Natural gas prices surged 36% in Europe over the weekend after Russia announced it was halting the flow of natural gas through its Nord Stream gas pipeline. European natural gas prices are now up 400% from a year ago, though off their August highs.
Russia said its main gas supply pipelines would remain closed indefinitely, fueling fears of gas rationing in the European Union this winter. Russia said the shutdown was due to “technical reasons,” but European officials accused Russia of weaponizing energy prices in retaliation for sanctions against Russia following its invasion of Ukraine. The Nordstream pipeline has typically supplied Europe with about a third of the gas imported to Europe from Russia.
Over the weekend, Germany unveiled its third energy relief package this year, worth more than $70 billion to shield consumers. European energy ministers will meet Friday to discuss options for dealing with the skyrocketing prices for energy.
Finland and Sweden also announced plans over the weekend to offer billions of dollars in liquidity guarantees to power companies in their countries. Finland is planning to offer about $10 billion, and Sweden plans to offer $250 billion in guarantees.
European countries have been boosting their stockpiles of natural gas to prepare for the winter. Europe’s stocks are currently 81% full.
"The spike in natural gas prices across Europe may drive energy bills up as much as 200% for the average European family, to around 500 euros per month, on average, according to recent estimates. That would imply a $2 Trillion Euro surge in energy costs for Europe as a whole, which could steepen the downturn for the economies of the EU," said Caleb Silver, Editor-in-Chief of Investopedia.