Europe’s Soaring Energy Prices Leave Recovery Dawdling
Why is employment growth so slow in Europe? Energy-intensive industries, like steel and chemicals, are not creating jobs in Europe. They’re going to the United States and other bits of the planet where natural gas and electricity prices – the two are linked – are much cheaper.
On Wednesday, the European Commission will lay out its climate and energy policy for the European Union through 2030. According to various reports in the Financial Times and elsewhere, the landmark report will highlight the yawning gap between EU energy prices and those in other countries where manufacturing is a big employer. Industrial gas prices are three to four times higher in the EU than in the United States and Russia and some 12 per cent higher than in China.
The gap between American and European prices is bound to rise, making Europe ever less competitive. That’s because of the American shale gas revolution, which is pushing down energy prices relentlessly. No surprise that big European companies, like Germany chemicals giant BASF, are plotting their expansions in the United States instead of on home soil.
In a comment piece in Tuesday’s FT, Lakshmi Mittal, chairman and CEO of global steel producer AcelorMittal, said: “The EU says the manufacturing industry is a motor for growth. Unfortunately, EU energy and climate policy is punishing the steel sector and other energy-intensive industries… Compare this with the U.S., where shale gas and more industry-friendly policies have led to much lower costs for industrial energy users.”