The price of gas runs amok at 160 euros/MWh, double that of a month ago

The price of natural gas in the Dutch TTF market, a reference for Europe, stands this Monday at around 160 euros per megawatt hour (MWh), which means returning to levels close to the maximum registered on March 7 (two weeks after the Russian invasion of Ukraine), when they reached 200 euros/MWh, and double the figures at the beginning of June, which were around 80 euros/MWh.

Natural gas prices started the day at 151 euros and throughout the day they have become more expensive until reaching 164 euros/MWh around 5:00 p.m., although around 6:00 p.m. they have relaxed slightly, reaching 162.3 euros.

This price increase has intensified since June 13, when gas closed its TTF price at 84.76 euros/MWh, only three days later to jump to 123.95 euros/MWh.

The increase in the price of this raw material occurs at a time when the European Union (EU) has agreed to impose a minimum gas reserve of 80% (Spain currently has its storage at a level of 72%) of the storage capacity of each country of the bloc for next autumn in order to guarantee energy security despite the tensions with Russia.

The Third Vice President and Minister of Ecological Transition and for the Demographic Challenge, Teresa Ribera, recently ruled on this last issue in the Congress of Deputies, who has not ruled out that these tensions may continue to increase.

In this sense, he stressed that Spain must be "prepared" for a hypothetical total cut off of Russian gas supply, a threat that, in the words of the minister herself, has already materialized with cuts in Poland, Bulgaria, Finland, the Netherlands and Denmark due to the refusal of its electricity operators to pay gas contracts in rubles, as Russia required. A decision based on avoiding violating the sanctions established by the EU.

Apart from the geopolitical situation, other factors that have influenced the increase in the price of gas in international markets are the paralysis of the main gas liquefaction plant in the United States or the 40% cut in the supply that Gazprom, the Russia's main gas company, sends through the Nord Stream gas pipeline.

65% increase in 21 days

On June 15, two days after the start of the rise in gas prices in the international reference markets, the so-called 'Iberian mechanism' came into force in Spain and Portugal, a measure that limits the price of gas to produce electricity with the aim of lowering consumer bills.

Since then, the Iberian Gas Market (Mibgas) publishes daily the price of natural gas that must be applied to the electricity market.

Thus, on the first day of application of the measure, the price of gas stood at 80 euros/MWh. However, since then it has been climbing and the price for this Tuesday will be 132.54 euros/MWh, that is, 65.67% more than 21 days ago.

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