Soaring Ethanol Prices Could Impact European Businesses

Last year, European wholesale gas prices went up by a record-breaking 400 percent. If you aren't already budgeting for unpredictable spikes, you might want to.

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Ethanol prices are up considerably across Europe – and around the world – which could impact businesses throughout the region.

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In France, for instance, consumption of high-ethanol E85 increased 33 percent last year and is expected to continue rising this year, according to Reuters. This increase was similar to soaring prices seen around the globe, which were attributable to an increase in crude oil as well as supply issues and overall economic recovery.

Earlier this month, the front-month gas price at the Dutch TTF hub was trending high, at one point hitting 93.3 euros per megawatt-hour, per CNBC. European benchmark gas prices surged at the beginning of the year, compounded by concerns over a cold winter, low inventories, and, again, supply issues.

Overall in 2021, European wholesale gas prices went up by a record-breaking 400 percent.

Gas prices in the eurozone are dependent on shipments, the weather, and the region's supply from Russia, none of which businesses can control or predict. That means business owners in the EU will need to strategically budget for any sudden increases or unforeseen gas prices.

Last week, the European Commission released findings showing wholesale gas prices in the EU rose to record levels in the third quarter of last year, hitting 85 €/MWh by September's end.

Moreover, the European Power Benchmark averaged 105 €/MWh in Q3 2021, which is an increase of 211 percent over Q3 2020 and 164 percent over Q3 2019.

However, in the United Kingdom, there are limits on how much suppliers can charge for energy. The price caps are reviewed by regulators every six months and the next review is this month. Prime Minister Boris Johnson said in January that his government was "not ruling out" steps like tax cuts to stabilize energy costs.