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23 Sep, 2022 11:12

High energy costs drive companies away from EU – media

Firms in the metal and chemical industries, among others, are relocating to the US, The Wall Street Journal reports
High energy costs drive companies away from EU – media

Soaring energy prices in Europe coupled with gas shortages are forcing many European companies to relocate or move part of their operations to the US, The Wall Street Journal reported this week.

According to the paper, the companies are drawn by the fact that despite high inflation, gas prices in the US remain relatively low, while Washington, unlike Brussels, has not threatened to introduce fuel rationing to battle the energy crisis, which could be deadly for many industries. Washington also recently signed into law funding for renewable energy projects, as well as the US semiconductor industry, which many companies find attractive.

On Monday, reports emerged that German automaker Volkswagen was mulling relocating production from its plants in Germany and Eastern Europe. Along with Danish jeweler Pandora, Volkswagen announced US expansion earlier this year. Luxembourg-based steel maker ArcelorMittal recently said it would slash production at its German plants and focus work at a facility in Texas. Amsterdam-based chemical firm OCI also said this month it would expand its ammonia plant in the US.

American businesses have also been downsizing in Europe. Tesla recently said it is pausing its plans to make battery cells in Germany, while JPMorgan Bank is reportedly thinking of closing its Frankfurt headquarters because of the threat of disrupted trading in the event of blackouts.

European gas prices surged by more than 400% at their peak during 2022, with gas futures at the TTF hub in the Netherlands soaring to €346 euros ($353) per megawatt hour in August. Prices have since subsided as European gas storage sites reported they were nearly full, with the European benchmark trading at around €187 per megawatt hour on Monday. However, as uncertainty about Russian supplies remains, market experts warn gas prices could soon go up again.

For more stories on economy & finance visit RT's business section

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