Cold weather in Europe-will there be enough gas
2022.12.09 10:50
Cold weather in Europe-will there be enough gas
Budrigannews.com – According to an analysis of consumption data, countries in Europe’s first cold spell leading into the winter is testing their resolve to limit gas use after comfortably exceeding an EU reduction target.
Reuters calculations based on data from the ENTSOG network operators federation for 14 countries and the national network regulator for Germany found that European countries decreased their consumption by 24% in November compared to the average for the same month in 2019-2021.
That was down from 29% in October, but it was comfortably higher than the 15% reduction target that EU nations had set for the winter in response to Russian supply cuts.
Graphic: Variable reductions in gas consumption can be found. According to Barclays (LON:), “European gas consumption has dropped for two reasons – first, mild temperatures earlier this fall significantly dampened household demand, and second, high prices have led to demand destruction in the industrial sector.” Mark Cus Babic, an economist from Europe, said.
He continued, “We think the latter is a more robust source of savings going forward.” Household demand is still very responsive to the weather.
In addition to providing relief to European nations as they attempted to build gas stocks, the unusually warm temperatures at the end of October and the beginning of November allowed people to bask in the sun at outdoor cafes like it was summer.
However, as a cold spell has taken hold since the middle of November, demand for heating has increased. In comparison to the long-term average, gas consumption decreased by 18% in the final week of November, and preliminary data from network operators indicate that consumption has increased so far in December.
Graphic: European gas reserve funds falling as winter sets in, notwithstanding interest for warming, gas use for power age stays high as upkeep powers a record number of French atomic reactors to remain disconnected and low degrees of wind hits elective power supplies.
According to Reuters calculations using data from grid operators, European nations have also made efforts to reduce their electricity consumption, which was down by 9% in November compared to the average for 2015-2021.
Countries didn’t have to start using up their gas reserves until later than usual because of the unusually mild autumn weather. This gave them some cushion in case the winter turns out to be colder than usual.
Data from Gas Infrastructure Europe, a trade association for network operators, indicates that Germany, Europe’s largest economy and industrial powerhouse, only began drawing on its reserves on November 17 and that outflows have been minimal since then. On November 1 of last year, Germany began tapping stocks.
Graphic: Gas stocks are high as winter gets closer. “We still think the very high prices will drag on both consumption and industrial production in the euro area,” Cus Babic said. “The tail risk of physical energy shortages in Europe has likely been averted.”
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If it doesn’t get too cold for too long, Europe should be able to get through the winter with enough gas to meet demand thanks to high stock levels, but the gas supply problem probably won’t be completely solved until next year.
According to analysts at the Dutch bank ING, there is a possibility that as gas prices fall, demand will rise, making it difficult to maintain reductions.
Europe benefited this year from importing liquefied natural gas from the United States to build up its reserves; however, this may not be the case next year if it must compete with China for energy supplies as China’s economy recovers from lockdowns this year.
According to economist Florence Pisani of the asset manager Candriam, this indicates that the possibility of Europe experiencing supply shortages is not entirely out of the question.
She stated, “We’re not completely in the clear for the winter 2023-2024 depending on if Russia completely cuts supplies or if Asian and global growth comes back stronger.”
