Dec 3, 2025
LNG price shock forces Europe to revert to domestic gas sources.
The Most Dull Oil Month in Years Prepares for a Crucial December
When Germany approved an offshore gas drilling project earlier this year, it surprised many observers. A leader in energy transition and a top performer in wind and solar power installations, Germany was now reverting to fossil fuels—and it isn't the only nation doing so.
Electricity prices in European countries have surged to some of the highest globally over the past decade, despite earlier assurances that the shift from fossil fuels to renewable energy sources would be both eco-friendly and economical. Instead, it has proven neither, as much of the wind and solar equipment is manufactured cheaply in China, which relies heavily on coal for its power generation. While the issues regarding the so-called “clean” energy transition are often overlooked, it has been much harder to ignore the rising electricity costs.
According to a recent report by The Wall Street Journal, industrial electricity prices in the UK are around $0.338 per kWh, while in Germany, they reach $0.267. The UK has the highest rates for industrial electricity in developed nations. In comparison, the rates in the United States and Canada are significantly lower, at $0.081 and $0.094 respectively. For residential consumers, Germany leads with costs of $0.425 per kWh, followed by the UK at $0.386 per kWh.
The unsustainability of such electricity prices has been evident, particularly over the last three years, as indicated by GDP growth data, manufacturing activity, job losses, and consumer spending. Recent figures from the eurozone reveal another decline in manufacturing activity for November, along with increased job losses. Europe is experiencing rapid deindustrialization, driven by its commitment to reduce reliance on fossil fuels, even as it builds more LNG import terminals.
Following the EU’s sanctions against Russia after its invasion of Ukraine, imported liquefied natural gas has replaced Russian pipeline gas—albeit at a high cost. This has prompted a renewed focus on domestic energy production, particularly natural gas.
Reuters’ Ron Bousso reported that countries like Greece, Italy, and the UK are reassessing their energy transition strategies to permit continued production of energy resources that are hard to forgo—and costly. Bousso highlights recent oil and gas initiatives in Europe, including the expansion of Energean’s Block 2 project in the Ionian Sea with Exxon, and Shell’s recent willingness to invest more in Italian oil and gas exploration pending the lifting of government restrictions.
This backdrop of energy policy influenced Germany and the Netherlands' decision in July to pursue natural gas drilling in the North Sea, including in a protected marine area. Emissions considerations remain a priority for policymakers, and all new projects come with related stipulations. However, the mere approval of such initiatives signifies a recognition that wind and solar are not sufficient substitutes for hydrocarbons. Europe's transition efforts have led to reduced carbon dioxide emissions, but many view the associated costs as unacceptable—especially voters who are becoming increasingly dissatisfied with the current leadership.
When Germany approved an offshore gas drilling project earlier this year, it surprised many observers. A leader in energy transition and a top performer in wind and solar power installations, Germany was now reverting to fossil fuels—and it isn't the only nation doing so.
Electricity prices in European countries have surged to some of the highest globally over the past decade, despite earlier assurances that the shift from fossil fuels to renewable energy sources would be both eco-friendly and economical. Instead, it has proven neither, as much of the wind and solar equipment is manufactured cheaply in China, which relies heavily on coal for its power generation. While the issues regarding the so-called “clean” energy transition are often overlooked, it has been much harder to ignore the rising electricity costs.
According to a recent report by The Wall Street Journal, industrial electricity prices in the UK are around $0.338 per kWh, while in Germany, they reach $0.267. The UK has the highest rates for industrial electricity in developed nations. In comparison, the rates in the United States and Canada are significantly lower, at $0.081 and $0.094 respectively. For residential consumers, Germany leads with costs of $0.425 per kWh, followed by the UK at $0.386 per kWh.
The unsustainability of such electricity prices has been evident, particularly over the last three years, as indicated by GDP growth data, manufacturing activity, job losses, and consumer spending. Recent figures from the eurozone reveal another decline in manufacturing activity for November, along with increased job losses. Europe is experiencing rapid deindustrialization, driven by its commitment to reduce reliance on fossil fuels, even as it builds more LNG import terminals.
Following the EU’s sanctions against Russia after its invasion of Ukraine, imported liquefied natural gas has replaced Russian pipeline gas—albeit at a high cost. This has prompted a renewed focus on domestic energy production, particularly natural gas.
Reuters’ Ron Bousso reported that countries like Greece, Italy, and the UK are reassessing their energy transition strategies to permit continued production of energy resources that are hard to forgo—and costly. Bousso highlights recent oil and gas initiatives in Europe, including the expansion of Energean’s Block 2 project in the Ionian Sea with Exxon, and Shell’s recent willingness to invest more in Italian oil and gas exploration pending the lifting of government restrictions.
This backdrop of energy policy influenced Germany and the Netherlands' decision in July to pursue natural gas drilling in the North Sea, including in a protected marine area. Emissions considerations remain a priority for policymakers, and all new projects come with related stipulations. However, the mere approval of such initiatives signifies a recognition that wind and solar are not sufficient substitutes for hydrocarbons. Europe's transition efforts have led to reduced carbon dioxide emissions, but many view the associated costs as unacceptable—especially voters who are becoming increasingly dissatisfied with the current leadership.