Gas prices in Europe continued to soar on Tuesday, December 21: + 90% increase since December 1. The onset of winter cold and geopolitical tensions with Russia explain this situation.
The benchmark European price, the very volatile Dutch TTF, gained more than 22% on Tuesday to settle at 180.267 euros per megawatt hour (MWh). These highs are ten times higher than the prices seen a year ago. The factors of this increase are plural. First of all, quite logically, with the temperatures dropping, the demand for gas increases and runs up against a supply problem due to too low stocks in Europe.
Geopolitical tensions
Added to this are the geopolitical tensions between Russia and Ukraine which create a climate of concern, knowing that a third of the gas supply comes from Russia. Suddenly, Western investors are playing it safe and buying heavily on the gas market, which drives up prices.
In addition, Berlin threatened not to approve the commissioning of the new Nord Stream 2 pipeline, scheduled for 2022, in the event of Russian aggression against Ukraine. This long tube of more than 1000 kilometers and with a capacity of 55 billion cubic meters of gas per year connects Russia to north-eastern Germany and bypass Ukraine, traditional gas delivery route.
Unfavorable weather
Finally, the weather did not allow renewable energies to compensate for the lack of gas. This surge in the price of this energy is also having repercussions on the electricity market, particularly in the United Kingdom, which is more dependent on gas and renewable energies than others in Europe.
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