European gas prices surge to 2-year high

Europeans are paying more this winter for the natural gas they use to heat their homes.

With demand high because of the unusually cold weather throughout the continent, and with supply limited because of dwindling stockpiles, the price of gas shot up to a two-year high this week of 1.68 euros ($1.73) for a therm, which equates to about 2.83 cubic meters of the fossil fuel.

Futures at the Title Transfer Facility in the Netherlands, a hub that acts as a virtual trading point for natural gas, went up by 4 percent to 58 euros per megawatt-hour, or some $635 per thousand cubic meters — the highest level since February 2023.

The higher price will affect most people on the continent because natural gas is used in power stations to generate electricity.

Arne Lohmann Rasmussen, chief analyst at Global Risk Management, told Bloomberg, "The risk of the European Union entering the spring with very low gas inventories has increased in the last couple of weeks."

The limited supply has led to short-term price spikes and might affect long-term gas pricing, he said.

Gas companies reported that European storage levels were down to 49 percent of capacity on Monday, in comparison with the 67 percent they were at on the corresponding day last year.

The United Kingdom is understood to be at particular risk of fast-rising prices because its gas storage facilities are far smaller than those in many other European nations. That means it has to buy gas more frequently from overseas suppliers.

Experts say the price of gas has also been nudged up by the Russia-Ukraine conflict because both nations have been major suppliers of the fuel to European nations.

With supplies dwindling, European governments could be forgiven for hoping for better weather and a letup in demand, but that looks unlikely, with northwestern Europe set to be hit by freezing temperatures in the coming days.