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2 Jan, 2023 13:25

Germany acknowledges ‘new normal’

High energy prices are here to stay, the country’s finance minister says
Germany acknowledges ‘new normal’

High energy prices will become a new reality in Germany, Finance Minister Christian Lindner warned on Sunday.

In an interview with Bild newspaper, Lindner admitted that Berlin is facing the prospect of more expensive energy in the long term without Russia’s natural gas.

“It will be a new normal. Gas via the liquid gas terminals is more expensive than Russian pipeline gas for logistical reasons alone. So, the price level remains higher, but without ruinous spikes,” he said.

Over the course of the past year, natural gas prices in Europe spiked to unprecedented levels several times, driven by sanctions on Russia and disruptions in pipeline supplies. This saw inflation soar across the EU.

To protect consumers from such spikes, EU countries agreed in December to set an emergency cap on wholesale gas prices at €180 ($191) per megawatt hour (MWh), with the measure set to take effect on February 15.

Gas prices have been declining in recent weeks, however, due to unseasonably warm winter weather in parts of Europe, among other factors.

On Monday, the cost of front-month natural gas futures on the TTF hub in the Netherlands plunged to just over €73 ($78) MWh in household terms, a level not seen since last February.

Despite the current decline, however, gas prices remain several times higher than the long-term average. In the 2017-2019 period, before the pandemic and the current energy crisis, TTF gas spot prices were trading in the €10-25 MWh range.

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