Status: 08/25/2022 2:12 p.m
Gas is becoming more and more expensive: due to fears of increasing shortages, the price on the energy exchange in Amsterdam has climbed to over 300 euros per megawatt hour today. It’s getting close to its record level.
How high will the gas price rise? In the past year, it has increased in price by more than 1000 percent on the futures markets. In August 2021, the futures contract TTF, which is trend-setting for European gas trading, still cost 26 euros per megawatt hour on the energy exchange in Amsterdam. Now it is already 316 euros per megawatt hour.
Only 30 euros below the record level
Today the price rose again by six percent after having already risen sharply at the beginning of the week. Now only nine percent are missing from the record level of early March. At that time, the gas price in European trading had reached its zenith of 345 euros per megawatt hour.
According to traders, the reason for the newly fueled soaring gas price is the forthcoming renewed interruption of Russian gas supplies to Europe through the Nord Stream 1 pipeline. Russia announced last Friday that gas supplies via the Nord Stream 1 Baltic Sea pipeline would start on August 31 for three due to maintenance work days to interrupt. This fuels fears that Moscow will soon turn off the gas supply completely.
Officially, however, Russia assures that after the maintenance work, 33 million cubic meters of natural gas will be delivered again every day. That would be 20 percent of maximum capacity, still the level to which shipments were scaled back a few weeks ago.
E.ON boss expects permanently high energy prices
The head of the energy company E.ON, Leonhard Birnbaum, predicts that energy prices will remain high in the long term. “I do not expect that we will return to the prices before the crisis,” he said at the “German Energy Law Day 2022” in Essen. At the same time, he warned against narrowing the view of gas prices. Electricity has also become massively more expensive.
For example, German electricity prices climbed to over 600 euros per megawatt hour for the first time this week. That’s a sixfold increase from the level of a year ago. At that time, the price was still 100 euros per megawatt hour. E.ON boss Birnbaum is therefore concerned: “At 600 euros per megawatt hour we have a problem.”
Electricity prices at record high
Wholesale electricity prices have tripled since Russia announced in mid-June that it would cut gas supplies to 40 percent of potential capacity. The low water in the Rhine, which affects shipping, also fueled prices. Half of Germany’s electricity comes from fossil sources, including Russian gas and Russian hard coal.
Gas storage now 80 percent full
The gas storage facilities in Germany are still well stocked. The filling quantity is currently 80.65 percent. The target of 75 percent set for September should therefore be achieved. However, it will be more difficult for the following months. A fill level of 85 percent is targeted for October 1st, and a level of 95 percent for November 1st.
Torsten Frank, Managing Director of Trading Hub Europe, is skeptical that this can be achieved. “We will be able to fill many storage facilities to 95 percent, but not all of them, by November,” he told the “Rheinische Post”. He does not expect a nationwide gas shortage. However, the expert warns that there could be shortages in the region.