{"id":268369,"date":"2023-07-19T19:22:30","date_gmt":"2023-07-19T17:22:30","guid":{"rendered":"https:\/\/climatescience.press\/?p=268369"},"modified":"2023-07-19T19:22:32","modified_gmt":"2023-07-19T17:22:32","slug":"europe-has-spent-more-than-1-trillion-on-gas-since-2021","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=268369","title":{"rendered":"Europe Has Spent More Than $1 Trillion on Gas Since 2021"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

From The Daily Sceptic<\/a><\/p>\n\n\n\n

By\u00a0NOAH CARL<\/a><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

The wholesale\u00a0<\/span>price<\/a>\u00a0of natural gas in Europe started rising above its historical average in the summer of 2021, around the time that Russia began\u00a0<\/span>reducing<\/a>\u00a0gas pipeline exports. After reaching a level 2000% higher than its historical average in the summer of 2022, it then fell dramatically. The price is now only 30\u201360% higher.<\/span><\/p>\n\n\n\n

Yet bills for households remain well above pre-crisis levels. As of July 2023, the typical U.K. household will pay around\u00a0\u00a32,074 per year<\/a>\u00a0for energy \u00ad\u2013 almost double what they were paying in April of 2021. What\u2019s more, the thinktank Cornwall Insights\u00a0predicts<\/a>\u00a0that household energy bills will not return to their pre-crisis levels until the end of the decade \u201cat the earliest\u201d.<\/p>\n\n\n\n

How can this be? Wholesale prices of natural gas are way down from their peak, and are now only slightly above the historical average. Why are energy bills set to remain elevated until at least 2030?<\/p>\n\n\n\n

The main reason is that energy bills aren\u2019t determined by current prices; they\u2019re determined by the prices wholesalers paid in the recent past. And over the last two years, wholesalers have paid an absolutely huge amount for gas. Just how much?<\/p>\n\n\n\n

Seb Kennedy of Energy Flux\u00a0estimates<\/a>\u00a0that since 2021, European energy firms have spent around\u00a0$1.1 trillion<\/em>\u00a0on gas. This is about equal to the amount they spent over the\u00a0ten years<\/em>\u00a0between 2010 and 2020. What\u2019s more, gas consumption has actually fallen since 2021 (which helps to explain why the wholesale price has come down) so the rise in expenditure comes entirely from an increase in price.<\/p>\n\n\n\n

Kennedy admits the figure is based on a \u201csimple calculation\u201d and therefore has a \u201chigh margin of error\u201d. But he\u00a0believes<\/a>\u00a0it\u2019s \u201cin the right ball park\u201d. (Note that he includes the UK, Turkey and Ukraine as part of Europe.)<\/p>\n\n\n\n

Here\u2019s more or less what happened. When gas prices spiked in the summer of 2022, European policymakers panicked. Fearing there would be shortages in the upcoming winter, they told energy firms to buy up huge quantities of LNG \u2013 with the goal of refilling gas storage. And while they succeeded in refilling gas storage, the cost of doing so was enormous.<\/p>\n\n\n\n

\"\"
Chart taken from \u2018Europe\u2019s pyrrhic gas victory\u2019.<\/figcaption><\/figure>\n\n\n\n

The chart above puts the figure of $1.1 trillion into perspective. As you can see: it\u2019s bigger than the GDP of Saudi Arabia, more than twice as big as the estimated reconstruction costs for Ukraine, and more than 44 times bigger than the cost of Hinkley Point C \u2013 the world\u2019s most expensive nuclear power plant.<\/span><\/p>\n\n\n\n

\u201cThe rush to fill underground gas storage facilities at the height of the market was understandable,\u201d he notes, \u201cbut the costs were apparent at the time, and governments put consumers on the hook\u201d.<\/p>\n\n\n\n

Since the winter of 2022\/23 passed largely\u00a0without incident<\/a>, it might appear that European policymakers \u201csolved\u201d the energy crisis. But what they really did was hide the costs. You can\u2019t a spent a trillion dollars in two-and-a-half years and expect there not to be consequences. European citizens will be paying off the debt for years into the future.<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The wholesale\u00a0price\u00a0of natural gas in Europe started rising above its historical average in the summer of 2021, around the time that Russia began\u00a0reducing\u00a0gas pipeline exports. After reaching a level 2000% higher than its historical average in the summer of 2022, it then fell dramatically. The price is now only 30\u201360% higher.<\/p>\n","protected":false},"author":121246920,"featured_media":268376,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_crdt_document":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[691819630,691818155,691819760],"class_list":{"0":"post-268369","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-uncategorized","8":"tag-energy-crisis","9":"tag-gas","10":"tag-ukraine","12":"fallback-thumbnail"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2023\/07\/0russia2.jpg?fit=1400%2C774&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/paxLW1-17Ox","jetpack-related-posts":[{"id":245243,"url":"https:\/\/climatescience.press\/?p=245243","url_meta":{"origin":268369,"position":0},"title":"Europe 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