'Europe has more to fear from winter than from heat'
The article discusses concerns over potential energy supply challenges in Europe, particularly focusing on natural gas shortages during the upcoming winter. Analysts from Oxford Economics warn that while current heatwaves are manageable, the coming winter could be more difficult than the previous one due to historically low gas reserves. Italy, Germany, and other European countries have seen declining gas storage levels compared to previous years, raising fears of potential price spikes and energy insecurity. The report highlights the role of global LNG supplies and increased import terminals as partial mitigations but notes ongoing risks such as reduced Norwegian production and geopolitical tensions, including Russia’s continued influence on European gas imports. It also points out differences in how EU member states handle price increases, with some countries like Austria and Germany delaying adjustments while others, such as France, Italy, and Spain, respond more quickly.
Oxford Economics analysts based in London have warned that Europe should be more concerned about the coming winter than the current heatwave. According to the firm, the upcoming heating season could prove more challenging than the one that took place during 2021–2022 in terms of energy supply availability. Energy supply risks have emerged, with gas reserves currently at historically low levels just months before the start of the cold season. As of August 13, Italian gas reserves stood at 78.22 percent, equivalent to 159.1 terawatt-hours, compared to 84 percent or 171.04 TWh recorded on the same date in the previous year. In Germany, reserves reached 49 percent, or 120.78 TWh, following a slight drop from 47.28 percent, or 116.52 TWh, the day before. These figures contrast sharply with the 65.77 percent, or 162.13 TWh, recorded in the corresponding period in 2025. Across Europe, gas stocks climbed to 59.92 percent, or 677.23 TWh, though they were higher at 72.9 percent, or 823.95 TWh, by the end of last year. Analysts warn that further increases in gas prices could push inflation above 3.5 percent by year-end, maintaining levels over 3 percent into 2027. This scenario would provide room for the European Central Bank’s hawkish policymakers to consider raising interest rates. However, they emphasize that while physical shortages of gas remain a remote risk, there is currently greater global availability of liquefied natural gas (LNG) and more active import terminals. The Strait of Hormuz remains closed, and production disruptions in Norway have increased. Natural gas has recently compensated for reduced hydroelectric and nuclear power generation. Despite a reduction in gas consumption across the EU by 15 to 20 percent, the continent remains heavily dependent on winter weather patterns. A colder-than-usual season could lead to sharp price spikes. In this context, Russia continues to play a crucial role, supplying approximately 15 percent of Europe's gas imports. The possibility of another unilateral cut in gas supplies, similar to the situation between 2021 and 2022, could trigger a new price spiral, creating fears of a tangible shortage. While such a risk is described as remote, the EU might be forced to reconsider its embargo on Russian gas. Italy, in particular, is identified as the weakest link in the chain, being the country most exposed to sudden price hikes due to its heavy reliance on gas usage. Across Europe, there is a notable difference in how countries respond to rising gas prices. The prevailing market structure features contracts with fixed prices for 12 or 24 months, allowing delays in passing on price increases to consumers, as observed in Austria and Germany. Conversely, in France, Italy, and Spain, retail prices adjust within about a month, while in the Netherlands, the response is nearly immediate.
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