Shell CEO Ben van Beurden says that gas prices will significantly increase and that in a worst-case scenario, Europe may have to ration its energy usage.
“Some countries will fare better than others,” van Beurden explained, “but we will all be facing a very significant escalation in energy prices.”
He places the blame on deteriorating relations between Russia and much of Europe. Mainland Europe gets roughly 40% of its energy supply from Russia. While the UK gets far less, around 4%, the disruptions to global energy markets will undoubtedly raise prices there as well.
Complicating matters further is the Nord Stream 1 gas pipeline that runs from Russia through the Baltic Sea and into Germany. It has been shut down for maintenance that will continue for an estimated 10 days, but many fear it will not be turned back on.
If that happens, Europe will have difficulty meeting its energy goals. The European Union intends to have 80% of its storage capacity filled by November, but without the pipeline reopening, that looks unlikely. Stockpiles currently sit at 62.6%.
Officials and leaders around Europe are already telling their citizens to expect difficult times ahead. In France, President Emmanuel Macron told citizens during Thursday’s Bastille Day speech to expect some energy rationing, including turning off street lights at night. He also called for a time of “energy sobriety” in the country.
Elsewhere, in Germany, the head of the country’s energy regulator, Klaus Müller said that he expects heating bills to triple next year. They have already doubled in 2022 compared to last year.
Meanwhile, the UK’s energy regulator Ofgem has already increased price caps on energy and is expected to do it again in October, raising prices by as much as 65%.
Shell has seen massive profits this year, and van Beurden has indicated that he plans to boost shareholder returns in an attempt to increase the company’s stock price.