Gas in Europe triples in price. High bills may remain for several more years

Wholesale gas prices in Europe have exceeded 100 euros per megawatt-hour — three times more than a year ago. This refers to the market price of fuel: consumer bills also depend on tariffs, contracts, and state support.

The new crisis is linked to the US war with Iran and the blocking of the Strait of Hormuz, through which liquefied gas is exported from the Persian Gulf. According to the EU energy agency ACER, the crisis has already increased the EU's gas import costs by an additional 33 billion euros.

"Even in the most optimistic scenario of the conflict ending by the end of the year, gas prices, in our assessment, will unfortunately continue to rise," said Tom Marzec-Manser, Wood Mackenzie's chief analyst for the European gas market.

Expensive gas affects the entire economy: it is used for heating, electricity generation, fertilizers, and chemical products.

Fuel was also expensive in the summer, making it difficult to replenish reserves. According to ACER, as of October 21, European storage facilities were only 75% full. Moreover, the distribution of reserves is uneven: Germany and the Netherlands lagged behind the EU average.

Even after a mild winter, storage facilities will have to be refilled again. This will sustain demand and prices next summer, meaning expensive fuel will also impact costs in the 2027–2028 heating season.

"So we face another year or two of high electricity and heating bills," warned Henning Gloystein, an expert at Eurasia Group.

Europe needs additional supplies of liquefied natural gas, but it competes for them with China and other Asian countries. The problem is exacerbated by the loss of supplies from Qatar, which supplied about a fifth of the world's liquefied natural gas market before the war.

The US, Canada, Russia, and other exporters have increased sales, but the shortfall has not yet been fully compensated. The International Energy Agency predicts that from November to March, global liquefied natural gas supplies could be 10-25 billion cubic meters less than a year ago. The outcome will depend on the resumption of traffic through the Strait of Hormuz.

At the same time, the EU is finally abandoning Russian liquefied natural gas: from January 1, 2027, the ban will also affect supplies under long-term contracts. This increases the importance of alternative suppliers, primarily the United States.

Hope for relief is tied to the weather. A mild winter will reduce heating demand, wind will allow more electricity to be produced without gas, and rains will help hydroelectric power plants and the cooling of nuclear power plants. According to experts from the Oxford Institute for Energy Studies, under favorable circumstances, Europe could save 10-12 billion cubic meters of gas this winter.

The analysts surveyed believe that Europe is capable of getting through this winter without supply disruptions to consumers. But this does not mean cheap fuel.

A gradual decline in prices is possible from spring due to new production capacities, and the lost supplies of Qatari gas, according to one forecast, will only be fully compensated by the end of 2028.

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