Gas Prices Soar as Russia cuts Supply to Germany

Image Source: DW

Russia has further reduced gas supply to Germany and other central European nations after earlier this week’s threat to do so caused gas prices to skyrocket.

Gas prices in Europe increased by about 2% and are now almost at the record high reached after Russia invaded Ukraine.

Gas as a political weapon is a charge leveled against the Russian government by critics. The Nord Stream 1 pipeline from Russia to Germany has reduced its flow rates and is currently only functioning at about a fifth of its maximum capacity.

Before the Ukraine War, Germany imported more than half of its gas needs from Russia; most of this gas passed through Nord Stream 1, with the remaining portion coming through land-based pipelines. That was down to a little more than a quarter by the end of June.

According to Russian energy company Gazprom, a turbine needs to be maintained, which tried to defend the most recent curtailment. Although the German government said there was no technical justification for doing so, they did limit supply.

According to Ukraine, a “gas war” against Europe and a supply cutoff to inflict “horror” on people are actions that Moscow is said to have engaged in.

Poland, in the meantime, has said that by the end of the year, it will be totally independent of Russian gas.

Being that fewer than 5% of the UK’s gas imports come from Russia, any disruption in the gas supply would not have a significant impact on the UK. But when demand in Europe grows, it will be impacted by price rises in international markets.

The third-highest price ever recorded for European wholesale gas was €204.85 (£172.08) per megawatt hour. When prices closed at €210.50 (£176.76) per megawatt hour on March 8, they reached an all-time high. But at this same time last year, the cost of wholesale gas in Europe was a little over €37 (£31.08) per megawatt hour.

On Wednesday, gas prices in the UK increased by 7%, making them now more than six times higher than they were a year ago. However, the peak observed following Russia’s invasion of Ukraine is still much below where it is at the moment.

A management firm has warned that an average energy bill in the UK might reach £3,850 per year by January, which is far higher than earlier this month’s predictions. In April, energy prices in the UK surged by an unprecedented £700. It is believed that this trend will continue.

The ongoing tensions with Russia have sparked worries about winter supply, according to BFY, and its projection reflects the rise in wholesale prices over the past few weeks.

The most recent decrease in flows puts pressure on EU nations to lessen their reliance on Russian gas even further and is expected to make it harder for them to restock their gas supplies in time for the coming winter.

Europe’s top leaders have discussed how to lessen its reliance on Russian fossil resources ever since the invasion of the country.

EU agreed to reduce its intake of gas supply

On Tuesday, the European Union decided to reduce its gas use if Russia shut off supplies, but some nations will be excluded to prevent rationing.

A voluntary reduction in gas consumption of 15% between August and March has now been agreed upon by EU countries. However, the deal, which had no exemptions before, was significantly altered.

Read Also: Russia suspends gas supply to neighboring Finland

Russian energy supplies are “continually being used as a weapon,” the EU has warned and has stated that its goal from the agreement is to save money and store gas before winter. In the event of a supply crisis, voluntary agreement would become obligatory.

By the end of this year, the EU promised to restrict all maritime imports of Russian oil; but progress on gas import bans has been slower.

The price of wholesale gas has increased significantly since Russia invaded Ukraine in February, which has negatively influenced consumer energy prices around the world.

The Kremlin accuses the West of imposing sanctions, claiming that it is a dependable energy partner and is not to fault for the recent disruption of gas supply.


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Anthony Carter

I’m Anthony and I finished my degree graduate studies on Public Administration and I spend most of my free time in contributing written works about community development, public administration and lifestyle.

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