For several weeks now, gas, fuel and electricity prices have been spiking around the world. A situation that worries households, who see their purchasing power seriously affected. So why are we experiencing a soaring in energy prices?
End of lockdown and economic recovery
One of the major and common reasons for the increase in fuel, gas and electricity prices is the increase in demand following the economic recovery. After several months of lockdown, the world is relaxing sanitary measures, which is driving up demand and significantly increasing prices.
Tension on gas
According to the French newspaper Les Echos, in addition to the economic recovery, gas is facing strong demand due to the increase in the price of CO2 emission allowances in Europe. Emission allowances are traded on the European market between large industrial CO2 emitters. This increase is pushing industrialists to turn to gas for electricity production and thus reduce the use of coal. Another element mentioned by Les Echos, a winter 2021 longer than usual in Europe, which “has pushed gas consumption for heating, which was 15% higher than in 2020″. Gas stocks in Europe are weakened, which is driving prices up considerably.
The rise in the price of gas directly affects the price of electricity produced by gas-fired power plants. A situation that affects most EU countries through electricity interconnections.
Another factor that has not helped to stabilize the price of electricity is the weather. In 2021, the winds in the North Sea, which has many wind farms, were too weak. The insufficient wind power production was compensated by production via fossil fuel plants. This compensation has pushed up electricity prices.
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