The State of Energy Prices Across Europe
Although it is a hot summer and it is hard to imagine a long, dark winter, that is exactly what Europe is heading towards. Although governments throughout the bloc are moving quickly to shield everyday households from massive utility bills, experts fear that most nations will struggle to keep everybody warm (at least affordably). From March 2021 to March 2022, average home energy costs jumped by 41% in the European Union, and the price of fuels for private transport by 38%. These rises have strongly contributed to the rapid, sustained inflation across the continent. With wholesale gas prices currently at eight times their normal average over recent years, wholesale electricity prices have also jumped sharply. Naturally, the outlook is bleak in many nations. The following is a summary of where many nations look to be heading come winter 2022.
The United Kingdom
Although no longer part of the EU, the UK is suffering from the same continental woes. Average household energy bills are expected to go all the way up to 5,225 EUR per year by early 2023, which is almost quadruple the average cost from 2018 to 2021. It is no wonder that prognosticators expect a crisis and a recession. The UK has been especially vulnerable because the country runs primarily on gas for both home heating and electricity generation. One key difference between the UK and most EU countries – the UK lets wholesale prices proceed directly to consumers, whereas the governments of most EU countries provide a buffer and price reduction. Thus, since wholesale prices have skyrocketed, UK citizens are being hit harder than others.
EU nations spend differently when it comes to gas, electricity, petrol, and coal, but generally speaking, governments protect customers from increased bills. To the UK government’s credit, all UK households will receive a subsidy of 400 GBP towards energy bills come this winter. Moreover, less prosperous households will receive 650 GBP to help with energy bills.
The German government has promised its people to help them weather the storm of high inflation coupled with rising energy bills. Germany has offered lump sum reductions in income tax and raised allowances, and lowered petrol prices by 29.55 cents per litre, albeit temporarily.
The French government will spend 22 billion EUR to protect its citizens from rising energy costs. They have done this via a freeze on gas prices for consumers as well as its four per cent cap on electricity price increases — both of which were introduced in February this year. These policies have meant that, so far, the average French citizen has hardly felt the brunt of the energy crisis.
Norway’s government pays 90 per cent of households’ electricity bills when wholesale prices exceed prescribed thresholds. Despite its big hydropower capacity, Oslo still faces growing criticism for its inability to keep higher prices at bay.
We are in for a long, expensive winter.