Residents of Denmark must be prepared to receive extra-large bills in coming months, an analyst said in light of the development.
“Danish gas consumers will initially be hit hard by these increases, but so will electricity customers because gas is very important in electricity production,” senior economist with Sydbank, Søren Kristensen, said to news wire Ritzau.
The new, high price of raw gas will take one to two months to become apparent in prices paid by consumers, Kristensen said.
An increase in gas prices was registered on Monday, but this followed on from some earlier reductions to the price.
“So despite the increase on Monday we are not quite hitting the peak we had during August,” Kristensen said.
Climate, Energy and Critical Supplies Minister Dan Jørgensen minister on Saturday said Denmark is entering an uncertain autumn and winter after the Nord Stream 1 gas pipe, which supplies Russian natural gas to Denmark via Germany, was closed indefinitely on Friday.
READ ALSO: Denmark faces ‘uncertain winter’ after Russia halts gas supplies to Europe
Monday afternoon saw the price of gas reach 270 euros per kilowatt hour, notably lower than the peak of 340 euros during August.
The Russian decision to switch off the gas is nevertheless directly responsible for Monday’s increase, the Sydbank analyst told Ritzau.
“It’s supply that is affected when Russia again says no gas will be sent through Nord Stream 1,” he said.
“And it is also related to concerns about what we are looking at during the winter. Many people are scared about whether they’ll get any gas at all,” he said.
A price increase of the magnitude seen on Monday is rare, he also observed.
“These are some incredibly drastic price increases,” he said.
“A few years ago, an increase of more than 20 percent did not have a huge value. But because of the [high] prices today, this change is unheard of in kroner and øre,” he said.
The European gas price was around 20 euros per kilowatt hour at the beginning of 2021, meaning prices are well over 1000 percent higher than they were in January last year.
Jørgensen said on Saturday he was considering new energy saving measures after Russian gas giant Gazprom said the Nord Stream pipeline would remain shut until a turbine is repaired.
The Nord Stream 1 pipeline normally sends enough natural gas from Russia to Europe to heat around 26 million homes, but this supply has been significantly reduced since Moscow invaded Ukraine in late February. The line was shut down by Russia last week, ostensibly for maintenance work, but not reopened on Saturday as initially advised.
A draft 2023 budget presented last week by the government sets aside funding for inflation relief but did not specify the recipients of such spending.
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