Europe’s gas prices soar as a result of Russia cutting off supply to Germany
Russia continues to reduce the supply of oil and gas to Germany through the Nord Stream 1 pipeline, which is now only functioning at around 1/5 of its typical capacity..
The Euro-American plan of isolating Russia on the geopolitical front has backfired in a spectacular turn of events. Russia cut its already-reduced gas shipments to the continent in half.
Following Tuesday’s price increase, Wednesday saw a further 9% increase in natural gas prices. In just two days, the price of gas in Europe increased by 30%, and it is already trading close to the all-time high reached following the Russian invasion of Ukraine.
The Nord Stream 1 pipeline from Russia to Germany has been operating at less than a fifth of its typical capacity as a result of flow reductions. This supply reduction must be viewed in the context of the fact that, prior to Russia’s invasion of Ukraine, Germany imported more than half of its gas from Russia, the majority of it via Nord Stream 1 and the remainder via land-based pipelines. The supply had fallen to just over a fourth by the end of June.
The German government claimed that there was no technical basis for limiting the supply, in contrast to the Russian energy company Gazprom, which attempted to justify the latest cut by citing the delayed return of a gas turbine for a compressor station from Canada and blaming western sanctions for the snafu.
Poland, in contrast to Germany, has said that by the end of the year, it would be totally independent on Russian gas. “Even now, Russia is no longer able to blackmail us in the way that it blackmails Germany, for example,” Prime Minister Mateusz Morawiecki stated.
Since fewer than 5% of the gas in the UK comes from Russia, a disruption in the gas supply would not have a significant impact on the country. However, when demand rises in Europe, the worldwide price changes would impact local costs.
The third-highest price on record for wholesale gas in Europe was €204.85 (£172.08) per megawatt hour. The price per megawatt hour reached its all-time high on March 8 when it ended at €210.50 (£176.76). For comparison, the wholesale gas price in Europe at this time last year was just over €37 (£31.08) per megawatt hour.
Given that it will be more challenging for them to restock their gas supplies in time for winter as a result of this most recent drop in flows, EU nations are under pressure to further reduce their reliance on Russian gas.