When the gas runs out

Finance Minister Robert Habeck brought a graphic to make the situation very clear: You can see the filling levels of German gas storage facilities. And despite the recent slight upward trend, the curves show very clear downward overall. “From now on, gas is a rare commodity,” the Greens politician told a news conference. The result: Hubeck stated the level of alarm in the gas emergency plan. It will not be the last step to prevent the fuel card. Massive price increases for private households and companies can no longer be prevented.

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The supply is currently secured, says Habeck. However, it warns of a “Lehman moment” – referring to the collapse of the US bank of the same name in 2008, which triggered a multi-year global financial crisis.

In the case of gas supply, the scenario will look something like this: Importers have to buy extremely expensive gas on the stock exchange in a short time, because very little gas is supplied from Russia and the storage facilities are empty. The cost can be so high that companies can go bankrupt and stop delivering to utilities and other utilities. Millions of citizens then sit in cold living rooms, companies must stop production.

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Putin’s calculus

Russian head of state Vladimir Putin, whose orders for deliveries via the Nord Stream pipeline have been cut by 60% since July 14 – allegedly due to technical problems – is likely to calculate exactly this scenario. “Reducing gas supplies is an economic attack by Putin on us,” Habeck said. And he adds: “We are facing.”

The minister is surprisingly supported by his predecessor: “Robert Habeck made the declaration of the second level of crisis of the gas emergency plan anything but easy”, says Peter Altmaier of the publishing network Germany (RND). “He deserves cross-party and partisan support in this difficult phase,” the CDU politician warns. Altmaier does not want to comment on Habeck’s reproach that the failures of the last decade have now brought Germany into these difficulties.

However, the alarm level statement is still a rather mild step. This means that the ministry only states that there is a “gas supply interruption”. But it is believed that the “market” can handle this disorder. First of all, the alert level means that experts from the Federal Bureau of Investigation (BnetzA) – the competent regulatory authority – are monitoring developments in the gas market even more closely than they already are. The Bonn Authority has hired 65 employees who work around the clock to secure supplies.

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However, it is difficult to say when a “Lehman moment” could really happen, because the gas market is extremely turbulent. It is clear that more and more gas importers have to buy their product extremely expensively – as a substitute for missing Russian deliveries. A megawatt hour for the European reference variety Dutch TTF cost 137 euros yesterday at noon, compared to about 20 euros a year ago. € 20 – Conditions for supply contracts are likely to have moved to this size range, which have only been partially met since June 14, when Russia drastically reduced gas exports.

Importers therefore have to bear huge financial burdens in order to meet their obligations to utilities – including price agreements. Habeck said the situation is being closely monitored and some companies are currently suffering losses.

The sharpest sword

However, if the situation continues to escalate, the “sharpest sword” may need to be used. This is Paragraph 24 of the amended Energy Security Act, which allows for a “price adjustment mechanism”: Stadtwerke and Co. can suspend the terms of on-site gas delivery – even for customers who have actually agreed price guarantees on their contracts. The simple purpose of this arrangement: It aims to channel money into the coffers of the gas industry and be done immediately, in order to save companies from collapse. Consumers and companies would be faced with huge increases overnight.

Hubeck should have known very well what upheavals such a step would trigger – observers even describe it as “instructions for political suicide.” The Minister of Finance quickly made it clear that he would not withdraw paragraph 24 for the time being. Ultimately, this could lead to acute energy poverty in low-income families. And companies with high gas requirements could go bankrupt very quickly.

Hubeck announces alarm level: This is the purpose of the “gas emergency plan”.

Federal Finance Minister Robert Hubeck has launched the second of three phases of the “Gas Emergency Plan.” What does this mean?

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According to information from the RND, intensive discussions on paragraph 24 have taken place in recent days between the gas industry and the federal government. It is being debated whether the regulation should at least be significantly relaxed. In any case, their use should be avoided as much as possible. And if it can not be avoided, then with simultaneous absorption by the state.

That is, subsidies for gas as a price brake? Hubeck thinks nothing of it. “Price intervention is not the best solution,” he says. Because prices have a sign effect. He is quick to add that this is not intended to sound cynical. Targeted support is more effective. Which, among other things, should result in additional immediate assistance for low-budget households.

According to reports, the federal government is already negotiating further relief. So far, however, no decisions have been made, they say. But Finance Minister Christian Lindner (FDP) should also have realized that suppliers’ customers often have to double the price of gas. This can only be seen from the current invoices for new customers.

At the same time, Hubeck speaks of a “paradoxical supplier”, as many consumers have not yet felt anything from the gas crisis. Often this will not be reflected in the bill until the new year. Because often only then do new tariffs come into force from the utility company. Residents should consider unpleasant surprises when it comes to utility bills.

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Germany is in danger of running out of gas. High prices are certain, production losses and recession are possible. In the end, however, Germany has more power than Russia, comments Andreas Niesmann.

And it probably won’t stop doubling. After all, the effects of the latest developments on end-user prices have not yet arrived: as of June 14, the current market price has climbed again by 50% to more than 130 euros.

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In addition, from July 11, no more natural gas will flow through the Nord Stream pipeline. Regular maintenance is pending. In previous years, the work lasted about ten days. At the time, it did not matter about the supply. This is different now. Above all, everyone is wondering if the pumps will reopen at all. And if so, to what extent.

This will be crucial for us to overcome next winter, when gas demand will rise again massively compared to summer. Then we need the underground tanks, which, according to Habeck, are now 58.7% full. However, he has set it to be 90 percent by December. However, forecasts by the Federal Bureau of Investigation have shown that this cannot be achieved if only 40 percent of normal gas volume continues to be pumped through the Nord Stream pipeline. In any case, according to the scenario, gas consumption should be one-fifth below normal this winter.

Saving on heating

How should this be achieved? It has already been decided to use as little gas as possible for electricity generation and therefore to reactivate the coal-fired power stations. Second, Habeck is industry-based. The network service is currently working on an “auction model”. Industrial companies will have to announce when and to what extent they can save on gas. They should receive a bonus for this. This savings market is going to open “still in the summer”. Hubeck stresses that the industry is “very, very open.”

Meanwhile, the minister advises individuals and owners to make hydraulic adjustment of heating systems, which could lead to savings of up to 15%. In government circles, however, it is also rumored that another sharp sword has not yet come off the table: the possible reduction of the minimum permissible temperatures in homes and / or work.

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If savings efforts fail, the highest level in the contingency plan should be called. The network service then decides on the distribution of gas. First of all, it is possible to disconnect the leisure facilities and then the industrial companies. On the other hand, private households and social actors are under special protection.

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