European energy prices are reaching astounding heights. Wholesale gas prices, as measured by the Dutch TTF benchmark, hit €337 per megawatt hour (MWh) last week, a more than sixfold increase on the price a year ago. That is as if oil cost $500 a barrel. Electricity, whose price is closely linked to gas, has also surged. German and French power prices for delivery next year have topped €1,000 per MWh, says Bloomberg. “UK day-ahead electricity is trading at ten times its two-decade average.” The price spike is being driven by pressure to fill gas storage before winter, says Stanley Reed in The New York Times. The prospect of a Russian embargo means energy firms want to buy up gas at virtually any price.
The Nord Stream 1 pipeline between Russia and Germany is running at only 20% capacity, with Russia’s Gazprom repeatedly scheduling downtime for supposed “maintenance”. UK power for December 2022 “is fast approaching £1,000 per megawatt hour”, says Javier Blas on Bloomberg. Conversations between traders and managers of the national grid are “getting scarier by the week”, with talk of “shortages” and emergency planning for the winter.
A multi-year problem
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