Is there a gas shortage? ‘Yes, we should really be concerned’

Purchase prices on the gas market, where energy companies and large consumers purchase their gas, have risen to record highs in recent days. The price now fluctuates around 130 euros per megawatt hour. A tenfold increase from a year ago.

blind panic

“There is now a blind panic on the markets,” says Hans van Cleef, energy expert at ABN Amro. The reason for this is that there is a risk of a shortage. This simply means that there may be a situation where there is not enough gas available to supply consumers and businesses.

That is not yet an issue for the time being, but an extremely cold winter could cause that. Large consumers of gas are particularly concerned about this.

Households seem safe

According to Van Cleef, households do not have to worry about gas coming out of the stove. “I don’t think there is that chance. If there are real shortages, we will increase production from Groningen.”

Because although the intention is not to get anything out of the Groningerveld in the near future, production can still be increased in the event of an emergency. And before households really run out of gas, the industry must first believe it.

“We should really be concerned about that,” says Jilles van den Beukel, energy expert at the Hague Center for Strategic Studies (HCSS). “The chance is not great, between 0 and 10 percent. But that is not 0 and it was in the past.”

“Not that everything will go down, but industries will then have to shut down. What you see now is a precursor to that,” he continues.

Prices are now skyrocketing so much that Van den Beukel calls it ‘frightening’. “It’s going to be unaffordable for businesses.” This means that some companies are already starting to scale down.

Although consumers do not have to worry so much about the supply of gas, they will also suffer from the sharply rising prices. Logical: if it becomes much more expensive for your energy company to buy gas, you will also pay for it.

Of course, that does not matter if you have locked in your gas price for a longer period of time. But anyone who has agreed a variable price or has to renew their contract will notice that. Anyone who has to conclude a new contract can count on a cost increase of hundreds of euros per year.

Cap in hand to Putin

Preventing a shortage this winter is not in our own hands. “We must hope for a mild winter, and with the cap in hand to Putin,” said Van de Beukel.

He is referring to the import of Russian gas. So far this has not been easy. Until now, the Russians were unable or unwilling to supply more gas to Europe.

The fact that we suddenly ended up in these problems has to do with several factors. For example, we had a cold spring, which meant that the gas reserves were not fully replenished after the winter. Add to this: relatively little wind in Europe, which means that less wind energy was available (and therefore more gas had to be burned) and a very strong economic recovery, which means that a lot of energy is needed.

Until a few years ago, this would never have led to an impending gas shortage in the Netherlands, but that has all changed with the phasing out of Groningen gas.

eye opener

“This is an eye opener, a warning. We have to think seriously about how you can guarantee security of supply,” says Van Cleef. Van den Beukel wholeheartedly agrees. “We have not thought carefully about the consequences,” he says about the rapid phasing out of production in Groningen.

For now, we can do little else than hope for a mild winter, but for the future, measures must be taken to prevent a recurrence. Van Cleef points, for example, to the import of LNG, which is liquefied natural gas that can be transported by ship. “And of course production from the small fields.”

In addition to the Groningerveld, the Netherlands has numerous smaller gas fields. Emptying it involves fewer risks than in Groningen, but it does encounter a lot of resistance. Van den Beukel also recommends entering into long-term contracts with foreign gas suppliers. Something that the Netherlands has not done until now, because it was never necessary. That era has definitely come to an end.

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