Italy has accused Germany of contributing to the latest surge in European natural gas prices by delaying the replenishment of its underground storage facilities, reopening a debate about national energy policies and their consequences for the EU’s single market.
The dispute emerged on 29 October after the European benchmark gas price briefly exceeded €100 per megawatt hour the previous day, its highest level since December 2022.
Germany’s gas storage facilities were just 61.7 per cent full, compared with almost 91 per cent in Italy and an EU average of approximately 75 per cent.
The difference has become politically sensitive because European countries purchase gas in an interconnected market, meaning decisions taken by one major consumer can influence prices paid elsewhere.
Speaking at the Montel Italian Energy Day conference in Milan, Alessandro Noce, director general for energy markets and infrastructure at Italy’s Energy Ministry, criticised Germany’s approach to preparing for winter.
According to Reuters, Noce argued that Italy had spent €300 million securing additional gas reserves, only to face higher market prices as Germany attempted to replenish its comparatively depleted stocks.
He also questioned whether Germany had delayed purchases because of preparations to privatise energy companies involved in the storage process.
Germany’s Economy Ministry did not immediately respond to the criticism.
The German government’s approach has attracted particular attention because of its role in the operations of Uniper and Securing Energy for Europe (SEFE).
Both companies became important components of Germany’s energy-security arrangements following the disruption of Russian gas supplies in 2022.
Plans concerning their future ownership have coincided with renewed questions about how Berlin balances commercial considerations against the need to maintain strategic reserves.
At the Milan conference, an energy analyst suggested that preparations for privatisation had contributed to delays in storage purchases.
That assessment has not been established as the definitive explanation for Germany’s comparatively low reserves.
Nevertheless, the resulting political dispute demonstrates the difficulties of managing energy security through a system in which national governments retain considerable discretion while their purchasing decisions affect a common market.
Europe’s latest price increase has several causes extending beyond German storage policies.
Disruptions to liquefied natural gas shipments associated with the conflict involving Iran have constrained supplies from the Middle East.
At the same time, European countries entered the summer storage-refilling period with unusually low reserves following the previous winter.
The EU Agency for the Cooperation of Energy Regulators (ACER) reported that underground gas storage was only 28 per cent full at the end of winter 2025–26.
By 21 October, that figure had risen to 75 per cent, still below historical levels.
In its latest gas-market monitoring report, ACER estimated that disruption linked to the Middle East conflict had added between €18 billion and €33 billion to Europe’s gas-import bill.
The agency also found that American liquefied natural gas accounted for roughly 30 per cent of EU gas supplies, reflecting Europe’s growing reliance on transatlantic energy imports.
Although this diversification has reduced dependence on Russian pipeline gas, it has also increased Europe’s exposure to international competition for LNG cargoes.
European buyers must compete with customers in Asia, particularly when colder weather or geopolitical disruptions increase demand.
The disagreement has implications for the European Union’s gas-storage framework.
Following the 2022 energy crisis, the EU introduced mandatory storage requirements intended to reduce the risk of supply shortages during winter.
The arrangements were subsequently extended until the end of 2027.
Under the revised rules, member states retain a 90 per cent storage-filling target but have greater flexibility over when and how it is achieved.
Countries may reach the target between 1 October and 1 December, rather than being bound to the previous 1 November deadline.
Further flexibility is available in difficult market conditions.
These provisions were designed partly to prevent governments from creating artificial demand peaks by purchasing gas simultaneously to meet rigid deadlines.
However, the present dispute suggests that delayed purchases can create another problem if several major consumers need additional supplies as winter approaches.
Germany’s current storage level does not, by itself, establish a breach of EU requirements. The applicable deadlines and permitted exemptions must also be considered.
The Italian government has meanwhile been seeking permission from the European Commission to use public funds to reduce energy costs for households and businesses.
Rome’s concerns reflect the economic consequences of sustained high gas prices, particularly for industries dependent on energy-intensive manufacturing.
Italy faces a general election expected in 2027, adding a domestic political dimension to the debate over energy subsidies.
Noce warned that prices could rise to between €150 and €180 per megawatt hour if January brings particularly cold weather.
Such an outcome remains a scenario rather than a forecast.
Energy markets will also be influenced by developments in the Middle East, LNG deliveries, industrial demand and winter temperatures.
Europe has expanded its LNG import infrastructure and diversified energy sources substantially since 2022.
However, the latest price increases demonstrate that greater import capacity does not necessarily insulate consumers from global supply disruptions.
The German–Italian dispute also exposes the limits of national energy planning within an integrated European market.
Germany’s storage policies affect its neighbours, just as decisions taken elsewhere influence the price German consumers pay.
The central question for Brussels is whether existing coordination arrangements provide sufficient incentives for governments to safeguard their own winter supplies without transferring additional costs to other member states.
With the heating season approaching, that issue is becoming an immediate economic concern rather than a theoretical dispute about European energy solidarity.
Britain’s government has attempted to reconcile rising energy prices, constrained public finances and growing defence obligations in a Budget that illustrates how international conflicts are reshaping domestic economic policy.
Presenting his first Budget on 28 October, Chancellor of the Exchequer John Healey announced a £100 energy payment for millions of households, an extension of electricity VAT relief and additional measures intended to support businesses facing rising operating costs.
The package comes as Prime Minister Andy Burnham’s administration confronts the economic consequences of the conflict in the Middle East, alongside continuing financial commitments arising from Russia’s war against Ukraine.
The central difficulty is that Britain must simultaneously protect household purchasing power, support economic growth and finance a more expensive security environment, without allowing government borrowing to expand beyond its fiscal targets.
The most immediate measures concern energy.
Under the Treasury’s Budget proposals, up to 20 million households in England occupying properties in Council Tax bands A to D will receive a £100 payment from January 2027.
The government has allocated £2.6 billion for the programme, including corresponding funding arrangements for the devolved administrations.
The temporary reduction in VAT on domestic electricity will also remain in place until July 2027, a measure expected to reduce the annual Ofgem price cap by approximately £50 in April.
Meanwhile, the Chancellor announced plans to remove standing charges from domestic gas bills, transferring fixed costs into consumption-based charges.
Although the government estimates that the change could benefit a majority of households, its distributional effects will depend on individual consumption. Lower gas users may benefit differently from households with substantial heating requirements.
The measures demonstrate how energy prices have become a direct constraint on fiscal policymaking.
Britain’s exposure to internationally traded gas means that disruptions originating outside Europe can quickly influence domestic prices, regardless of the source of individual energy supplies.
Rather than introduce broad increases in personal taxation, the government has chosen targeted revenue measures.
The Bank Corporation Tax Surcharge will temporarily increase from 3 to 6 per cent between January 2027 and March 2028, helping finance household energy support.
The government has also announced changes to gambling taxation intended to fund assistance for smaller businesses in retail, hospitality and leisure.
Fuel duty will remain frozen until July 2027, extending a policy intended to limit motoring and transport costs.
These decisions reflect competing pressures.
Households and smaller businesses require relief from higher costs, while the Treasury must demonstrate that its spending commitments remain consistent with fiscal discipline.
The distribution of the tax burden is therefore becoming an important political question, particularly when the government is simultaneously seeking private investment to stimulate growth.
The latest forecasts from the Office for Budget Responsibility offer little prospect of rapid economic expansion.
According to figures published alongside the Budget, British GDP is expected to grow by 1.2 per cent in 2026 and just 1 per cent in 2027.
Inflation is forecast to peak at 3.8 per cent in the first quarter of 2027 before gradually returning towards the Bank of England’s 2 per cent target.
The Chancellor’s fiscal headroom — the margin available before the government’s borrowing rules would be breached — has narrowed to approximately £15 billion in 2029–30.
This creates an unusually difficult environment for policymaking.
Further economic disruption could reduce tax receipts or increase spending demands, leaving the Treasury with limited capacity to respond without revising its plans.
The Budget also places national security increasingly within the government’s wider industrial strategy.
Britain remains committed to reaching defence spending equivalent to 3.5 per cent of GDP by 2035, with an interim target of 3 per cent in 2030.
The government has announced plans for the National Wealth Fund and British Business Bank to deploy up to £5 billion over four years into defence, dual-use technologies and other sectors supporting national security.
It has also committed an additional £500 million to support Ukrainian air defences during the coming winter.
These measures extend beyond immediate military procurement.
They seek to strengthen domestic industrial capacity, encourage private investment and establish supply chains capable of sustaining higher defence expenditure.
However, the precise financing arrangements for Britain’s longer-term NATO commitments are to be determined at the next spending review.
Britain’s predicament closely resembles that confronting European Union governments.
Across Europe, policymakers are attempting to finance defence modernisation and energy security while maintaining social expenditure and industrial competitiveness.
The difference lies partly in the institutional frameworks within which those decisions are made.
EU governments operate under European fiscal rules, while Britain sets its own borrowing and debt targets. Nevertheless, all face the same underlying pressures from energy markets, interest rates and international security commitments.
For British businesses trading with the European Union, the effects of energy costs and industrial investment policies on either side of the Channel will remain particularly significant.
The October Budget consequently represents more than an exercise in temporary household assistance.
It exposes the difficulty of sustaining public services, improving competitiveness and responding to geopolitical instability when economic growth is modest and available fiscal resources are limited.
Whether the measures provide lasting relief will depend less on the immediate payments announced by the Chancellor than on the course of energy prices, inflation and economic growth over the coming year.
The European Union is reconsidering the strategic importance of its oil-refining industry as disruptions to international energy supplies and growing defence requirements force Brussels to examine whether Europe can afford further reductions in domestic fuel production.
On 28 October, the European Commission convened its first high-level dialogue with the European refining industry, bringing together energy companies, technology providers and representatives of NATO.
The meeting was chaired jointly by Energy Commissioner Dan Jørgensen and Defence and Space Commissioner Andrius Kubilius.
Its significance extends beyond the immediate increase in fuel prices associated with the conflict in the Middle East.
Brussels is confronting a longer-term problem: Europe intends to reduce its dependence on fossil fuels, but its transport networks, industrial infrastructure and military forces remain substantially dependent on petroleum products.
The question is no longer simply how quickly the European economy can decarbonise. It is also how much refining capacity must be retained to guarantee essential fuel supplies during a geopolitical crisis.
Europe’s refining industry occupies an important position in the continent’s energy system.
According to figures published by the European Commission, EU refineries supply approximately 70 per cent of the jet fuel and 85 per cent of the diesel consumed in Europe.
These products are essential not only for civilian transport and logistics but also for military aviation, armoured vehicles and the movement of equipment.
Maintaining adequate production capacity therefore has implications for both economic activity and defence readiness.
Yet European refineries have faced difficult commercial conditions for years.
High energy costs, international competition and declining expectations for long-term fossil-fuel demand have complicated investment decisions.
Refineries require substantial capital expenditure to remain competitive, meet environmental requirements and adapt production processes.
Companies considering whether to modernise facilities must consequently assess the profitability of assets that may be expected to operate in a progressively decarbonising economy.
The resulting uncertainty creates a problem for governments seeking to retain strategically important industrial capabilities.
The immediate catalyst for the Commission’s initiative is the disruption to energy markets caused by the continuing conflict in the Middle East.
Interruptions to supply chains and uncertainty over maritime transport have increased concerns about the availability and cost of refined petroleum products.
Importing crude oil and importing finished fuels are not equivalent from a strategic perspective.
A country with domestic refining capacity can process available crude into the particular products required by its economy.
An economy heavily dependent on imported refined products is additionally exposed to processing capacity, transport availability and commercial decisions outside its jurisdiction.
The distinction becomes particularly relevant when governments must guarantee supplies of diesel and aviation fuel during an emergency.
European policymakers are therefore examining ways to improve output from existing facilities and strengthen the resilience of fuel supply chains.
However, the Commission has not announced a binding production target or a programme to reopen closed refineries.
The 28 October meeting represents the beginning of a policy discussion rather than the adoption of a new industrial strategy.
The participation of NATO gives the initiative a wider security dimension.
Military preparedness requires dependable access to energy products, including during periods when normal commercial supply chains are disrupted.
Aircraft, naval vessels, military logistics and ground operations cannot be reorganised around alternative energy sources at the same pace as some civilian activities.
Furthermore, the ability to sustain prolonged operations depends on reliable industrial production, storage, distribution and transport.
A refinery’s strategic importance may therefore exceed its immediate commercial profitability.
That raises difficult policy questions.
Governments may consider whether critical production facilities require targeted support, whether strategic stockpiles are sufficient and how supply arrangements should function during emergencies.
Any intervention would have to address competition rules, public financing and the risk of subsidising facilities that become commercially unviable.
Brussels has not abandoned its climate objectives.
The Commission has explicitly linked its refining discussions to the development of sustainable biofuels and synthetic fuels, commonly known as e-fuels.
These technologies offer potential alternatives for sectors where direct electrification remains technically difficult, including aviation.
However, their commercial development requires investment, suitable feedstocks, reliable energy supplies and sufficient demand.
Traditional refineries may be able to participate in this transition, although the technical requirements and economic viability vary between facilities.
Jørgensen said the Commission intended to work with industry on a roadmap that would reconcile domestic fuel production with Europe’s longer-term climate ambitions.
The challenge will be translating those objectives into investment decisions.
The initiative illustrates a wider adjustment in European economic policy.
In recent years, the EU has increasingly described industrial capacity as an element of economic security, rather than treating production solely as a commercial activity.
Semiconductors, pharmaceuticals, critical minerals and defence equipment have all attracted attention because of vulnerabilities in international supply chains.
Oil refining is now entering the same discussion.
The Commission must determine how to preserve sufficient capacity for essential civilian and military requirements while continuing to encourage cleaner technologies.
Those objectives are not necessarily incompatible, but they operate over different timescales and involve different commercial incentives.
For European refiners, the central question is whether governments can provide enough regulatory and investment certainty to support modernisation.
For Brussels, it is whether the energy transition can proceed without creating new strategic dependencies.
The outcome of the dialogue will indicate how the EU intends to balance its climate commitments with the industrial demands of a less predictable security environment.
As temperatures are falling in Kyiv, so are rent prices, with residents leaving the capital to escape Russian bombardment and the prospect of a winter without heating and electricity.
Over the last two months, the number of long-term rentals listed on Kyiv&
Have we passed peak oil – are fossil fuels running out? Richard Lyon says yes, and the transition to 'renewables' is making it worse. But peak oil is a myth, says Tilak Doshi, as he reviews Lyon's book The Energy Trap.
The post Are Fossil Fuels Running Out? appeared first on The Daily Sceptic.
European Union leaders are preparing for a two-day summit in Brussels dominated by the economic consequences of the Middle East conflict, Russia’s continuing war against Ukraine and mounting pressure on governments to reconcile defence commitments with deteriorating public finances.
The European Council meeting on 15–16 October will bring together the leaders of the 27 member states to consider immediate measures addressing high energy prices alongside longer-term decisions on competitiveness, enlargement, migration and the EU’s budget for 2028–2034.
European Council President António Costa has placed economic competitiveness and energy costs at the centre of the discussions, reflecting concerns that the disruption of global oil and gas markets is threatening the bloc’s industrial recovery.
The meeting also takes place against the background of renewed disputes over national spending limits, with Italy and Greece seeking greater freedom to finance energy relief and France facing increasing pressure over the credibility of its budget.
The Middle East conflict has created a renewed energy shock for European economies, raising transport and industrial costs while pushing inflation higher.
The disruption of shipping through the Strait of Hormuz has also affected global oil supplies, exposing Europe’s continuing dependence on internationally traded fossil fuels despite efforts to diversify imports following Russia’s invasion of Ukraine.
European leaders are expected to consider targeted and temporary support measures for households and businesses, as well as longer-term policies intended to reduce energy dependence.
The political disagreement concerns how those measures should be financed.
The European Commission has resisted requests from Italy and Greece for further exemptions from the EU’s fiscal framework. Both governments argue that extraordinary energy costs require additional budgetary flexibility.
Brussels maintains that existing provisions already permit exceptional expenditure within defined limits.
The disagreement is particularly difficult for indebted governments that must simultaneously finance military expansion, maintain public services and protect their economies from energy inflation.
France’s position has added urgency to the debate. Its borrowing costs have increased sharply as investors question whether the government can adopt a credible budget ahead of the 2027 presidential election.
A summit agreement on emergency energy assistance would therefore have to accommodate substantially different national fiscal circumstances.
Support for Ukraine remains a central item on the summit agenda as Russia continues attacks against Ukrainian cities, energy infrastructure and industrial facilities.
EU leaders are expected to review military and financial assistance, the implementation of sanctions against Moscow and the resilience of Ukraine’s economy.
The discussions take place amid renewed uncertainty surrounding American weapons deliveries.
Washington’s reported threats to suspend supplies under the NATO-backed PURL procurement arrangement have raised further questions about Europe’s dependence on the United States for advanced military equipment.
European governments have increased defence expenditure and committed additional support to Ukraine, but replacing American capabilities remains difficult, particularly in air defence, precision-guided weapons and certain intelligence systems.
The summit is unlikely to resolve those industrial limitations, but the broader question of Europe’s ability to sustain Ukrainian defence over several years will influence discussions.
Member states must also consider how increased defence expenditure will be financed alongside other demands on national budgets.
The EU’s published summit agenda includes Russian-linked hybrid attacks within Europe.
The issue has gained prominence as European governments investigate sabotage, cyber operations, information interference and threats against infrastructure and defence-related industries.
Recent warnings concerning possible Russian assassination operations targeting European defence executives and employees of companies supplying Ukraine illustrate the changing nature of the security threat.
Such activities place additional demands on national intelligence services, police forces and European institutions responsible for cross-border cooperation.
The EU has strengthened its sanctions instruments against hybrid activities, but enforcement remains dependent on coordination between national authorities.
Any further measures would need to address intelligence sharing, protection of critical infrastructure and the relationship between internal security and the Union’s wider Russia policy.
Enlargement will form another important part of the discussions following the Commission’s proposals for preparing a wider Union.
Brussels has outlined possible institutional safeguards intended to prevent future members from undermining democratic standards or blocking common decisions.
Montenegro and Albania are advancing through their accession negotiations, while Ukraine and Moldova remain central to the EU’s geopolitical enlargement strategy.
The financial implications will become increasingly important as governments negotiate the next multiannual financial framework covering 2028–2034.
Existing members are already divided over how much the EU should spend, which programmes should receive priority and whether additional common resources should be raised.
Agricultural expenditure, cohesion funding, defence investment and support for Ukraine will compete for resources within the same budget negotiations.
The Commission argues that enlargement can be accommodated through targeted reforms, but securing agreement among member states will require decisions on future expenditure and the distribution of financial benefits.
Leaders will also examine progress on the One Europe, One Market agenda, which aims to reduce barriers to economic activity within the EU and improve conditions for European businesses.
The initiative is intended to address structural weaknesses affecting investment, industrial development and the ability of European companies to compete internationally.
High energy prices have made those concerns more immediate, particularly for industries competing against producers in economies where electricity and fuel are cheaper.
The European Council will be asked to provide direction on measures planned for 2026 and 2027, but implementation will depend on subsequent legislation and decisions by member states.
The October meeting brings several unresolved European policy questions into the same negotiation: how to protect economic competitiveness, maintain fiscal credibility, finance defence, sustain Ukraine and prepare for enlargement.
The immediate test will be whether leaders can agree on a credible response to energy prices without reopening broader disputes over national budgets.
More difficult decisions concerning defence financing, institutional reform and the EU’s long-term expenditure commitments will extend well beyond the two-day summit.
The European Commission has rejected requests from Italy and Greece for greater freedom to increase public spending in response to the energy crisis, resisting pressure from two member states that argue existing budget restrictions are limiting their ability to protect households and businesses.
The decision, confirmed on 8 October, follows renewed appeals from Italian Prime Minister Giorgia Meloni and Greek Prime Minister Kyriakos Mitsotakis for measures recognising the exceptional financial burden imposed by higher energy prices.
Meloni wants Brussels to take greater account of unexpected inflation when assessing national budgets and to permit additional tax revenue generated by rising prices to be used for energy relief. Mitsotakis has sought the exclusion of temporary support measures for consumers and businesses from the expenditure limits agreed under the EU’s fiscal framework.
Economic Commissioner Valdis Dombrovskis rejected the argument for further concessions, maintaining that the existing arrangements already take inflation into account and provide mechanisms for responding to exceptional circumstances.
The disagreement comes as Europe’s governments confront the economic consequences of the Middle East conflict, including higher fuel costs, inflationary pressures and increased demands for state intervention.
For Italy, the dispute adds to a fiscal problem that has been developing throughout the year.
The government expects its budget deficit to rise to 3.4 per cent of GDP in 2027, reversing an earlier objective of reducing borrowing below the EU’s three per cent reference value.
As EU Today reported earlier this month, Rome plans to use additional fiscal room for defence and energy-related expenditure, while public debt is projected to remain close to 138 per cent of GDP.
The new request concerns the treatment of inflation and the financial support required to offset its effects.
Energy inflation creates an unusual budgetary problem. Governments can receive additional nominal tax revenue as prices rise, particularly through consumption taxes, while simultaneously facing public pressure to compensate consumers for higher living costs.
Meloni argues that such unexpected revenue should be available for targeted assistance without forcing equivalent reductions elsewhere in national expenditure.
Brussels is reluctant to accept arrangements that could turn temporary increases in tax receipts into an opportunity for permanent spending expansion.
Italy’s position also reflects the political competition between defence spending and domestic economic support. Rome has accepted the need for higher military expenditure but faces immediate pressure from households and energy-intensive industries.
That competition was already apparent when the government chose to prioritise energy relief over the full use of defence-spending flexibility.
Greece’s request is more narrowly focused on the treatment of temporary assistance under the EU’s expenditure rules.
Athens argues that measures intended to help businesses and households manage exceptional energy costs should not be counted against the normal spending limits.
The Greek government faces an economic environment in which higher imported energy prices threaten household purchasing power and business profitability, particularly in sectors dependent on transport and fuel.
Excluding temporary relief from expenditure calculations would give Athens additional room to intervene without breaching its agreed fiscal trajectory.
The Commission, however, has resisted establishing further exemptions beyond those already provided in the fiscal framework.
Its objection is institutional as well as financial. If additional categories of emergency expenditure are repeatedly excluded from fiscal calculations, the system becomes increasingly difficult to enforce consistently across the Union.
The EU revised its fiscal governance framework in 2024, introducing nationally agreed expenditure paths intended to provide greater flexibility while maintaining sustainable public finances.
The Commission’s rules on exceptional circumstances permit member states to depart temporarily from normal requirements under specified conditions.
Those provisions have already been used to accommodate higher defence expenditure, while the Commission has also issued guidance on their application to energy-security investments.
Temporary financial assistance intended to reduce household energy bills, however, is not necessarily treated in the same way as investment in infrastructure that reduces Europe’s long-term dependence on imported fuel.
That distinction has become a source of friction between Brussels and national capitals.
Governments argue that the immediate economic effects of an international crisis require exceptional measures. The Commission is concerned that repeated concessions could weaken the credibility of the spending framework.
The Commission’s decision also comes as France faces increasing pressure over its debt and budget deficit.
The deterioration in French borrowing conditions has reinforced concerns about the risks associated with heavily indebted governments continuing to expand expenditure.
France, Italy and Greece have different fiscal positions, but the problems confronting them originate partly in the same combination of expensive energy, weak economic growth and competing spending commitments.
The dispute will now feed into preparations for the European Council meeting on 15–16 October, where energy prices and economic competitiveness are prominent agenda items.
EU leaders are expected to consider targeted and temporary measures to reduce the burden on businesses and consumers, alongside longer-term initiatives intended to reduce dependence on fossil fuels.
The Commission’s refusal to provide Italy and Greece with further fiscal exemptions establishes the limits within which those discussions will take place.
National governments remain free to introduce assistance, but Brussels is insisting that they account for its cost within the fiscal rules already agreed.
For Rome and Athens, the question is whether those rules provide sufficient room to respond to an energy crisis whose duration remains uncertain.
So, this is Andy Burnham's solution to soaring energy prices: nationalisation and relitigating the 1970s. It's just a shame, says Ben Pile, that energy was far cheaper under Thatcher than in our Net Zero era.
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KARACHI: State-run Pakistan LNG Limited (PLL) has issued a fresh tender to procure one spot cargo of liquefied natural gas for delivery between September 4 and 8, as global supply disruptions stemming from the Middle East war continue to strain the country’s gas-fired power generation. PLL invited bids from international suppliers for a single cargo ... Read more
The post Pakistan returns to spot LNG market with fresh tender as power generation takes a hit appeared first on BOL News.
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