[Leyu News] Soaring Gas and Electricity Prices: Impacts of the Energy Crisis on German Companies and Consumers?

A rare global energy crisis is sweeping across the world. First came power cuts and blackouts in Northeast China; then, electricity prices skyrocketed across Europe! This winter will be exceptionally expensive for Germany—and consumer anxiety may intensify as winter approaches! /////////////////////////////////// — What pro-people policies will the German government introduce? In fact, the energy crisis across Europe has persisted for weeks, with alarming news emerging almost hourly: · On Tuesday (October 12), gas supplier E.ON announced it would temporarily accept no new natural gas customers due to excessively high prices. · On the same day, German steel group Salzgitter threatened to halt production at its electricity-intensive plant in Peine. · Building materials company HeidelbergCement announced short-term price hikes—an entirely unprecedented move within the industry. — · 1) Consumers Are Already Feeling the Crisis According to data from the Federal Statistical Office, heating costs and fuel prices rose 76.5% year-on-year in September. Fuel costs increased by 28.4%. Natural gas prices rose 5.7%, and electricity prices rose 2.0%. These soaring energy prices are the decisive factor behind Germany’s recent inflation rate surging above 4%. Part of the reason is that energy prices were exceptionally low in the same period last year. — · 2) Causes of the Energy Price Surge · 1) Supply-demand imbalance: Post-pandemic economic recovery has reignited global production, driving up energy demand worldwide. · 2) In some cases, pricing has failed to keep pace. Moreover, the EU’s green environmental regulations—imposing stricter emissions requirements—have raised emission-related costs, thereby pushing up energy prices. For instance, raw materials emitting carbon dioxide into the atmosphere are indispensable for utilities and factories. · 3) The natural gas market relies heavily on Russia, where supply has markedly declined. For example, Gazprom—the Russian state-owned gas giant—claims to fulfill all contractual obligations, yet it delivers far less gas to the West than it theoretically could. — · 3) Impacts on Companies and Consumers A) Business: Industrial fuel is becoming prohibitively expensive. German companies are especially hard-hit by high oil prices, as one-third of Germany’s natural gas consumption occurs in the industrial sector—particularly in chemical and metal industries, but also in brick-and-tile manufacturing, which relies heavily on natural gas for heat. High prices significantly raise production costs across these sectors. Although most German industrial firms prepare for difficult periods—for instance, by signing so-called futures contracts to secure natural gas at fixed future prices—such safeguards are not foolproof. Indeed, some companies appear already to be facing serious difficulties... Similarly, German enterprises operating in China are also confronting the energy crisis. Since the beginning of this year, coal prices have, in some cases, tripled. Power plants cannot afford to pay, prompting some factories to suspend operations. Local governments across many regions of China have repeatedly ordered factory shutdowns—sometimes day after day. Jörg Wuttke, President of the European Union Chamber of Commerce in China, stated that these problems may worsen with the approaching heating season.

The EU’s Response to the Energy Crisis Fails to Address Root Causes

Europe is currently facing an increasingly severe energy crisis. Surging natural gas prices are exacerbating inflation and exerting unprecedented pressure on residents’ daily lives and energy-intensive industrial production. To address this immediate emergency, the European Commission has introduced urgent measures—including mandatory electricity rationing, new levies, guaranteed protected electricity prices, and more flexible energy trading rules—to curb the rapid rise in energy prices. Although the Commission’s unprecedented intervention is necessary, it yields minimal effect in bridging medium- to long-term supply gaps. Renewable energy industries are likely the best option for Europe to produce affordable, secure electricity. European Commission President Ursula von der Leyen recently declared in her State of the Union address to the European Parliament that Europe’s current electricity market is outdated and requires comprehensive reform. Europe is now grappling with a worsening energy crisis: natural gas prices have multiplied several times over compared to last year, intensifying inflation and placing extraordinary strain on both households and energy-intensive industries. How to weather this crisis—especially how to ensure sufficient heating and electricity this winter—is the most urgent challenge confronting EU policymakers. Reforming Europe’s electricity market may offer a path forward—but even that would only be a temporary fix. Europe’s electricity shortage is structural. The continent is currently enduring the painful transition between old and new energy systems; the COVID-19 pandemic and the Ukraine crisis have merely intensified the severity and urgency of the problem. Skyrocketing natural gas prices have pushed electricity costs to unprecedented levels. Data from European energy exchanges show that on September 17, Germany’s electricity price surged to €1,000 per megawatt-hour; French electricity prices are projected to soar to €1,130 per megawatt-hour next year; and electricity prices across most of Western Europe have already exceeded €600 per megawatt-hour—more than eight times higher than the same period last year. With winter approaching, prices may climb further. Soaring electricity prices have triggered continuous protests and demonstrations across the region. In early September, approximately 70,000 people gathered in Prague, the Czech capital, protesting soaring living costs; in Brussels—the EU’s headquarters—thousands took to the streets. According to a local media opinion poll, roughly 64% of Belgians fear they may be unable to pay their exorbitant energy bills. The energy crisis brings more than just hardship for ordinary citizens: key industrial sectors are also suffering severely—some have already shut down entirely. Numerous aluminum smelters, steel mills, fertilizer plants, and large-scale farms across Europe are progressively closing because they cannot bear the soaring energy costs. Although both the EU and national governments have pledged support, the scale and duration of such assistance remain highly uncertain. Factory closures inevitably trigger waves of unemployment and social unrest. An index compiled by a risk consultancy firm shows that, among the 198 countries and regions surveyed, over half experienced internal unrest during the past quarter—with food and energy shortages cited as the primary cause. To tackle this immediate emergency, the European Commission has rolled out urgent measures to rein in rapidly rising energy prices. Its latest emergency plan comprises four components, pending final approval following an emergency meeting of EU energy ministers later this month—though consensus remains uncertain. First: Mandatory electricity rationing. After extensive mediation by the Commission, most EU member states have agreed to cut their natural gas consumption by 15%. The Commission now aims to establish binding electricity reduction targets: requiring all member states to reduce electricity consumption by 5% during peak hours, and voluntarily cut monthly total electricity consumption by 10%.

Salzgitter urges Berlin, Brussels to tackle high electricity costs

14 hours ago

Salzgitter urged EU policymakers to address unsustainable electricity prices threatening steel industry competitiveness. While hedging protects near-term stability, the company warned against investment delays from future carbon-market reforms.

reuters

2026-11-12

Salzgitter urges Berlin, Brussels to tackle high electricity costs

Salzgitter urges Berlin, Brussels to tackle high electricity costs

FAQ