Europe’s energy crisis shows electricity and gas still ‘intimately’ tied

European officials are grappling with an energy crisis that is sending gas prices soaring and creating divisions over how to tackle the issue as the winter months approach. 

Jacob Mays, an assistant professor in the School of Civil and Environmental Engineering at Cornell University, studies energy systems and the design and analysis of electricity markets. He says that despite Europe’s push to break the link between gas and electricity prices by moving away from fossil fuels, the two are still strongly connected.

Mays says:

“Electricity and gas prices are intimately tied, to the extent that ‘decoupling’ them would be tremendously difficult. In the longer term, most European countries hope to move away from fossil fuels, which would break the link and shield them from volatility in gas prices.

“In the short term, however, those same decarbonization goals may lead to less investment in gas and more price volatility. Given the experience of this shock, a more straightforward approach for many customers may be to look for more long-term contracts for gas and electricity, shielding themselves from the volatility associated with spot prices.”

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