
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Energy Crisis in Europe Intensifies
Markets

Energy Crisis in Europe Intensifies

Editorial Board Published December 15, 2021
Share
Energy Crisis in Europe Intensifies
SHARE

Cold-weather forecasts launched natural-gas prices to record highs this week and propelled electricity markets to levels rarely experienced in Germany, France and the U.K. 

The chances of a gusher of Russian gas arriving to swell depleted supplies by spring, meanwhile, are fading, after Moscow massed troops on its western flank. U.S. officials say the deployment could pave the way for an invasion of Ukraine in early 2022.

Benchmark European gas prices are more than seven times as high as a year ago  at 127.77 euros ($144) a megawatt-hour, having jumped by more than a quarter over the past week. In a sign that traders expect the shortfall to last for months, prices for contracts that expire deep into 2022 have shot up alongside those that require imminent delivery of gas.

A prolonged spell of higher energy prices will further complicate the picture on inflation and cloud prospects for economic growth. Data released Wednesday showed energy prices contributed to a 5.1% annual pace of growth in consumer prices in the U.K. in November, the fastest rate since 2011. 

The shortfall in Europe contrasts with the U.S., where mild weather sent gas prices down by a third this quarter. American gas exporters such as Cheniere Energy, Inc. stand to rake in bumper earnings from the disconnect. Though exports of chilled gas are running at close to record levels and can’t rise much higher without new liquefaction infrastructure, profits are tied to the gap between prices in the U.S. and in its main export markets.

Early winter storms have covered central and Eastern Europe with snow and forecasts project frigid temperatures ahead. Yet the prospects of additional fuel coming from Russia, the continent’s main gas supplier, are dim. Nord Stream 2, a controversial pipeline that circumvents U.S. allies Ukraine and Poland by sending gas straight to Germany, is complete but can’t be used before it gets approval from German and European regulators.

German regulators paused the certification process on the roughly 750-mile pipeline that runs under the Baltic Sea in November. U.S. Secretary of State Antony Blinken this week described Nord Stream 2 as a “source of leverage” for the U.S. in efforts to deter Russia from invading Ukraine.

Annalena Baerbock, Germany’s new foreign minister, said Nord Stream 2 couldn’t come into service if there was an escalation in Ukraine, adding that the project didn’t meet European Union energy legislation. Russia denies it is planning an attack.

Ukrainian officials say an invasion would disrupt pipelines that carry Russian gas through their territory to eastern and Western Europe. 

“If there is a full-scale war, all our operations can be affected,” said Yuriy Vitrenko, chief executive of Ukraine’s state energy company Naftogaz, adding that high-pressure gas pipes are unsafe to run in a live military environment. 

Mr. Vitrenko has lobbied members of Congress for the U.S. to impose sanctions on Nord Stream 1, which already ships Russian gas to Germany, if Russia invades.

A Ukrainian soldier in Zolote, Ukraine. The country’s officials say an invasion by Russia would disrupt pipelines that carry Russian gas through their territory to eastern and western Europe.

Photo: Brendan Hoffman/Getty Images

Depleted supplies are encouraging traders to cast around for unusual sources of gas. Phillip Tripodakis, senior LNG broker at London-based shipbroker Simpson Spence Young, said there are inquiries in the market about loading vessels with liquefied natural gas in China and Japan send to Europe. The trade would have been almost unthinkable in the past, he said.

Rocketing prices for gas—second to nuclear as a source of electricity in Europe—sent power prices higher across the continent this week. Adding to the toll on industry, prices for carbon permits, which utilities and other energy guzzlers have to buy to cover greenhouse-gas emissions, have also leapt.

A mild and windy winter is needed to stop gas supplies falling to uncomfortably low levels, said Joachim Gessner, director of energy procurement at U.S. glass manufacturer O-I Glass, Inc. Glassmaking devours natural gas used to heat furnaces that melt raw materials.

Mr. Gessner said European natural gas supplies are so low—stocks are just over 60% full, compared with 81% at this point in 2020—that they could stand at less than 10% of capacity by the end of winter.

A military buildup along the Ukrainian border is further straining ties between Russia and the U.S., after clashes over cybercrime, expulsions of diplomats and a migrant crisis in Belarus. WSJ explains what is deepening the rift between Washington and Moscow. Photo Composite/Video: Michelle Inez Simon

The surge in prices has trimmed industrial demand for gas by about 8%, according to S&P Global Platts. But strong demand as European economies emerged from pandemic shutdowns has enabled companies to pass input costs through to customers, boosting inflation instead of curbing production of goods.

Norwegian fertilizer giant Yara International ASA said Wednesday it had resumed most of its ammonia production in Europe. Yara had cut output in the fall when prices for natural gas—a feedstock for fertilizer—jumped, making its operations unprofitable. It can make money again because ammonia prices have since risen to offset higher input costs.

Industry groups say disruption could spread if energy prices keep rising. “Some companies have had…months of financial loss that they hope to recover in the future,” said Richard Leese, chairman of the U.K.’s Energy Intensive Users Group.

The price spikes pose a challenge to traders. They are receiving larger margin calls, requiring more cash to hand, and concerned that counterparties could default or go bankrupt. Twenty-eight retail energy companies in the U.K., for example, had failed in the U.K. as of Dec. 1, according to regulators. The largest, Bulb Energy, supplied 1.6 million domestic customers.

“It’s a lot more expensive to trade these days,” said Martin Juhl, head of power markets analysis at Danske Commodities, adding that the trading company—a unit of Norwegian energy company Equinor ASA —is spending even more time evaluating potential risks than it normally does.

Write to Joe Wallace at [email protected]

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article JPMorgan’s Big Healthcare Conference Goes Virtual JPMorgan’s Big Healthcare Conference Goes Virtual
Next Article Retail Sales Rose 0.3% in November Retail Sales Rose 0.3% in November

Editor's Pick

Brooke Hogan Written Out of Hulk’s Will (At Her Personal Request)

Brooke Hogan Written Out of Hulk’s Will (At Her Personal Request)

Studying Time: 3 minutes Brooke Hogan isn’t in her dad’s will, a brand new report reveals. Regardless of years of…

By Editorial Board 4 Min Read
6 Greatest Underwear To Stop Chafing For Males in 2025 | Fashion
6 Greatest Underwear To Stop Chafing For Males in 2025 | Fashion

We independently consider all really helpful services. Any services or products put…

15 Min Read
9 Finest Males’s Shorts Manufacturers – Versatile Types For 2025 | Fashion
9 Finest Males’s Shorts Manufacturers – Versatile Types For 2025 | Fashion

We independently consider all advisable services. Any services or products put ahead…

13 Min Read

Oponion

SoftBank Reports .5 Billion Loss on China Crackdown

SoftBank Reports $3.5 Billion Loss on China Crackdown

TOKYO— SoftBank Group Corp. reported its first quarterly net loss…

November 8, 2021

Prince Harry Desires ‘Area’ From Meghan Amid Divorce Rumors

Prince Harry reportedly needs some “space”…

October 7, 2024

Mortgage charges hit a two-month low this week, stay underneath 7%

Mortgage charges continued to development down. …

February 28, 2025

The Evergrande Blueprint Worked for Other Chinese Developers, Until It Didn’t

China’s property boom has spawned numerous…

November 28, 2021

Opinion: An Israel-Iran conflict can be a lethal mess for area and world

We're at a harmful precipice within…

October 8, 2024

You Might Also Like

Microsoft joins unique T market cap membership after AI surge, becoming a member of just one different firm
Markets

Microsoft joins unique $4T market cap membership after AI surge, becoming a member of just one different firm

Angelo Zino, a CFRA Analysis senior fairness analyst, discusses the efficiency of Microsoft, Meta and the general tech sector within…

4 Min Read
Moderna plans to slash 10% of workforce as COVID shot gross sales gradual
Markets

Moderna plans to slash 10% of workforce as COVID shot gross sales gradual

Rep. Russell Fry, R-S.C., discusses the Home probe into Pfizer’s launch of COVID vaccine outcomes and extra on ‘Varney &…

3 Min Read
Figma goes public, and the CEO was a fellow at Peter Thiel’s basis
Markets

Figma goes public, and the CEO was a fellow at Peter Thiel’s basis

‘Making Money’ host Charles Payne discusses whether or not the inventory market is a coiled spring able to explode or…

5 Min Read
Zuckerberg needs to offer everybody their very own private superintelligence via Meta’s new imaginative and prescient
Markets

Zuckerberg needs to offer everybody their very own private superintelligence via Meta’s new imaginative and prescient

Meta CEO Mark Zuckerberg on Wednesday introduced the tech large will give attention to growing a private superintelligence for everybody, which…

4 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?