German government issues new gas price warning

Lazy eyes listen


Gas prices in Germany, the EU’s largest economy, are expected to skyrocket and remain high until at least 2027, according to Bloomberg, citing the latest Economy Ministry data.

Based on forward prices at the end of June, wholesale gas costs may rise to roughly €50 ($54.62) per megawatt-hour ahead of the heating season, according to the research. According to the report, they are anticipated to remain high for the next four years unless more emergency measures are adopted.

The ministry promised to continue monitoring developments in the gas markets in order to be ready to deal with any problems that may occur as a result of the higher pricing.

The ministry’s forecasts are consistent with a recent prognosis from the German gas storage operator firm INES. Earlier this month, the group warned that unless Germany installs more fuel infrastructure, such as more liquefied natural gas (LNG) terminals, storage capacity, and pipeline connections, it will face gas shortages during the heating seasons through the winter of 2026-27.

Germany relied on Russia for around 40% of its gas prior to 2022, and was among the hardest hit by the decline in Russian energy deliveries last year, which were either considerably reduced or completely interrupted when the EU placed sanctions on Moscow in response to the Ukraine conflict.

Despite measures taken by Berlin to replace Russian gas with alternate supplies and efforts made to lower energy consumption, experts have warned of the lingering threat of shortages ahead of the heating season, and a surge in prices.

The government has already paid €22.7 billion in power and gas subsidies to customers since last year, including a one-time payment in December, according to the ministry on Wednesday.

At roughly 08:00 GMT on Thursday, EU benchmark gas futures for September delivery at the TTF hub in the Netherlands were trading at around €38.6 per megawatt-hour in residential terms, following soaring to over €47.6 earlier this week. The present price is approximately twice as high as the average between 2008 and 2021 (about €19.40).