The world faces a chilly winter as energy prices climb

The gas crisis has revealed Europe’s dependence on imported gas, but the rest of the world is facing higher bills too.

Chinese thermal coal prices have hit a record high. Flooding in the country’s northern Shanxi province, a major coal producer, sent prices on the Zhengzhou Commodity Exchange to ¥1,408 (£161) a tonne on Monday, says Laura He for CNN. That was an all-time high and more than double where they started the year. “Energy shortages have spread to 20 Chinese provinces in recent weeks, forcing the government to ration electricity during peak hours”.

In Europe gas prices have retreated from record highs set earlier this month, but Dutch wholesale prices are still up more than fivefold compared with a year ago. The gas crisis has revealed Europe’s dependence on imported gas, says David Sheppard in the Financial Times. Gas demand is concentrated in the winter months: “About 40% of total gas consumption in the UK goes directly to heating homes, largely condensed into a period of five [or] six months”. Europe has historically relied on Russian imports and liquefied natural gas (LNG) shipments to top it up during winter. But LNG from the likes of Qatar is now heading east as Asian demand for gas has gone up 50% over the past decade.  

Moscow has suggested that swift German regulatory approval of its Nord Stream 2 pipeline could ease Europe’s energy woes, says The Observer. The pipeline is still not expected to come online for months. There are claims that the Kremlin has been playing politics with gas, but Russia has little interest in “undermining its finances” and “speeding up Europe’s decarbonisation” by withholding supplies. In any case, Nord Stream 2 is not the solution to the current crisis: even if the pipeline is swiftly approved it won’t be able to deliver significant amounts of gas before the new year.

Recommended

Britain’s ten most-hated shares – w/e 20 May
Stocks and shares

Britain’s ten most-hated shares – w/e 20 May

Rupert Hargreaves looks at Britain's ten-most hated shares, and what short-sellers are looking right now.
23 May 2022
Britain's most-bought shares w/e 20 May
Stocks and shares

Britain's most-bought shares w/e 20 May

A look at Britain's most-bought shares in the week ending 13 May, providing an insight into how investors are thinking and where opportunities may lie…
23 May 2022
Director dealings w/e 20 May: what company insiders are buying and selling
Stocks and shares

Director dealings w/e 20 May: what company insiders are buying and selling

Directors’ share dealings can often give investors an insight into the sentiment of company insiders. Here are some of the biggest deals by company di…
23 May 2022
Amazon’s shares have fallen hard – value investors should take note
Share tips

Amazon’s shares have fallen hard – value investors should take note

Investors have dumped Amazon shares as post-pandemic life returns to normal. But it still has plenty of competitive advantages, says Russell Hargreave…
23 May 2022

Most Popular

Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Barry Norris: we’re already in the 1970s. Here’s how to invest
Investment strategy

Barry Norris: we’re already in the 1970s. Here’s how to invest

Merryn talks to Barry Norris of Argonaut capital about the parallels between now and the 1970s; the transition to “green” energy; and the one sector w…
19 May 2022
Share tips of the week – 20 May
Share tips

Share tips of the week – 20 May

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
20 May 2022