Gas Prices in Europe Double Since the Beginning of the Year

Natural gas prices in Europe have risen by about 120 percent since the beginning of the year, and with low storage levels and risks of supply disruptions, the European market could come under additional pressure ahead of winter.

Another heatwave and record temperatures are increasing demand for electricity, and reduced production at nuclear and hydroelectric plants has had to be compensated by gas-fired power plants, precisely at a time when gas storage facilities should be filling up, writes the Brussels portal Euronews.

The pressure is already being reflected in wholesale gas prices. The European benchmark gas price, on the Dutch TTF market, has risen by about 120 percent since the beginning of the year, reaching around 63.7 euros per megawatt-hour on August 18.

Gas prices are still significantly below the record 350 euros per megawatt-hour reached during the energy crisis of 2022 after Russia’s invasion of Ukraine, but European countries are entering the storage filling period with reserves below the usual level for this time of year.

The price increase is happening at an inconvenient time, during the summer when gas storage facilities are typically filled to ensure sufficient reserves ahead of the heating season and increased household consumption.

The replenishment of reserves has also been affected by a series of disruptions, from the closure of the Strait of Hormuz to limited operation of nuclear and hydroelectric plants due to drought and high temperatures.

At the beginning of August, European gas storage facilities were filled to only about 57 percent, the lowest level for this time of year.

According to EU rules, storage facilities should be filled to at least 90 percent of capacity, but member states are allowed flexibility to reach that target between October 1 and December 1, with the possibility of further deviation in the event of difficult market conditions.

Compared to 2021, Europe has reduced gas consumption by approximately 15 to 20 percent, the share of renewable energy sources has increased, while heat pumps have partly replaced gas heating. At the same time, the supply of liquefied natural gas has increased, making complete physical shortages much less likely today.

However, although reduced consumption has increased Europe’s resilience, it is not fully protected from weather conditions, so gas storage facilities are particularly important during periods of unusually cold weather when demand surges.

Euronews also points out that the rise in gas prices poses a risk for inflation in the eurozone, and thus for the monetary policy of the European Central Bank.

According to estimates by Oxford Economics, inflation in the eurozone could be closer to 3.5 percent in the second half of 2026, compared to just over three percent according to earlier forecasts.