Home » European gas demand to rise in winter Germany faces energy crisis and recession | Economic crisis | European gas |

European gas demand to rise in winter Germany faces energy crisis and recession | Economic crisis | European gas |

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European gas demand to rise in winter Germany faces energy crisis and recession | Economic crisis | European gas |

[Epoch Times, November 2, 2022]Comprehensive report (Comprehensive report by Epoch Times reporter Li Xiaotong) As winter approaches, rising energy demand may exacerbate the energy crisis in Europe. The situation is particularly severe for Germany, where nearly half of the residents use gas for heating. The continuation of the Russian-Ukrainian war has exacerbated the inflation and energy crisis in Germany. German inflation has hit a high for nearly 70 years, hitting the economy and people’s livelihood. Several indicators have indicated that the German economy has begun to decline.

The Met Office on Monday (31 October) released a climate outlook for the next three months. Overall, there is a higher than normal chance that the next three months will be colder than normal, the report noted.

While the climate report focuses on the UK, the forecast raises concerns because it has implications for the entire European continent. The report simulates the North Atlantic Oscillation (NAO), an important factor in predicting climate across Europe.

As an early observation, this suggests that heating-related gas demand will rise this winter, the Wall Street Journal quoted Caroline Bain, chief commodities economist at Capital Economics, as saying.

Although winter has yet to come, in the context of the energy crisis, winter energy demand is affecting European countries, especially Germany, which is already suffering from high inflation and energy shortages.

Deutsche Welle (DW) quoted a survey on September 24 that 40% of Germans expected they would have problems paying their energy bills this winter. Currently, nearly half of German households use natural gas for heating.

Rising energy prices push inflation to another 70-year high

On Friday (October 28), the German Federal Statistical Office released preliminary data on the consumer price index (CPI) for October. Germany’s October CPI rose by 10.4% year-on-year, exceeding market expectations and also higher than September’s 10%. The highest in nearly 70 years.

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Energy prices have risen sharply since the start of the Russian-Ukrainian war and had a significant impact on inflation, Germany’s Federal Statistics Office said. Energy prices rose 43.0% year-on-year in October; food prices rose 20.3% year-on-year, both higher than average.

German citizen Monique Ruck said that if there were discounted bread, she would buy five packs and store them so she could make ends meet.

According to Agence France-Presse, bakeries are one of the industries hardest hit by rising energy prices in the country, with German bakeries now spending nearly three times more on energy than they did in 2020.

According to Friedemann Berg, director of the German Bakers Association, 70% of artisan bakeries in Germany have gas ovens, but gas prices are soaring.

Andreas Schmitt, president of Germany’s Neu Isenburg Bakers Association, told The Associated Press that some small local bakeries are considering abandoning operations because of the energy crisis.

The bakery situation is only a microcosm of the German economy. Since Germany relies heavily on Russian imports for energy, since the outbreak of the Russian-Ukrainian war, Germany has been in a difficult situation of energy crisis. Germany has opted to reduce energy imports from Russia, but the price it faces is soaring energy prices and increasing energy shortages.

Germany relies heavily on Russian energy

According to the statistics of the Ourworlddata.org website, as of 2021, fossil energy will still be the main source of energy consumption in Germany, with oil, natural gas and coal consumption accounting for 33%, 25.78% and 16.74% respectively, which together exceed 7% of Germany’s energy consumption. above. Wind energy and nuclear energy accounted for 8.77% and 4.93% respectively.

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Natural gas accounts for the largest share of Germany’s industrial and residential sectors. According to data released by the German Federal Statistical Office in July this year, in 2019, 41.2% of German households’ housing energy came from natural gas; in 2020, natural gas, as the main energy source for German industry, accounted for 31.2%; in 2022, in Germany’s power grid 13% of electricity production comes from natural gas.

Before the outbreak of the Russian-Ukrainian war, Germany imported 95% of its natural gas, of which 55% was imported from Russia. In addition, in terms of coal and oil, the proportion of imports from Russia also reached 50% and 35% respectively.

After the outbreak of the Russian-Ukrainian war, although Germany reduced its natural gas imports from Russia, the proportion has dropped from 55% to 35%, but Germany has to pay higher costs.

Data from the October report of the German Federal Statistics Office showed that as of July 2022, the price index of German imported natural gas had soared to a level of more than 600 from less than 400 in March 2022.

Energy shortages and high energy prices are also putting German companies in a difficult position.

According to a survey released on October 24 by Ifo, a German economic research institute, a quarter of German companies plan to lay off workers due to rising energy prices; 57% of companies will postpone investment plans; 17% of companies plan to completely abandon energy-intensive business area. In addition, 13% of companies in Germany are considering stopping production; 9% are planning to move out of Germany.

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In response to the energy crisis, the German government announced an additional subsidy program worth 200 billion euros at the end of September and set a cap on energy prices to ease the impact of the surge in energy prices on businesses and residents.

Germany, the largest economy in Europe, will fall into recession next year, German Economy Minister Robert Habeck said in early October, according to Deutsche Welle (DW). He noted that the German economy will contract by 0.4% next year, rather than the 2.5% growth forecast this spring. Meanwhile, Germany’s growth forecast for this year has also been revised down to 1.4% from 2.2%.

Habeck also acknowledged the seriousness of the energy crisis. He said that Germany is experiencing a severe energy crisis, which is slowly evolving into an economic and social crisis.

In addition, according to the Purchasing Managers’ Index (PMI) released by S&P Global on October 24, Germany’s PMI fell to 44.1 in October from 45.7 in September, the lowest value since the outbreak of the CCP virus.

Phil Smith, associate director of economics at S&P Global Market Intelligence, said the data reinforces signs that Germany, the euro zone’s largest economy, is on the verge of a recession.

A PMI index below 50 indicates that the economy is contracting. @

Responsible editor: Li Wei

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