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Spiralling prices of gas that have already created shortages are likely to spread to the rest of Europe in the coming months and threaten the nascent economic recovery, business analysts have begun to warn.
The consequences won’t be measured only by households facing exploding energy bills and businesses going under. As a consequence of higher wholesale gas prices, two fertiliser plants have been forced to shut down in the UK, in turn threatening the supply of carbon dioxide – a byproduct of their manufacturing process.
That in turn imperils the production of food and meat: Carbon dioxide of CO2 is not only one of the major causes of global warming. It also has industrial usages, most notably in the fizzy drinks, the vacuum packing of food or the slaughtering of animals—not to mention the cooling of nuclear power plants or in some surgical procedures.
Nippon Gases, one of the largest distributors of natural gases, told the Financial Times that its deliveries of CO2 to Europe have fallen by half this year, because of the rocketing prices. In the U.K., the meat industry lobby has also warned that meat processors may have to close as soon as this week because of the lack of CO2.
The gas crisis has propelled prices up 280% since the beginning of the year, and 100% in the U.S., due to several causes: colder weather throughout Europe in April and May, some outages in gas fields in Norway and Russia, and higher demand in Asia, which rerouted some of the global liquefied natural gas (LNG) traffic to the region.
Some European policy makers also suspect that Russia is refusing to increase deliveries to Europe just to make the case that its controversial Nord Stream 2 pipeline, which has faced opposition from the U.S. and European Union governments, needs to be completed without delays.
As a result of the crisis, gas storage tanks in Europe are only 72% full ahead of the winter season, compared with the usual 87% at this time of the year, ING economist Warren Patterson has noted.
The impact of the crisis will be different between countries. It will be milder in the U.S. where users of gas are mostly industrial, Morgan Stanley expects. In Europe, the U.K., for example, is more reliant on gas than France, with its dense network of nuclear plants. But the economic consequences will affect everyone.
Norway has already promised it would increase its deliveries to Europe. A mild winter may help bring prices back to lower levels, and beyond that some form of energy substitution—for example from gas to coal—could help alleviate shortages somewhat. And LNG deliveries to Europe might increase in the coming months.
But if these don’t happen, the recovery, already weakened by the coronavirus Delta variant, will take another hit. Inflation could become more lasting than economists and central bankers now expect, and political problems may arise when households receive their gas bills.
Governments will have to help cushion the impact, stressing public finances further after public debts ballooned under the Covid-19 pandemic: Some have already started to subsidize energy bills or support businesses most affected by the crisis.
Meanwhile, the irony should not be lost that Europe is trying to produce more CO2 while expecting that a much-maligned pipeline from Russia will bring more gas to its shores.
Dontcha just love the nu-70's?
I'm sure the prospect of the peasants freezing and starving has Bill Gates and the WEF furiously stroking themselves.
Archive
Spiralling prices of gas that have already created shortages are likely to spread to the rest of Europe in the coming months and threaten the nascent economic recovery, business analysts have begun to warn.
The consequences won’t be measured only by households facing exploding energy bills and businesses going under. As a consequence of higher wholesale gas prices, two fertiliser plants have been forced to shut down in the UK, in turn threatening the supply of carbon dioxide – a byproduct of their manufacturing process.
That in turn imperils the production of food and meat: Carbon dioxide of CO2 is not only one of the major causes of global warming. It also has industrial usages, most notably in the fizzy drinks, the vacuum packing of food or the slaughtering of animals—not to mention the cooling of nuclear power plants or in some surgical procedures.
Nippon Gases, one of the largest distributors of natural gases, told the Financial Times that its deliveries of CO2 to Europe have fallen by half this year, because of the rocketing prices. In the U.K., the meat industry lobby has also warned that meat processors may have to close as soon as this week because of the lack of CO2.
The gas crisis has propelled prices up 280% since the beginning of the year, and 100% in the U.S., due to several causes: colder weather throughout Europe in April and May, some outages in gas fields in Norway and Russia, and higher demand in Asia, which rerouted some of the global liquefied natural gas (LNG) traffic to the region.
Some European policy makers also suspect that Russia is refusing to increase deliveries to Europe just to make the case that its controversial Nord Stream 2 pipeline, which has faced opposition from the U.S. and European Union governments, needs to be completed without delays.
As a result of the crisis, gas storage tanks in Europe are only 72% full ahead of the winter season, compared with the usual 87% at this time of the year, ING economist Warren Patterson has noted.
The impact of the crisis will be different between countries. It will be milder in the U.S. where users of gas are mostly industrial, Morgan Stanley expects. In Europe, the U.K., for example, is more reliant on gas than France, with its dense network of nuclear plants. But the economic consequences will affect everyone.
Norway has already promised it would increase its deliveries to Europe. A mild winter may help bring prices back to lower levels, and beyond that some form of energy substitution—for example from gas to coal—could help alleviate shortages somewhat. And LNG deliveries to Europe might increase in the coming months.
But if these don’t happen, the recovery, already weakened by the coronavirus Delta variant, will take another hit. Inflation could become more lasting than economists and central bankers now expect, and political problems may arise when households receive their gas bills.
Governments will have to help cushion the impact, stressing public finances further after public debts ballooned under the Covid-19 pandemic: Some have already started to subsidize energy bills or support businesses most affected by the crisis.
Meanwhile, the irony should not be lost that Europe is trying to produce more CO2 while expecting that a much-maligned pipeline from Russia will bring more gas to its shores.
Dontcha just love the nu-70's?
I'm sure the prospect of the peasants freezing and starving has Bill Gates and the WEF furiously stroking themselves.
