Boris Johnson comments on energy crisis
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The Bank of America has suggested that annual energy costs for the average European family will rise by as much as £540. Rising electricity and gas prices will have a total impact of about £7.5 billion (€9 billion) on Spanish domestic consumers, according to data from the bank, which compares its estimates for this year and 2021 with 2020 prices. However, Spain is not the country in which this shock to the domestic consumer will be greater due to the rise in electricity and gas prices, especially since the middle of last year, as the investment bank points out.
This total increase in the United Kingdom will amount to £23.09 billion, while in Italy it will be £20.43 billion, in Germany £19.18 billion and in France £18.43 billion.
In the report, the financial entity calculates the impact that the current energy price crisis will have.
The average residential consumer will spend £1,540 on energy this year, up from £1,000 in 2020, analysts at the bank said in a research note.
The biggest increases will be in Italy and the UK where bills will jump by about £790.
Europe’s energy crisis is hitting households, sending bills rocketing and pushing many into fuel poverty.
Policymakers are under pressure to find ways to shield consumers while not sending energy suppliers into bankruptcy.
Of the European Union’s 27 members, 20 have acted to soften the blow for the most vulnerable consumers and households — most effectively via tax cuts, according to the European Commission.
Businesses are also set to be hit hard, with typical industrial consumers seeing an increase of as much as 70 percent in their electricity costs and 100 percent in their gas costs this year, according to Bank of America analysts.
That follows a roughly 20 percent increase in electricity and 15 percent rise in gas costs in 2021, they said.
While gas and power prices have dropped from December’s record levels, the risk of high prices is far from over, with the likelihood increased by low gas storage in Europe.
That could be a boost for utility companies, who are expected to see increased earnings but are also at risk of government interventions.
Europe’s major industrial consumers may experience an annual increase of 70-100 percent in gas and electricity costs this year.
The banknotes European wholesale gas and electricity prices rose at the end of December from their already high levels.
Thus, gas supplies for 2022 increase by more than 400 percent compared to January 2021, while gas-fired electricity prices in Europe rise by 300 percent.
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Some critics of the rising prices suggest the increase comes as Russia tightens its grip on the European energy supply, in particular in light of the ongoing delays over the opening of the NordStream II pipeline.
Gazprom, Russia’s state-backed gas giant, has taken in £179m in dividends from Europe’s energy crisis.
The world’s largest gas producer amassed the payout from its London-based trading business, which bets on the movements of gas and power prices.
In its results for 2020, the trading arm, Gazprom Marketing & Trading Ltd, noted that the plunge in energy demand during the pandemic had “provided opportunities” to take advantage of the “highly volatile market conditions.”
Europeans have invested heavily in renewable energy. But gas remains a crucial gap-filling fuel, not only for power generation but also for heating homes and cooking food.
European energy markets apparently foresaw grim natural-gas shortages ahead.
Emergency fixes to the shortfalls are available. Market forces have already summoned some two dozen tankers of US liquid natural gas to Europe. Each tanker carries enough gas to supply 75,000 homes for a year.
But to keep the peace in Europe, the US and its allies will need longer-term plans. Europe has made itself unnecessarily vulnerable to Russian pressure via missteps such as closing perfectly functional German nuclear facilities.
In 2021, nuclear power met more than 10 percent of Germany’s electricity needs.
Replacing that supply will take a lot of carbon-emitting natural gas, unless Germany reverts to burning coal, an even worse climate offender.
Renewables offer a promise of European energy independence. But that is a distant promise, and without the German nuclear supply, which according to The Atlantic, “the route will be even longer and more difficult.”
Additional Reporting by Maria Ortega
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