Soaring European Energy Prices

Europe’s natural gas and electricity prices could rise even further

Record breaking natural gas and electricity prices in Europe could be the harbinger of increased volatility in global commodity markets, according to Goldman Sachs. “European energy pricing dynamics offer a glimpse of what is in store for other commodity markets, with widening deficits and depleting inventories leading to elevated price volatility,” the investment bank’s analysts wrote in a new report carried by Bloomberg.

Depleted natural gas inventories and low wind speeds have led to a surge in electricity prices across Europe, putting pressure on governments as consumers protest against soaring power bills ahead of the winter heating season. Electricity prices from the UK to Spain have jumped to all-time highs, people in Spain have taken to the streets, while prices across Europe so high could become a drag on the economic recovery from the pandemic.

According to Goldman Sachs, Europe’s natural gas and electricity prices could rise even further, considering that gas levels in inventories are at a ten-year low—and not filling fast enough—just ahead of the winter heating season that begins next month.

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