Gas, how prices and consumption are going in Italy and the EU
Gas prices in the EU have returned to pre-war levels, but still remain well above the average of the last ten years. Industries are in trouble. What is the situation in Europe and in Italy
Last week, natural gas prices in Europe fell to a level before the invasion of Ukraine on February 24, 2022.
The war has in fact aggravated the energy crisis in a continent extremely dependent on Russia for fuel supplies; supplies that Moscow has severely limited in retaliation for the sanctions. Today, however, the mild climate – and the relative drop in consumption – has eased fears about gas shortages and favored a drop in prices.
The difference between a mild and a harsh winter, in terms of gas consumption, is around 25 billion cubic metres, or 7-8 percent of European demand.
GAS AT THE MINIMUM FOR TEN MONTHS
As the Guardian recalls, last Wednesday the price of month-ahead gas contracts on the European market fell to 76.78 euros per megawatt hour, the lowest value in ten months. The same TTF futures were trading at $ 74.28 a megawatt-hour this morning.
HOW ARE THE STORAGES
As at 31 December, European gas storages were filled to an average of 83.3 per cent.
Last May, the EU authorities had set a minimum Community target of 80% storage capacity by the beginning of November, in preparation for the winter: the target was reached in August, and towards mid-November the peak filling rate was above 95 per cent.
– Read also: EU gas price cap: how it will work and what the experts say
GAS CONSUMPTION IN EUROPE
Energy prices in the European Union were sky-high throughout 2022: they peaked in August, and have fallen sharply since then. Despite the significant drop at the end of December, however, prices still remain three times higher than the average of the last ten years.
As the Financial Times writes, entire industries – especially energy-intensive ones, such as the steel and chemical industries – have had to reduce production due to high energy prices. Governments have collectively allocated more than €700 billion in subsidies and other financial support measures to consumers and businesses.
Eurostat data say that in the first six months of 2022 domestic gas bills increased significantly in all twenty-seven member countries of the Union; in some cases, such as Estonia and Bulgaria, they more than doubled compared to the previous year.
The estimates reported by the newspaper say that in the second half of 2022 gas consumption in Europe fell by around 15 percent, in line with the target set by the agreement on demand containment reached at the end of July by the governments of the Union . However, it was first of all the industries that "saved" energy, which had to reduce their activities due to the high production costs.
HOW IS ITALY
In Italy, wrote ISPI researcher Matteo Villa, “compared to a 23% reduction in industrial gas consumption, industrial production contracted by less than 2% on an annual basis. Energy-intensive production also fell much less than one might have expected (by 5-6%)”.
“On the -27% of warming”, continues the analyst, “a very mild autumn made the difference above all. Even with the same external temperature, in November the Italians were saving [the blue line in the following graph, ed ]. But in December we 'recovered'”.
According to Villa, this is “a very bad indication: it means that Italians have not followed the government's recommendations, and their consumption is practically insensitive to bill prices. It also tells us that the measures to support consumption spread across all bills are counterproductive”.
Villa thinks that the government should rather offer incentives for savings, not consumption, and limit support measures only to energy-poor families, around 10 per cent of the total: "this would allow aid to be tripled for families in poverty, freeing up billions for other measures”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/gas-come-vanno-prezzi-e-consumi-in-italie-e-ue/ on Mon, 02 Jan 2023 11:18:00 +0000.