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Unpayable energy in Belgium: why have prices soared for a year?

  • Post category:Economy News
  • Reading time:3 mins read

Since September 2021, the prices of electricity, gas, or fuel have exploded. The prices of these energies have been rising continuously for several decades. But, for a year, they literally flew away. Why ?

Covid

In September 2021, there is a strong economic recovery after the multiple confinements linked to covid. All countries must consume gas, electricity and coal in large quantities. Demand is exploding while supply remains limited. Prices are therefore starting to soar. To make matters worse, the winter of 2021 has been harsh and European stocks are low. In addition, one of our gas supplier countries, Norway, is experiencing several maintenance issues. This penalizes deliveries.

The war in Ukraine

Russia’s involvement in the conflict and the European sanctions against it are causing concern in the markets. Speculators anticipate difficulties in supplying Europe with Russian gas, while 40% of the gas consumed in the Union comes from Russia. The price takes off even more.

The announcements of work on the gas pipelines linking Moscow to Berlin add a layer, in the rise in prices. As almost no country in Europe has a gas field, the States are totally dependent on international gas prices which are soaring.

import

To get out of dependence on Russian gas, European countries are increasing the share of liquefied gas imported by ship from the United States or Qatar. This requires additional investments and transport costs.

The link between electricity and gas

As for electricity, it should be remembered that its prices are linked to those of gas: when the price of gas rises, that of electricity too. In particular because to produce part of our electricity, we run gas-fired power stations.

The French nuclear fleet

To make matters worse, the French nuclear fleet has experienced many failures in recent months. Less than half of the reactors are in operation. However, France traditionally exports its electricity to its neighbours. Electricity is therefore rarer and the demand strong: it is a new rise in prices.

The case of oil

The transport of goods and the air sector have resumed after the covid period. The demand for oil is strong but the exporting countries are not increasing production. They thus create a shortage to keep prices artificially high.

However, among the main oil-exporting countries, we find Saudi Arabia, of course, but also Russia. There, oil brings in 5 to 6 times more revenue than gas. Hit by international sanctions, following the war in Ukraine, Russia has every interest in keeping oil prices at a high level. To maximize its income. And finance his war with his neighbor.