The European industries most under threat from the gas crisis
Russia’s shutdown of natural gas flows to Europe has resulted in skyrocketing regional prices. This has contributed to a significant downgrade of our global and national economic growth forecasts and will impact European industry negatively. Energy-intensive sectors such as metals, refining, building materials, and chemicals are heavily exposed: non-ferrous metals use approximately four times as much electricity and gas per unit of gross value-added output as the manufacturing sector as a whole, while refining, iron & steel, and non-metallic minerals use just over double.
What you will learn:
- Using data now available from our Global Industry Service, we can measure energy intensity –defined as energy use per unit of output – by sector and fuel type. Industries that directly use gas as a key input for production are particularly at risk from higher gas prices.
- High gas prices can also pass through to industrial consumers via electricity prices due to the use of gas as a marginal fuel, the fuel that balances supply and demand for electricity, in electricity markets and the marginal pricing structure used in most European economies. The sectors for whom electricity is a key input generally include the same industries listed above as gas intensive as well as wood and paper manufacturing.
- The possibility that gas rationing will be imposed this winter remains a key risk. Industry is likely to bear the brunt of such policies, with restrictions most easily imposed on the biggest gas consumers in absolute – rather than relative – terms. The sectors most at risk include chemicals, non-metallic minerals, metals, food, and fuel refining.
Global Industry Service
Gain insights into the impact of economic developments on industrial sectors.Find Out More
Commodity Price Forecasts
Monthly reports on commodity price trends and forecasts, as well as weekly briefings on the latest price action.Find Out More
A comprehensive source of forecasts for world trade.Find Out More