Europe has record gas stocks for this winter — but consumers still face historically higher bills
A worker heats the seal of a joint between two segments of pipe during construction of a section of an interconnector gas pipeline, linking the gas networks of Bulgaria and Serbia, on the outskirts of Sofia, Bulgaria, on Friday, Feb.24, 2023. Bulgaria has begun work on a new pipeline to neighboring Serbia that will enable gas supplies from other countries to reduce dependence on Russian flows. Photographer: Oliver Bunic/Bloomberg via Getty Images
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A feared European winter gas shortage has yet to materialize for the second year in a row — but consumers are set to stay stuck paying significantly higher rates than they used to.
A crisis situation was averted last winter, following a scramble to find new suppliers, reopen old storage facilities and roll out initiatives to reduce consumption in some energy-intensive areas, as flows from Russia dried up in the wake of its full-scale invasion of Ukraine in February 2022.
According to research published by Moody’s this month, the EU had record high gas stocks of around 97.5% at the end November 2023, meaning both very low risk of energy shortages this winter and a strong position for the next cold season, analysts found.
“Europe’s improved energy reserves going into this winter are the result of the effectiveness of government actions on the supply and demand side, and consistent energy savings by both households and companies,” the Moody’s report stated, citing greater supplies of liquefied natural gas (LNG) in 2023, a higher availability of nuclear and hydropower plants and a mild winter as improving the situation.
Lower consumption has also been helped by economic stagnation in the continent, the report said.
Moody’s expects gas storage to be higher than previously anticipated at 55% at the end of March 2024.
Household and business bills
Yet, “European gas prices will remain high and volatile,” the report finds.
Energy has been one of the strongest forces pulling down inflation in recent months, after being a chief driver in hikes in consumer prices suffered in the immediate wake of Russia’s invasion of Ukraine. Annual headline inflation was 2.4% in November in the euro zone, with energy showing disinflation of 11.5% year-on-year, even as the extent of price rises simply moderated in all other sectors.
In the U.K., gas price inflation has plunged by 31% in the year to November, figures from the Office for National Statistics showed.
But all that is a fall off the back of a very large spike.
Using Factset data, Moody’s found that European gas prices are well above their 2015-2019 average — and sees them remaining above this level until at least 2031. In 2020 and 2021, prices were below the average.
“The tariffs paid by households and industries are still historically very high,” James Waddell, head of European gas and global LNG at Energy Aspects, told CNBC by email.
“Movements in these prices generally follow movements in the wholesale gas market with a lag of several months, because of supplier hedging. So the fall in European wholesale gas prices from last year has not fully been passed through yet.”
Wholesale prices are overall around four times lower than they averaged over 2022, but still more than double what they were historically, Waddell said.
“This means that there are still price pressures on households and industries and in the case of the latter, increasingly we see interest in these firms relocating production outside of Europe.”
He also said that, despite healthy supply in the short term, concerns remain about the ability for European gas storage capacity to set itself up for the years ahead, since “stocks can be drawn down quickly in the event of cold weather.” That can also be the case if an increase in Asian demand pulls a lot of LNG away from Europe, he said.
Moody’s says gas prices will stay volatile primarily because of “increased geopolitical risks, which reflect their intrinsic vulnerability to supply disruptions.”
It cites various downside risks to its gas market outlook, including a further cut in Russian pipeline supply and episodes of supply disruption, as seen in the strikes at Australian LNG facilities earlier this year.
Additional volatility has arisen following the Israel-Hamas war, which has lifted risk premiums and driven spot gas prices higher despite Europe’s relative distance from the conflict, researchers say.
According to Moody’s, “Under the unlikely adverse scenario where the conflict could escalate to the broader region with the direct involvement of Iran, European gas prices could spike to similar levels seen following Russia’s invasion of Ukraine. This scenario would hurt economic activity and add further challenges for energy-intensive sectors.”
Fancy German-made mid-drives are often considered the premier option for electric bikes, offering higher precision engineering and an overall more sophisticated experience. But they’ve also been quite pricey, at least until Ride1Up began running an incredible sale on its normally $2,195 Prodigy XC electric mountain bike, marked down to just $1,295.
I reviewed the urban version of this bike back when it was at full price, and it was a great buy even at its MSRP. But now with this killer Black Friday price, this is a deal that is unlikely to ever be seen again.
The Class 3 electric bicycle can hit speeds of up to 28 mph (45 km/h), and comes with all the benefits of that nice Brose TF Sprinter mid-drive motor. That means you get the smooth and refined torque sensor-based pedal assist, the color screen, and the higher-end ride quality.
Other nice components found on the bike include the Maxxis Forekaster off-road tires, the Tektro quad-piston hydraulic disc brakes, and the 120mm-travel air suspension fork.
At this price, Ride1Up is almost certainly selling the bike at below cost, meaning you’re getting it for less than it costs the company to build these highly-acclaimed e-bikes.
Why would they do that? Because this is the previous generation of the bike, which was eclipsed by the second-generation Prodigy V2. But hey, if this bike was good enough when it came out a year before the V2 (and it was), then it still a great bike today. For those who don’t need the nicest and newest version of a piece of tech, this is an incredible steal of a deal.
Ride1Up is all but certain to be moving these Prodigy XCs at such a low price to clear up shelf space in their warehouse, so when these are gone, they’re gone for good. And this isn’t only a Black Friday price – the company has been moving these bikes for several months at this crazy sale price. That further underscores that this is a clear-out-the-previous-version sale that will be gone for good when the bikes are gone.
At this price, there’s simply no other German-made mid-drive e-bike out there with the bang-for-buck offered by the $1,295 Prodigy XC right now, that’s for sure.
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Working oil pumps against a sunset sky.
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Higher fuel prices could be in the cards if President-elect Donald Trump follows through with his tariff threats on Canada, according to industry experts, who are skeptical on whether the new levies will ever be implemented.
Trump on Monday pledged to implement additional tariffs on China, Canada and Mexico on day one of his presidency, according to his posts on social media platform Truth Social. He said he would sign an executive order on Jan. 20 imposing a 25% tariff on all imports from Canada and Mexico, a move that may breach the terms of a regional free trade agreement.
Goldman Sachs’ Co-Head of Global Commodities Research Daan Struyven said that if a 25% levy hit Canadian crude exports to the U.S. “that could, in theory, lead to some pretty significant consequences for three groups.”
U.S. refiners who rely on Canadian oil barrels could face lower profit margins, and consumers may potentially face higher prices, surmised Struyven. Lastly, Canadian producers may suffer revenue losses if they are unable to reroute their barrels that would have otherwise gone to the U.S.
America’s imports of Canadian crude oil hit a record of 4.3 million barrels per day in July 2024 after the expansion of Canada’s Trans Mountain pipeline, according to the most recent data from the U.S. Energy Information Administration.
If we were to see a 25% tariff on Canadian energy exports, I think it could have some very significant ramifications for trade flows.
Daan Struyven
Goldman Sachs
Additionally, refiners in the Midwest, which are more adapted to process Canada’s heavy sour crude rather than the low sulfur sweet crude produced domestically, could also have problems switching should the Canadian imports be interrupted, Struyven told journalists at an online conference.
“If we were to see a 25% tariff on Canadian energy exports, I think it could have some very significant ramifications for trade flows,” Struyven said.
Mexico and especially Canada have “notable tightly integrated linkages” with the U.S. when it comes to the oil, natural gas and auto industries, Citigroup wrote in a note following Trump’s announcements this week.
“Absent carve-outs, this would increase costs for U.S. refiners and U.S. consumers,” said the bank’s research team led by Energy Strategist Eric Lee.
However, Goldman highlighted that it is unlikely that the tariffs will be implemented as announced, on the premise that the Trump administration is focused on reducing energy costs.
Trump cannot allow inflation to get out of control in the 15 months before the midterm election season, Viktor Shvets, global strategist at Macquarie Capital, told CNBC. Shvets believes that tariffs are used as a negotiating tool to achieve certain objectives such as strengthening the border.
“I do not believe for a second that there will be a massive increase in overall tariffs because that will represent a tax on U.S. domestic manufacturers. That will also represent a tax on U.S. exporters,” said Shvets.
Canada’s trade bodies have shared their concerns, too.
“As Canadians, we need to be eyes-wide-open on the President-elect’s promise for across-the-board tariffs,” the CEO of the Canadian Association of Petroleum Producers, Lisa Baiton, reportedly said.
Danielle Smith, the premier of Alberta which accounts for the largest production of crude in Canada, said that the Trump administration has “valid concerns related to illegal activities at our shared border,” and urged the federal government to resolve said issues immediately to avoid any “unnecessary tariffs” on Canadian exports.
On today’s fact-checking episode of Quick Charge, we’ve got a showdown brewing between California Governor Gavin Newsom and Tesla CEO Elon Musk, an updated 650 hp Kia EV6 GT that’s ready to take on the world, and some sweet deals on battery-powered goodies.
We’ve also got new electric buses at UCLA that are powered by inductive current in the road itself, and a massive new solar project on a site more famous for coal than clean. All this and a little bit of fact-checking on some fresh musky nonsense – enjoy!
Today’s episode is sponsored by BLUETTI, a leading provider of portable power stations, solar generators, and energy storage systems. For a limited time, save up to 52% during BLUETTI’s exclusive Black Friday sale, now through November 28, and be sure to use promo code BLUETTI5OFF for 5% off all power stations site wide. Learn more at this link.
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Read more: E-quipment highlight | Palfinger FLS 25 eDRIVE truck mounted forklift.
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