Warmer than usual winter weather has helped ease some of Europe’s energy concerns.
- Anticipated energy shortages and inflation in Europe have been lessened by a warmer-than-usual winter.
- While energy costs are still higher than in previous years, energy prices haven’t been as high as expected.
- Even with lower-than-expected costs, the European Central Bank is expected to raise interest rates again to curb European inflation.
Why it’s news
Following the Russian invasion of Ukraine at the beginning of 2022, European energy prices jumped. In part, prices rose because of sanctions imposed on Russian oil. The issue was compounded as Russia began to restrict access to oil reserves.
Before winter, European officials worried that the need for more energy to heat homes would push energy prices even further and potentially lead to blackouts. Warmer temperatures at the end of the year helped alleviate these concerns.
Even though disaster has so far been avoided, European inflation and overall costs remain high. Consumer prices in Europe were 9.2% higher in December than the year before, according to statistics from the European Union. While this rate is high, it is a decrease from 10.1% inflation in November. Home energy prices increased by 25.7%.
Europeans decreased energy prices in December by looking to alternative energy sources such as coal. Gas prices have decreased as warmer weather leaves fewer people turning up their thermostats. A few weeks ago, European officials discussed the possibility of rationing energy. Now, that seems unlikely.
Backing up a bit
European households and businesses are using far less energy than in the past—as prices may rise throughout the winter.
During a period of warm weather, European households were able to reduce overall natural-gas consumption by turning off heating systems. Governments asked citizens to reduce energy consumption when possible as the region prepares for potential energy rationing during the colder months.
Overall European gas demand dropped 22% in October as both residential and business heating systems were turned on less often. Electricity consumption increased by 14% during the same time period.