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On 15 August, natural gas futures in Europe grew by another 3.2 percent to €233.56, or about $237, per million Btus, a new record price.
It continued rising on 22 August, climbing to €257.40.
The continent is in the midst of its third heatwave this summer, with temperatures exceeding 100°F in France and reaching 106°F in Portugal, spiking demand for electricity to run fans, refrigerators, and air conditioners.
Much of Europe’s electricity is produced by burning natural gas. Electricity prices have risen as much as tenfold in some parts of the continent in the last 12 months.
Since June, Europe has faced a natural gas crisis when Russia cut gas deliveries to the continent as a political pressure tactic.
In normal times, Russia supplied about 40 percent of Europe’s natural gas.
When Europe adopted NATO sanctions against Russia after it attacked Ukraine, Russia cut Europe’s gas flow through the Nord Stream 1 pipeline, the chief gas conduit, by 80 percent.
In July, Russia completely shut down the pipeline for 10 days to carry out “routine maintenance.”
On August 19, Russia announced it would again close Nord Stream 1 for three days at the end of the month to conduct unscheduled maintenance on a compressor.
Russia is choking off Europe’s gas supplies in an attempt to cripple the European economy and force the continent to abandon the sanctions imposed after Russia invaded Ukraine.
The U.S. has channeled much of its marginal natural gas production to Europe to ease the region’s fuel pressure.
Thinning U.S. supplies have driven the price of gas for September delivery to $9.329 per million Btus, a price not seen since 2008 during the Great Recession and 150 percent higher than a year earlier.
The U.S. gas price reached $9.79 on 22 August.
Europe’s combined heatwave and drought have limited the ability of alternative energy sources to help ease the crisis.
“You don’t have enough wind or enough coal barges in Germany and in France, nuclear plants can’t get enough water for cooling,” analyst Xi Nan at Rystad Energy, said to The Wall Street Journal.
“Of course, hydropower levels are quite low, especially in Norway,” she added.
The crisis has forced Germany to postpone closure of its last three nuclear-powered generating stations.
However, Europe’s natural gas storage tanks are about 75 percent full, analysis firm Gas Infrastructure Europe reported, and the region had been on track to meet its November 1 target of 80 percent before Russia announced the latest Nord Stream shutoff.
The heatwave, drought, and Nord Stream shutdown will make reaching that and future storage goals ahead of winter more difficult.
TREND FORECAST: There is not enough excess natural gas production capacity in the world to make up what Europe has lost from Russia. A renewable energy infrastructure adequate to replace the missing gas would take years to build.
The loss of Russia’s gas, which has propelled gas prices to staggering heights, will throw Europe, and especially Germany, into a recession.
Barring an unpredictable event, such as peace in Ukraine and Russia restoring its previous full gas flows to Europe, the recession is likely to last through 2023 and could easily extend beyond next year.