The European Union is facing a challenging winter as its gas storage levels hit their lowest point in over a decade. On October 3, EU gas storage was at 72.4% capacity, the lowest level recorded since 2011, according to a report by the US-based Institute for Energy Economics and Financial Analysis (IEEFA). This lower stockpile leaves the bloc vulnerable to sudden spikes in demand or disruptions in liquefied natural gas (LNG) supplies, especially with the EU's planned ban on Russian LNG imports starting in January 2027.
The IEEFA report suggests the EU may need to reduce gas demand by about 14 billion cubic meters this winter, or 7% compared to last winter, due to higher prices, limited supply flexibility, and the risk of colder weather. Alternatively, the shortfall could be covered by additional imports, estimated to cost around 3 billion euros, about 12% higher than a year earlier because of the impact of Middle East conflicts. The European Network of Transmission System Operators for Gas warned that under tight LNG supply conditions, storage levels could drop below 30% by the end of winter, with Gas Infrastructure Europe estimating a possible low of 13%.
The strain on energy supplies is already affecting fuel prices, with the EU's average petrol price reaching 2.063 euros per liter and diesel at 2.159 euros per liter on September 14, the highest levels recorded. Higher energy costs are contributing to broader inflation, with the EU's annual inflation rate rising to 3.2% in August, up from 2.4% a year earlier. Energy prices recorded the largest annual increase among the main categories, impacting households and businesses alike.
A survey by the German Chamber of Commerce and Industry (DIHK) found that electricity costs had risen for 49% of companies over the previous 12 months, while heating costs had increased for 67%. The survey also revealed that about one-third of companies delayed investment in core business processes due to high energy costs, and more than 40% reported a hit to their competitiveness. Around one-fifth of the companies were considering moving investment or production capacity abroad, had begun doing so, or had already completed the move. DIHK President Peter Adrian warned that persistently high energy costs are contributing to declining competitiveness, delayed investment, and the relocation of production capacity.