Europe sleepwalks into fresh energy crisis as prices surge and storage drains
Complacency after mild winter
European governments declared energy victory in March when tanks held record gas stocks and benchmark prices fell below €40 per MWh, but the celebration was premature, analysts told the BBC. Storage sites are now only 62 % full, the lowest mid-year level since 2021, after a heat wave forced utilities to burn more gas for air-conditioning and Chinese buyers returned to global markets.
Russian squeeze continues
Russia has all but halted pipeline deliveries, and Kremlin-backed exporter Gazprom warned last week that any remaining flows through Ukraine could stop when the transit contract expires in December. Europe has replaced 90 % of lost Russian volume with liquefied natural gas (LNG) from Qatar and the United States, yet spot cargoes trade at twice pre-2021 averages, pushing wholesale power prices to €120 per MWh in Germany, triple the decade norm.
Policy gaps and price spikes
Brussels capped gas costs at €180 per MWh last winter, but the measure sunsets in January 2024, leaving consumers exposed to volatility that traders say could send bills above €200 when heating demand peaks. Governments also allowed long-term storage contracts to expire, opting instead for market-based refilling that traders warned would fail if Asia outbid Europe for tankers. "We repeated the same mistake as 2021, assuming mild weather equals eternal supply," said Ana-Maria Covrig of the International Energy Agency.
Industries warn of shutdowns
Chemical giant BASF said Monday it may close more plants in Ludwigshafen if gas exceeds €150 per MWh for more than 30 days, risking 10,000 jobs. Glass, fertilizer and aluminum producers across Belgium and the Netherlands report similar thresholds, raising the prospect of industrial closures that could ripple through supply chains already battered by inflation.
Rush to renewables accelarates
EU energy ministers agreed Tuesday to fast-track permits for offshore wind and solar farms, aiming to cut gas use another 15 % by 2027, but infrastructure will take years. Meanwhile, households face record summer bills; Italian utility Enel reports customer arrears up 40 % since June. "We didn�t just fail to diversify, we failed to learn," said Simone Tagliapietra of Brussels think-tank Bruegel. "Europe is one cold spell away from a repeat of last year�s chaos, only this time with less Russian gas and more Chinese competition."