Europe’s industrial sector cuts natural gas demand as prices soar

(Bloomberg) --Europe’s industrial sector has started to cut demand for natural gas, as record prices have made the fuel prohibitive for many consumers.

Average consumption to-date in October is 12% lower than its pre-pandemic level, according to data compiled by Paris-based consultancy Engie EnergyScan. Gas consumption had already started to fall in September, down 5% from the 2019 level.

“We are starting to see the beginning of a demand destruction trend in the industrial sector in Europe,” said Julien Hoarau, head at Engie EnergyScan. “Germany, the Netherlands and the U.K. are showing the largest reductions so far but we really need to wait for a few weeks to see if the trend is confirmed, notably when gas demand for heating will increase.”

Industry Gets Hurt

Natural gas prices have hit fresh records almost daily recently, just before lower temperatures start to increase demand for heating in the region. Some energy-intensive companies have temporarily shut operations because they’re becoming too expensive to run. The crisis has also broken power suppliers and weighed heavily on European consumers’ pockets.

Europe’s benchmark gas contract has retreated in recent days, on the hope that Russia will increase flows. However, it remains up fourfold this year.

“High gas prices can slow down the economic recovery in Europe as industrial users are already suffering with it,” said Hoarau.