Demand destruction
Which industries are most exposed to high natural gas prices?
European natural gas prices rose more than 75% this morning, to over €345 per MWh. That’s equivalent to more than $600 of oil equivalent!
Natural gas prices are spiking on concerns that Russian gas supplies could be disrupted either by the Russians, or due to self-sanctioning. Proposals by the European Commission (EC) to require higher gas storage levels going into next winter have also helped bid the market.
Very few industrial buyers will be willing and able to pay such high prices.
If they cannot, then the alternative is to bring their operations to a halt. That means less demand for natural gas (and power), reducing emissions and demand for emission allowances (EUAs).