European gas prices rose further on Wednesday to a new record level. The price rose 60 percent in two days due to continued strong demand, limited supply in the gas market, and colder weather forecast in the northern hemisphere.
The European Commission is concerned but says there are sufficient gas reserves in Europe to get through the winter.
The price of a so-called megawatt-hour of gas rose by 40 percent to more than 160 euros on Wednesday. The price rose 20 percent on Tuesday. The price has now fallen again to about 131 euros. Due to the high demand for gas due to the economic recovery from the corona crisis, the cold spring and less energy generated from sustainable sources, energy prices are rising, and gas stocks are smaller. In addition, the supply of Russian gas is limited, and it is difficult to find gas elsewhere because there is also a strong demand from Asia with fierce competition.
On Wednesday, European Energy Commissioner Kadri Simson said that the shock of high gas prices should not be underestimated. Poorer households are particularly affected by rising energy costs, she says. She said that prices would remain high for the time being but enough gas for the winter. However, she believes that EU member states should look at ways to help poorer households with the high costs, for example, by lowering energy taxes or providing subsidies.
Several countries, such as France and Spain, believe that the EU should take action to absorb the price increases. Spain has made a proposal for a joint EU purchase of natural gas and the construction of a strategic gas stock. Simson has said that before the end of this year, Brussels will come up with plans for a review of the rules on the European gas market.
More and more companies in Europe are having trouble with the high gas prices and therefore have to reduce or even temporarily stop production; otherwise, they will be loss-making. Furthermore, high prices are also driving inflation, undermining consumers’ purchasing power. Households also have to deal with higher energy bills, leaving less money for other expenditures. France has already taken measures to help poorer families, for example, with subsidies and a freeze on energy bills.
Price comparator Pricewise reported on Wednesday that an average household pays 500 euros more for a one-year energy contract than last week. With a three-year contract, that is 250 euros. According to Pricewise, energy suppliers are also forced to withdraw their offer due to rising purchase prices or withdraw because they run too much risk.