Natural gas prices in Europe today jumped the most since March 2022, an unwelcome piece of news that might have been overshadowed by the long-awaited return of clear skies.
With central heating systems mostly switched off in Belgium, consumers have had little use for gas ad household bills are far from the haunting highs of winter. But with natural gas accounting for almost 40% of the country's energy supply at times of peak demand (ie. the winter months), analysts have long warned of more price increases, possibly with peaks that are unsustainable without structural intervention.
Whilst Europe has largely managed to decouple itself from the grip of Russian imports, it now finds itself at the mercy of production pinches elsewhere around the world. Today's spike was provoked by fears of a worker strike at a LNG facility in Australia.
The volatility again makes the case for energy sovereignty and maximising how much domestic demand can be covered by sources under national control. The prudent use of resources – namely, following a policy of sobriety – will lead to a more efficient system at all levels.
But as noted previously, it isn't as simple as celebrating reductions in gas consumption: mistaking savings for efficiency overlooks the very things we should be protecting. European industry has already taken a beating and experts warn that Belgium's greater reduction in natural gas is driven by an almost 20% fall in industry demand.
If lowering gas use also means lowering employment and GDP, the pain for consumers will intensify and be far harder to reverse. Not dissimilar to the flawed tendency to understand an economy through the lens of household expenditure, the nationwide reduction in demand for gas hides more concerning challenges.
Whilst switching your own lights off is a no-brainer, we should be mindful of turning off industry.
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