Will high energy prices cause a German winter of discontent?

Prices for natural gas have hit record highs in recent weeks.

Since January, the price for a Megawatt hour of gas on the European Energy Exchange has risen from €20 to over €100 today.

European Gas Spot Index. Source: EEX

At the same time, European gas storage facilities are only 72 percent full ahead of the winter in comparison to a ten-year average of 85 percent. These reserves are a crucial buffer for meeting demand during cold spells between October and March.

Market observers say that the low gas reserves could unsettle spot prices even further, especially if Europe is hit by a prolonged cold snap.

The main driver of the shortage is a surge in demand in Asia. Countries like Japan, China and South Korea currently pay more than Europe does, meaning that exporters like the US and Russia are delivering there rather than to us.

According to Handelsblatt, China’s liquified natural gas (LNG) imports increased by 26 percent year-on-year for the first six months of 2021 and it will soon overtak…