So the EU price cap on natural gas is a success?
It's too early to tell. Europe filled the gas storages with expensive liquefied natural gas, towards the end of January when they are empty, the prices will go up again.
No. It is just there is no panic anymore. Europe avoided shortages for certain. European storages are more filled than they were during the December of 2021. The economic slowdown and warm winter are also lowering the demand. Russia got outplayed again.
But at what cost?!
Bloomberg: Europe’s $1 Trillion Energy Bill Only Marks Start of the Crisis
- High prices could last years and aid is becoming unaffordable
- Relief on global gas markets isn’t expected until 2026
Europe got hit by roughly $1 trillion from surging energy costs in the fallout of Russia’s war in Ukraine, and the deepest crisis in decades is only getting started.
After this winter, the region will have to refill gas reserves with little to no deliveries from Russia, intensifying competition for tankers of the fuel. Even with more facilities to import liquefied natural gas coming online, the market is expected to remain tight until 2026, when additional production capacity from the US to Qatar becomes available. That means no respite from high prices.
While governments were able to help companies and consumers absorb much of the blow with more than $700 billion in aid, according to the Brussels-based think tank Bruegel, a state of emergency could last for years. With interest rates rising and economies likely already in recession, the support that cushioned the blow for millions of households and businesses is looking increasingly unaffordable.
“Once you add everything up — bailouts, subsidies — it is a ridiculously large amount of money,” said Martin Devenish, a director at consultancy S-RM. “It’s going to be a lot harder for governments to manage this crisis next year.”
Government fiscal capacity is already stretched. About half of European Union member states have debt exceeding the bloc’s limit of 60% of gross domestic product. Germany to issue record federal debt to fund energy crisis aid.
The roughly $1 trillion, calculated by Bloomberg from market data, is a broad tally of more expensive energy for consumers and companies — some but not all of which was offset with aid packages. Bruegel has a similar estimate looking at demand and an increase in prices, which was published in a report this month by the International Monetary Fund.