Federal Network Agency concerned: warning of “huge price jumps”

According to the Federal Network Agency, gas prices have recently increased sixfold in some cases. The additional costs have not yet reached consumers, but the authorities warn. Chancellor Scholz wants to further reduce dependence on Russian gas.

Due to the reduced supply of Russian gas, prices could continue to rise. The Federal Network Agency warns of this. “The gas price increases of last autumn are already being passed on,” said its President Klaus Müller ARD morning magazine. “That’s almost plus 30, plus 50, sometimes plus 80 percent. That’s the past from the fall.”

Since then, the gas price has quadrupled as of last week and has now even increased sixfold. These are “huge price jumps”, which are not all passed on to consumers one-to-one. “But doubling or tripling is definitely possible, depending on the building envelope,” said Müller.

“It can double or triple”: Klaus Müller, Federal Network Agency, on possible gas price increases

Morgenmagazin, June 24th, 2022

The anxious view of July 11th

The Federal Network Agency believes it is possible that Russia will completely stop supplying gas to Germany through the Baltic Sea pipeline Nord Stream 1. “We cannot rule it out,” said Müller, referring to the planned maintenance of the pipeline on July 11. The appointment, which lasts several days, is actually an annual routine. But this time the question arises as to whether Russia will actually turn on the gas tap again after ten days. The Russian state-owned company Gazprom had already severely curtailed its gas deliveries via Nord Stream 1 in the past few days.

In the event of a delivery stop, the Federal Network Agency has calculated various scenarios. “Most of the scenarios are not nice and mean either too little gas at the end of winter or – very difficult situation – in autumn or winter,” said Müller.

Scholz wants to look for alternatives faster

Federal Chancellor Olaf Scholz announced that the search for alternative import options would be accelerated in view of falling Russian gas supplies. “We are all very, very carefully prepared together for the difficult challenge associated with importing fossil resources from Russia,” he said ahead of the second day of the EU summit in Brussels.

The SPD politician said, referring to the planned LNG terminals, that infrastructure was taken care of early on with which gas could be imported from other countries. “All activities” have been undertaken to import energy from other countries. “It’s an effort that needs to be accelerated again. We’ll hook up there.”

Scholz emphasized that the economic situation was not only related to the Russian war against Ukraine, but also to the upheavals after the corona pandemic. The aim now is to ensure “that we can quickly do business in a climate-neutral manner, that we expand renewable energies, that we develop our economic structures in such a way that we quickly gain CO2-neutral economic stability,” explained Scholz.

Second stage in the gas emergency plan

Federal Minister of Economics Robert Habeck announced the second of three escalation levels in the gas emergency plan on Thursday, the so-called alarm level. According to experts, this should make the seriousness of the situation clear – with the aim of saving as much energy as possible voluntarily. The first level, the early warning level, has been in effect since the end of March, a good four weeks after the Russian attack on Ukraine, which drove up energy prices.

Habeck fears a domino effect

In view of the impending gas emergency, Habeck fears a domino effect leading to a severe recession. “The risk that energy suppliers may find themselves in an economic situation where they can no longer raise money on the market to buy gas” is high, said Habeck in the daily topics.

It must be prevented “that they fall out of the market”. He fears “a kind of Lehman Brothers effect in the energy market”, which will then also affect public utilities, commercial and industrial companies and consumers. “And then you have a domino effect that would lead to a severe recession,” said the Green politician. He will take care to prevent that.

According to Habeck, further relief is necessary

Habeck again put in the daily topics clear “that gas is a scarce commodity”. The bitter news is that the heating cost increases will come in the next few days. Habeck sees this as “the actual social challenge”, which, moreover, “is unavoidable, regardless of how high the price is.”

Relief must be created for those who are driven into need and misery by these burdens. However, the Minister of Economic Affairs did not become specific. He has his own ideas, but he doesn’t want to present them just yet, so as not to let them “break” him, he said.

The Federal Association of Consumers sees high costs for households. “We need a third relief package, in particular the heating cost subsidy must be increased,” said Thomas Engelke, energy expert at the consumer center, in the BAyerian radio.

The suppliers have already increased the tariffs for consumers significantly. A three-person household with an average natural gas consumption of 20,000 kilowatt hours must expect additional costs of 1,000 to 2,000 euros for this year.