China is starting to scare European markets. Here’s why gas prices could rise because of the Asian giant.
The scenarios for price increases are frightening and almost reminiscent of the price increases related to the first half of the war between Russia and Ukraine.
Gas prices may rise because of China: here’s why
Mid-February in Europe brought only very good news regarding March as well: natural gas and electricity prices fell.
The diversification of energy sources, the process of ecological transition and the changing habits of European citizens have almost certainly influenced the price trend.
An alarm bell has gone off, however, warning all Western countries that China may be responsible for higher gas prices.
European nations buy many raw materials from China, including gas. Thanks to the pandemic and hard lockdowns that hit the Asian giant, domestic demand for natural gas had been extremely low. So Western countries have been buying that commodity at super-cheap prices.
The return to normality in China could lead to an almost unnatural increase in gas demand resulting in higher prices.
According to estimates, the increase could exceed even 35 percent.
Possible increase in gas prices: the EU indications
At the moment these are only estimates and assumptions, nothing certain.
What is clear, however, is that with the volume of Russian gas imports almost zero, in time we could begin to depend almost exclusively on China, which, in the face of excess demand could quietly speculate.
The European Union has already warned people by calling for continued gas and electricity rationing to try to reduce demand for these commodities and obtain them at cheaper prices.
The situation in Europe: from resource rationing to the Italian “Mattei Plan”
The years 2022 and 2023 had, fortunately for Europe, less so for the environment, mild winters that made it possible to reduce gas and electricity consumption. Many cities have adopted the strategy of keeping heaters at a lower than average temperature.
Meanwhile, to try to diversify the sources from which we buy gas and electricity, Italian PM Giorgia Meloni is pursuing the “Mattei Plan”, with the goal of making Italy an energy hub for the whole European continent.
For the moment, gas supplies from Algeria ha been increased. Meanwhile, other international partners are being sought to increasingly reduce dependence on Russia and China, and rely more on investments on renewables energy sources.
Read also: One European country is gaining from the gas crisis: the Norway case