Energy prices in Europe are repeatedly breaking records even before winter really kicks in

With the prospect of blackouts and fights for supplies, there’s a growing sense of foreboding before the cold weather has even really hit.

Europe Energy Crisis is About to get worse as winter arrives - ENB

Energy prices in Europe are repeatedly breaking records even before winter really kicks in, and one of the most damaging cost crunches in history is about to get worse as the temperature starts to drop.

A super price spike in the U.K. last month forced some industrial companies to cut production and seek state aid, a harbinger for what could play out widely in Europe just as it contends with a resurgence of the coronavirus. For governments, it could mean tension with neighboring countries by moving to protect supplies. For households, it could mean being asked to use less energy or even plan for rolling blackouts.

The trouble is that any fix is unlikely to come from the supply side any time soon, with exporters Russia piping only what it has to and Qatar saying it’s producing what it can. The energy industry is instead faced with relying on “demand destruction,” said Fabian Roenningen, an analyst at Rysted Energy.

“We have seen it over the last couple of months already, and in many industries, it will most likely continue and even increase,” he said from Oslo. “It’s just not profitable to operate for a lot of the players in the current market conditions.”

relates to Europe’s Energy Crisis Is About to Get Worse as Winter Arrives
A liquid natural gas tanker being loaded up with LNG at Raslaffans Sea Port, Qatar.
Source: AP Photo

The outlook adds to the sense of foreboding in Europe. The region is back at the epicenter of the pandemic again with Covid-19 cases surging and fears about a new variant identified in South Africa swirling the globe. Restrictions are being tightened in some countries, while household budgets are being squeezed by rampant inflation. On top of that, freezing weather could mean the lights going out. A return to lockdown like in Austria would help curb power demand, though few governments want to do that.

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