Europe will see factories close amid rising energy prices
Europe’s gas and electricity prices are soaring and it seems as though this will remain the case over the winter months.
As a result, manufacturing companies are looking at closing their plants in an effort to minimise spiralling costs over a busy winter period.
'Europe's rising energy prices will force factory closures'— Avid Commentator 🇦🇺 (@AvidCommentator) October 3, 2021
Not too long ago I was labelled a doomsayer for pointing these types of risks, now here we are. https://t.co/P3jSIY3cP2
Year-on-year front-month gas futures have increased six-fold, as Europe’s gas reserves are being depleted ahead of peak levels of demand seen during winter seasons.
JUST IN - Prices of gas futures in Europe continue to rise sharply and just hit $1,064 per 1,000 cubic meters, a new all-time high (Dutch TTF)— Disclose.tv (@disclosetv) September 29, 2021
Storage sites across Europe are three-quarters of capacity, according to Gas Infrastructure Europe. This is the lowest point in over ten years and well below the five-year seasonal average of 87.4% from before the pandemic.
This is worth monitoring: European natural gas storage sites are just under 75% full, the lowest level for this time of year 👀🇪🇺— Stephen Stapczynski (@SStapczynski) October 1, 2021
Inventory withdrawals typically start by the end of the month. Gas prices keep surging as Europe struggles to refill stockshttps://t.co/0BMePVjSJT pic.twitter.com/d9sbPUgURb
Plant closures offer a variety of problems such as inflationary pressure and further supply chain issues.
Due to there being shortages across the world, Europe is unlikely to remedy the situation over the short-term, as the supply of gas is fixed, resulting in prices rising in North America and in Asia.
Lower consumption could be necessary to stop reserves plummeting to critical levels which would represent a risk of fuel supplies running out.
Logically, prices rising would deter consumption, but a question mark remains over whether or not governments can get their citizens to consume less fuel without disruption.
Or, whether they can do it in a more measured way, for example, by marginally turning down thermostats across the country, ensuring sufficient comfort.
Otherwise, a cold winter could be on the horizon for Europeans.