Europe is preparing for a bleak winter as an energy crisis has sent prices for electricity and gas soaring. Germany, France, and the Netherlands have started to feel the effects of a waning energy supply, but the United Kingdom is projected to be the hardest hit.
Oil traders and financial institutions predict crude prices will reach higher levels during the remainder of 2021. For example, Vitol Group predicts oil will rise above $80 a barrel. Goldman Sachs went a step further, indicating crude could reach $90 by the winter season.
Brent, one of the two global benchmarks, recently it a 3-year high as global inventories shrank. Even with OPEC recently announcing production increases, it’s not enough to keep prices down.
To eradicate net carbon emissions by 2050, the U.K increased its reliance on wind-powered energy. Wind farms along the stormy North Sea accounted for 25% of Great Britain’s power last year, however, those numbers have recently dropped closer to 4%.
Paired with low fuel reserves from the pandemic and a rapidly declining coal industry, it’s understandable how European natural gas prices rose nearly 700% from this time last year. Analysts are fearful that a harsh winter would cause an unsustainable increase in demand resulting in widespread blackouts. US natural gas futures spiked 17% this month.
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