Europe’s green transition is the result of ‘management by chaos,’ says energy expert

Europe’s green transition is the result of ‘management by chaos,’ says energy expert

Article Highlights:

  • Natural gas futures on the New York Mercantile Exchange hit 13-year highs, holding a strain on Europe. It is dependent on imports owing to worldwide supply problems.
  • According to Benigni, natural gas prices will remain at “very, very lofty highs” until 2025. Also, the increase will not be a “short-term event.”

Management of Europe’s Green Economy:

According to Johannes Benigni, chairman of analytical firm JBC Energy, Europe’s handling of the transition to a green economy has been “management by disorder,”. Moreover, high energy prices is expected to last until 2025.

On the New York Mercantile Exchange, natural gas futures hit 13-year highs, with Europe especially feeling the pressure due to global supply restriction and its reliance on imports. Oil has also risen, and on Tuesday afternoon, worldwide benchmark Brent oil was hovering just below $84 per barrel. Benigni told reporters on Tuesday that, while natural gas prices have some seasonality, current demand pressures had aggravated the problem.

Natural gas prices are expected to remain at “very, very lofty highs” until 2025, according to Benigni, and the increases are not a “short-term phenomenon.” “We’re going to see that this market is quite strained.” “As we speak, prices are really high in the pre-winter, and this is due to a lot of fear,” he explained.

Russia may release more natural gas supplies into the market in November, according to Benigni. This will aid European utilities in replenishing their supplies, but he cautioned that the path through the winter will be highly weather-dependent.

“Nearly 75% of our inventory is presently filled.” This is running late. They have a long way to go. Remember, we were at 96 percent last year and it was brought down to 30 percent during a long, bitter winter,” he said.

“That was effectively the beginning of current crisis, that they didn’t regulate  to replenish their stocks as much as they required to, but this year is a different story.”

Factors of inferences on Energy Supply:

Benigni cited a slew of variables that will have ramifications across the energy supply chain. It include a huge energy shortage in Russia, a “gas-to-oil swap,” and South American demand escalation owing to drought-related hydropower shortages.

“We had suppliers that were just having maintenance issues and assumed the market would not recover as soon as it did,” Benigni explained. “All of that takes time to restart the engines on the production front.”

Analysts believe that because the United States does not rely on imports, it will be better shielded from the price spike and energy shortage that is currently affecting Europe. According to Deutsche Bank analysts, natural gas costs in Europe have increased fivefold, compared to 1.5 times in the United States and Asia.

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