Is an Upside-Down Gas Market Europe's New Normal?
High prices have discouraged stocking up to prepare for next winter.
The gas receiving compressor station of the Nord Stream 2 natural gas pipeline in Lubmin, Germany.
Photographer: Bloomberg/BloombergThe tiny German village of Rehden, halfway between Hamburg and Frankfurt, is the unlikely ground zero for the next phase of the European energy crisis.
In the pastoral scene above ground, the cows graze. It’s below where the drama is playing out: 2,000 meters (1 ¼ miles) beneath the surface lies Germany’s largest natural gas storage site, capable of stocking enough gas to heat 2 million homes for a year. Now almost empty, the cost to fill it for next winter totals almost €2 billion ($2.2 billion) at current prices.
But a once-routine process has given way to questions of when to fill it and who will foot the bill. At stake: the cost of heating for European families next winter — and for policymakers, a potential inflationary surprise. The underground Rehden storage, which spreads over a surface equal to 910 soccer pitches, is now hostage to a game of chicken, involving commodity traders, utilities, Brussels regulators and even Vladimir Putin1.