EU with promises of swift action to prevent energy crisis

European energy prices continue to jump as the supply crisis across the region shows no signs of easing, prompting the European Union to promise swift action to protect the economy.

Gas futures from the Netherlands and the UK jumped 60% in just two days, reaching new records. EU High Representative for Energy Kadri Simson said the bloc plans to review gas market rules by the end of the year to prevent rising energy costs that could hurt the economy.

Global gas and coal markets tightened just as the heating season in the northern hemisphere began, with limited supply failing to catch up with growing demand. High costs threaten to increase inflation and begin to burden industrial production.

Inflation risk has already boosted government borrowing costs in the UK and prompted industries to warn of plant closures. France, Spain and three other European countries have called on the bloc to take urgent action to mitigate the impact of rising gas prices – and to investigate the cause.

“It’s just absurd,” said Tom Marzek-Manser, an analyst at ICIS. “It is almost impossible to even explain or qualify how and why the price of gas and energy is moving so fast and so high.”

“We are currently living in exceptional circumstances,” analysts from consultant Engie EnergyScan said in a note. “The global gas market has never been in a situation where Asia and Europe have been forced to compete fiercely for those available for liquefied natural gas.”

Charts: with permission of Bloomberg Inc.