Household energy shortages are far from over, as gas wholesaling rises again by 12%

Gas prices in Europe rose again on Tuesday and are now close to their early October record, as the household energy crisis in Ireland and the rest of Europe is far from over.

Increases in gas wholesale prices have already led to significantly higher bills for households at the beginning of this winter and the price increases this week are particularly significant as the warnings of the impending sharp increase in cases of the Omicron variant should have pushed wholesale prices lower.

The most recent increases came when the new German Foreign Minister Annalena Baerbock said that Russia would expect “massive consequences” if it invaded Ukraine. Your phone call was the first publicly announced contact between Berlin and Moscow since the coalition government of Chancellor Olaf Scholz took office last week.

Energy shortage on the continent

Wholesale gas prices are being watched closely as more and more gas is used to address the continent’s energy shortages by generating electricity in gas-fired power plants.

Late on Tuesday afternoon, the most heavily observed gas contract, the so-called Dutch TTF futures contract, rose again by over 12% to 130.50 kilowatt hours per hour for the January delivery.

At the beginning of October, the contract reached a peak for life of around 130 euros.

For consumers, there may have been better news as the price of crude oil fell in world markets amid fears that a flare-up of the Omicron variant will create new restrictions in leading economies. Brent crude futures fell 1.3% to $ 73.41 a barrel.

Paul Dales, UK chief economist at Capital Economics, said it was already scaling back its forecasts for GDP growth in the UK for the coming weeks based on the impact Omicron has already had.

The big risk remains whether Omicron cases would lead to a new lockdown in the UK in January, Mr Dales wrote in a research note.

“Reports that the surge in Omicron Covid-19 cases is causing some people to absent from work, schools, pubs and restaurants increases the downside risks to our December and January GDP projections,” he said.

But the big step down would come if there was another lockdown in the New Year. ”

Meanwhile, Simon MacAdam, Senior Global Economist at Capital Economics, predicted a clear easing of the recent price increases around the world, which “will reverse at the beginning of next year”.

“While energy prices have continued to be a major inflation driver in recent months, energy inflation should fall sharply over the next year, which will lower headline inflation worldwide,” MacAdam wrote in a press release.

Meanwhile, equity market investors focused on current inflationary pressures.

Chris Beauchamp, senior market analyst at online broker IG, said that “investors continue to expect higher prices to flow through the economy,” regardless of what leading central banks do with interest rates.

The Ftse-100 closed a little lower, but the Frankfurt stock index Dax lost 1%.

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