Jubilee Post News & Views
Special Desk
Electricity prices in Europe have skyrocketed and consumers are likely to face the brunt of rising prices soon.
The global increase in the prices of wholesale gas and power prices means that these higher prices will trickle down to retail consumers in Europe, who are likely to face inflated energy bills in the upcoming winter months. High cost of energy could also mean higher levels of inflation than already forecast.
In response to the rising prices, the governments of several countries in the continent are now contemplating aid to help tide the people through the winter season, when people use more energy to heat their homes and switch on lights earlier in the day.
The price and cost of energy is dynamic, and like most commodities of the world, it depends on the pull and push of demand and supply, the competition in the market and taxation among other factors. Other factors could include the energy mix used in a particular country, the amount of energy that is imported, the geopolitical conditions and environmental protection costs.
European Commission’s (EC) fourth report on energy prices and costs which came out in October 2020 notes that wholesale prices of energy rose in recent years before they began to fall in 2019 due to economic slowdown and surplus supply. Prices went further down in 2020, as a result of the Covid-19 pandemic, which triggered travel restrictions globally and locally.
As per the EC, for household consumers living in countries part of the European Union (EU), prices were highest for consumers in Germany in the second half of 2020, followed by those living in Denmark and Belgium.
On the other hand, consumers living in Bulgaria, Hungary and Estonia paid the lowest prices during this time period. In fact, a household consumer in Germany was paying about three times the price for the same amount of electricity consumed as a person in Bulgaria was paying for it in the latter half of 2020.
European countries rely on Russia for 40% of their gas needs. In August, the Russian-state owned Gazprom announced that it would be reducing its supply of natural gas to Europe because of a fire in a Siberian gas processing plant.
