The energy crisis in Europe in recent months has been dominated by one question: is Vladimir Putin turning on the gas? But this political pressure tool is likely to be less and less effective. Although gas has stopped flowing through Nord Stream 1 since Wednesday morning, wholesale prices are falling.
With the gas supply, Russia tinkered with a bogeyman that made many Europeans increasingly doubt the effectiveness of the sanctions imposed because of the war of aggression against Ukraine. Last but not least, the huge impact on energy prices – for example, electricity production is largely dependent on gas – fueled concerns about the cold season.
Price dropped by almost a third
But now a small trend reversal in demand seems to have succeeded. Although Russia recently shut down the Nord Stream 1 gas pipeline for maintenance work, the market has not responded with higher prices to the artificial shortage of supplies. Prices have actually fallen for the third day in a row.
Compared to last Friday (which marked the previous high), the wholesale price for gas fell from 339 euros per megawatt hour to 245 euros – this corresponds to a minus of 28 percent. The price of electricity also fell by 42 percent from 945 euros per megawatt hour to 575 euros.
Political announcements have an effect
While prices are still at a relatively very high level, the political decisions of recent weeks should finally have an impact. For example, the President of the European Commission, Ursula von der Leyen, not only announced short-term intervention in the market, but also held a view on general structural reform. The mere announcement of these steps led to a price reduction.
There is another aspect that plays into the hands of European states. Despite reduced gas supplies, the storage facilities in Europe are already quite full. In Germany, the fill levels are already approaching 90 percent and in Austria the value is already an average of 66 percent.
Gazprom heads to China
Despite this, Russia is still doing very good business with the gas supply. Despite Western sanctions, state-owned Gazprom reported billions in profit in the first half of 2022. And feelers are already being put in other markets: As it became known on Wednesday, the extra budget would now be used to continue pipelines to China.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
