Europe is in a full-blown energy crisis

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Power and natural gas prices are skyrocketing

I’ve been warning about this for awhile. Things have gotten out of hand quickly in Europe and this is going to be a political crisis in short order as people and companies get slammed with heating and energy bills that they can’t afford to pay — at least without digging into broader spending.

TTF European benchmark natural gas:

TTF prices

In the UK, power prices are at critical levels. They rose after a series of low-wind days. That’s been compounded by natural gas prices and there was a fire at a key electricity station yesterday that shut down a major cable that brings in power from France.

Another way of looking at that chart is in natural gas prices equivalent to crude oil barrels (it’s a messy calculation). By that measure, natural gas is above $150 BOE, or above the all-time record for crude prices.

In the UK, wholesale natural gas prices are up 20% today.

European energy prices

In terms of electricity, the prices are breaking the scale at EnergyLive, hitting records almost everywhere.

European energy prices tooI posted the same chart two days ago and you can see the differences:
Blas tweet

Goldman Sachs today is warning that if the winter is cold this year there’s a growing risk of blackouts, including in the industrial centre. Already the UK is bringing on regulations that limit the times that people can charge electric cars.

In the UK, two power producers — Utility Point and People’s Energy — who supplied gas and electricity to 570,000 home went out of business. There’s a safety net process that will continue to serve them power but it follows two other producers going out of business. As we saw in Texas last year, utilities with long-term fixed contracts with customers for power don’t have the ability to pay these high prices.

Uk power pricesIt’s not hard to see how all of this will spillover to the real economy and into inflation.

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