Gas prices have increased as a result of Russia continuing to reduce gas supply to Germany and other central European nations after earlier this week’s warning to do so.
The Beginning
After Russia invaded Ukraine, European gas prices increased by roughly 2% and are now trading above their previous record high. The Russian government is charged with utilizing gas as a political tool by critics.
What this means
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. Prior to the Ukraine War, Germany imported more than half of its gas needs from Russia, the majority of it via Nord Stream 1 and the remainder via land-based pipelines.
That had dropped to slightly over a quarter by the end of June. The current reduction in power has been attempted to be justified by Russian energy company Gazprom by claiming that maintenance on a turbine was required.
However, the German government claimed that there was no technical justification for doing so.
Effects around the World
In order to inflict “fear” on people, Ukraine has accused Moscow of waging a “gas war” against Europe and shutting off supplies. Poland, in the meantime, has said that by the end of the year, it will be totally independent of 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.
Gas prices in the UK increased by 7% on Wednesday; as a result, they are now more than six times more than they were a year ago. However, it is still far lower than the high observed following Russia’s invasion of Ukraine.
Energy prices in the UK rose by an unprecedented £700 in April, and more price increases are predicted. One management consultancy warned that, contrary to prior predictions this month, the average annual energy bill might reach £3,850 by January.
That will probably make it harder for them to restock their gas supplies before the winter. European leaders have discussed how to lessen their reliance on Russian fossil resources ever since the Russian invasion of Ukraine.
According to BFY, their projection took into account the rise in wholesale prices over the previous two weeks as persistent tensions with Russia sparked worries about winter supplies. The most recent decrease in shipments puts pressure on EU nations to further reduce their reliance on Russian gas.