Image Source: Netherlands Posts
Following Russia’s announcement that it will not reopen its main gas pipeline to Europe, gas prices have risen due to worries about the availability of energy.
The benchmark Dutch wholesale gas price for the month ahead increased by as much as 26% on Monday before reversing course slightly.
The Nord Stream 1 pipeline had been closed for three days and was scheduled to restart on Saturday.
Gazprom, a state-owned energy company in Russia, claimed to have discovered a leak.
Because of the war in Ukraine, Europe has accused Russia of using the gas supply as a kind of blackmail. Moscow disputes this accusation.
The past few weeks have seen a lot of volatility in wholesale prices. For example, when Germany revealed that its gas storage facilities were filling up more quickly than anticipated, they plummeted dramatically the previous week.
Despite not being dependent on Nord Stream 1 for its gas, the UK’s wholesale gas cost has increased due to the Kremlin’s decision to limit supply to Europe.
For consumers in England, Wales, and Scotland, the price cap on energy bills has increased as a result of this.
If Liz Truss is elected prime minister, she intends to present a strategy to address excessive energy costs. She is a candidate for the Tory leadership. However, the poorest people will be the focus of any additional benefits, according to her challenger Rishi Sunak.
The British Chambers of Commerce warned that businesses might “shut their doors this winter” if they were not supported with skyrocketing costs. However, UK businesses are not covered by a price cap.
According to energy analyst Bill Farren-Price, the “crunch moment ” might occur later in the year if gas demand is very strong and surpass what can be imported.
The new prime minister’s primary priority, he continued, would be to take steps to reduce energy costs.
Several European governments have unveiled proposals to assist consumers and businesses in coping with rising energy bills. For example, Germany launched a €65 billion (£56.2 billion) package on Sunday that includes one-time payments to the most disadvantaged people and tax reductions for businesses that use a lot of energy.
Read Also: Nord Stream 1 pipeline will remain closed
Over the weekend, multibillion-pound support packages for energy businesses were also unveiled by Sweden and Finland.
Cap of gas prices
Moscow has refuted claims that it has used energy supplies as an economic tool against Western nations that support Ukraine.
It has claimed that the penalties are to blame for the delay in Nord Stream 1’s routine maintenance, but the European Union disputes this.
Read Also: G7 members impose price cap on Russian oil
On Friday, immediately after the G7 countries decided to cap the price of Russian oil in support of Ukraine, Gazprom made the announcement.
A price cap has been introduced, implying that nations who agree to the policy will only be allowed to buy Russian gas and petroleum products shipped by sea and sold at the price cap.
Russia, however, asserts that it will not export to nations that adhere to the export cap.
The Nord Stream 1 pipeline can transport up to 170 million cubic meters of gas per day as it travels from the Russian coast near St. Petersburg to north-eastern Germany.
It is owned and run by Nord Stream AG, which has Gazprom as its largest shareholder.
The pipeline has been shut down on numerous occasions since Russia invaded Ukraine.
Gazprom fully cut off supplies for ten days in July, citing “a maintenance break.” Then, ten days later, it restarted, but much more subtly.
Opinions expressed by California Gazette contributors are their own.