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Gas costs in Europe broke records last week, due to the forecast of production closures in Norway, a drop in nuclear power generation in France and, of course, Gazprom’s planned closure of Nord Stream 1 for 3 days starting on Wednesday.
Benchmark values in the Netherlands reached almost €316 per megawatt-hour earlier this week, at around $315 per MWh. In addition to the Nord Stream news, planned maintenance of fuel fields in Norway also contributed to the latest price increase, as did news of planned blackouts at export terminals.
Citi analysts predicted this week that inflation in the UK could reach 18. 6% through January as energy prices continue to fall inexorably. These prices caused several energy leaders to warn this week about social unrest in the country.
Meanwhile, French President Emmanuel Macron dropped a bombshell in his first speech after the government’s summer break, claiming that France had reached the end of the “age of plenty,” warned that difficult times were coming and blamed them on climate change and Russia. President Vladimir Putin.
“What we’re experiencing lately is a kind of major turning point or a big upheaval . . . we are living through the end of what might have seemed like an age of plenty. . . the end of the abundance of generation products that seemed available. . . . the end of the abundance of land and materials, adding water,” Macron told The Guardian this week.
In fact, droughts have wreaked additional havoc in Europe, affecting hydropower generation from major manufacturers such as France and Norway and consequently fueling emerging fossil fuel costs that utilities will have to rely on in times of declining hydropower generation.
In Germany, droughts have disrupted the source of oil and coal for utilities, as the Rhine point has been kept too low for many ships to succeed in garages and forced plants where coal and oil will be needed this fall and winter.
“Due to very low inland shipping, accumulated coal reserves may fall temporarily,” according to a document produced by the German Economy Ministry and quoted by Reuters. “Additional garage sites that have been purchased and are being purchased in southern Germany will not be filled during the winter,” he warned.
Meanwhile, Chancellor Scholz returned from Canada pledging to supply more LNG, as Ottawa has shown it would prefer to marry Germany with hydrogen, which is touted as the cleanest option for the herbal fuel that will dominate the market after the transition.
To be fair, even if Canada had committed to supplying LNG to Germany, it would not have arrived soon enough to secure supply for this winter. Still, it would have eased fears for the future, as the Belgian prime minister warned that Europe was contemplating not yet one five to ten complicated winters ahead.
Since the beginning of the year, gasoline costs have risen nearly 30 percent, and August’s increase alone reached 40 percent. Of course, it has also raised electricity costs, with daily national averages exceeding all-time highs and adding to the developing economy. pressure on governments to find a way to get to the worst of the crisis.
However, expectations are not very high. Recession is a word used to refer to Europe’s rapidly long term, as energy costs continue to fuel inflation, which turns out to be less and less under control.
The only smart news so far is that Europe’s fuel tank is filling up faster than expected, so there will be fuel in case Gazprom makes the decision to shut down Nord Stream 1. However, according to analysts, this will only postpone the worst of the crisis. to avoid it.
Morgan Stanley issued the latest warning, stating that “if Nord Stream 1 flows fall to zero, this winter’s inventories will also be manageable,” but added that “if those flows don’t recover, then the cumulative loss next year would create an exceptionally tight winter. “2023/24”, in a note quoted via MarketWatch.
It turns out that the era of abundance that much of Europe enjoyed for a few generations is coming to an end.
In his speech, Macron said he would prioritize the transition of power this fall of finding tactics to make energy costs more manageable for the millions of French people who suffer to pay for their expenses. the only country facing civil unrest.
By Irina Slav for Oilprice. com
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