Bulletin
Investor Alert

Aug. 10, 2022, 1:22 p.m. EDT

Europe’s latest energy worries: U.K. experiencing blackouts and Germany’s Rhine running dry

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    TUI AG (TUI)
  • X
    STOXX Europe 600 Oil & Gas Index EUR (SXEP)
  • X
    STOXX Europe 600 Retail Index EUR (SXRP)

or Cancel Already have a watchlist? Log In

By Barbara Kollmeyer

While American tourists have been filling all corners of Europe this summer, happily snapping away and occasionally complaining about the heat, the region’s energy and climate crisis continues to deepen.

In the latest piece of bad news to hit the headlines, Bloomberg reported Tuesday that officials in the U.K. had a “reasonable worst-case scenario” over potential gas shortages and a cold winter that could force organized blackouts.

That scenario included potential cuts in electricity imports from France and Norway, as countries struggle to ensure they have enough to get their own people through the winter. A U.K. government source was quoted by Bloomberg as saying it didn’t expect the supply cuts to occur.

Still, social media served up some glimpses of past blackouts :

Potential shortages of electricity in the U.K. and worries about gas shortages across Europe have been exacerbated by Russia’s six-month-old war in Ukraine that has fueled soaring commodity prices and left governments racing to wean themselves off Russian energy. Consulting firm Cornwall Insight has warned that energy bills in a typical U.K. household could triple next year, reaching £4,266 ($5,208).

“The winter outlook for power & gas supplies across in Europe has become increasingly grim, with countries such as the U.K. now acting fast to plan for the worst. We are seeing more nationalized efforts in response to tightening supplies, with Norway hinting at potential export halts in the event of short supply, driving country level efforts to secure supplies independently,” noted analysts at RBC Capital Markets.

The U.K. is also facing water shortages, due to lack of rain amid record-shattering heat.

The heat wave has battered the continent as well, with scorching temperatures causing wildfires in Spain and Portugal, while Italy’s rice paddies — notably its beloved risotto rice — are under threat of turning dry and salty .

All that has come amid a summer of so-called revenge travel, with pent-up demand from 2½ pandemic years sending travelers up to the skies in airplanes also seen as part of the emissions problem. German travel operator TUI /zigman2/quotes/207049334/delayed UK:TUI -0.48% on Wednesday reported third-quarter bookings at 90% of the levels seen in 2019.

Don’t miss: The sum also rises: Hemingway enthusiasts and other tourists in Spain encounter an inflation rate significantly higher than the U.S.’s

Also see: The latest in inflation woes for Germany: No french fries with that currywurst

Lack of water has been a huge problem for Germany, with the continent’s misery deepening on news Wednesday that the Rhine’s falling level could reach a critical stage by the end of the week. A marker just west of Frankfurt was set to drop to below 16 inches, meaning barges would not be able to carry out the vital transport of coal and diesel on the ancient trade route.

“The low water levels are a déjà vu of the 2018 problems and are exacerbating the capacity bottlenecks in German inland navigation. While the economic impact in 2018 was rather small, it could be more substantial this time given the critical logistics of fossil fuels,” Deutsche Bank analysts Marc Schattenberg and Stefan Schneider said in a note last week.

“As coal-fired power plants are to take over to save gas, waterways could become an Achilles’ heel. Much of the needed hard coal is transported from Dutch ports by barges,” and cargo ships are already reducing their loads, the analysts added. 

Wednesday also marked the official start of Spain’s plan to save energy, which has involved a heavily criticized decision in some corners to limit air conditioning to 27 degrees Celsius (80° Fahrenheit) for businesses in summers, while shop windows and public buildings must have lights switched off by 10 p.m. local time.

Heating in winter for the same establishments will be limited to a temperature of 19° Celsius (equal to 66.2° Fahrenheit).

The Spanish government clarified that hotel guests would be able to keep things cooler in their rooms, while gyms, public transport, restaurants and bars would be able to keep the ambient temperature at 25° Celsius. Schools and hospitals are among the establishments exempt from the new rules.

This year, the oil and sector /zigman2/quotes/210599627/delayed XX:SXEP +1.43% has been the best performer on European stock markets, with a gain of 17%, while retailers /zigman2/quotes/210599402/delayed XX:SXRP -0.57% have slumped 27%.

/zigman2/quotes/207049334/delayed
UK : U.K.: London
133.65 p
-0.65 -0.48%
Volume: 3.52M
Sept. 27, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£2.40 billion
Rev. per Employee
£206,202
loading...
/zigman2/quotes/210599627/delayed
XX : STOXX
306.31
+4.32 +1.43%
Volume: 0.00
Sept. 27, 2022 11:03p
loading...
/zigman2/quotes/210599402/delayed
XX : STOXX
251.38
-1.43 -0.57%
Volume: 0.00
Sept. 27, 2022 11:03p
loading...

This Story has 0 Comments
Be the first to comment
More News In
Economy & Politics

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.