LONDON (AFP) – Plunging wholesale gas prices have sparked speculation of an end to Europe’s energy crisis – but consumers’ electricity and gas bills remain sky high, fuelling runaway inflation.
European benchmark Dutch TTF gas price has shed 18 per cent since the start of this year as unusually warm winter weather depresses demand and encourages stockpiling.
The price has fallen by more than 82 per cent since August, when it had spiked on fears over a lack of supplies from key producer Russia.
The Ukraine conflict highlighted Europe’s dependence on Russian gas, prompting a rush for alternative resources and improved efficiency measures as leaders sought to avert a costly supply crunch.
This approach, in tandem with mild winter temperatures, enabled European nations to replenish reserves.
“An unusually mild winter has helped reduce heating demand, while record liquid natural gas imports and increased renewable capacity have boosted supplies,” said Mirabaud analyst John Plassard. Europe’s gas stocks are hovering at about 82 per cent of capacity, up from 50 per cent one year ago and “well above” the seasonal norm of 70 per cent, he added.
TTF gas sank to a 16-month low this week and stood at 60 euros per megawatt hour on Wednesday, although this was still more than double its pre-pandemic level.
In contrast, TTF gas had rocketed last March to a record 345 euros after the invasion of Ukraine.
German Chancellor Olaf Scholz, whose nation is attempting to wean itself off Russian energy, declared last Saturday that gas prices are now falling in Europe.
Yet that has thus far failed to translate into lower bills for businesses and individuals.
With Russia also slashing its gas deliveries to Europe over Ukraine tensions, Norway has become the continent’s primary supplier.
Chief executive of Norwegian energy giant Equinor Anders Opedal told the BBC that there was “a kind of re-wiring of the whole energy system in Europe, particularly after the gas from Russia was taken away”.