The expert named the reasons for the rise in gas prices in Europe

The situation for Europe regarding the filling of gas storage facilities is really serious. This was stated by investment advisor, founder of the University of Finance Yulia Kuznetsova in an interview with Izvestia.

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"But I wouldn't call it a guaranteed energy collapse. Rather, it is the return of the "energy risk premium", which the market puts back into prices for the winter," the source said.

She cited low gas reserves after the cold season and the difficulty of quickly replenishing them as the main reason for the price increase for winter contracts. The situation is complicated by the fact that the gas market has once again become a global competitive field, and Europe cannot rely on the previous volumes of cheap pipeline gas from Russia.

"The second problem is the distorted seasonal economy of gas storage. In a normal situation, gas is cheaper in summer, and it is profitable to buy it and pump it into storage facilities to use it in winter. Now summer prices are already high, so it is less profitable for traders and companies to buy gas "in reserve". That is, the market itself slows down the process of replenishing storage facilities: the price is already high, and the risk of winter shortages makes winter contracts even more expensive," the specialist explained.

The third problem is the direct dependence of Europe's electric power industry on gas.

"Gas-fired power plants often cover peak demand, especially in winter when consumption increases. Solar production is lower, and problems with wind and hydropower are possible, so expensive gas automatically pushes up electricity prices," the analyst concluded.

Read more in the Izvestia article:

We've reached the limit: winter gas contracts in the EU are hitting our pockets