Europe faces sky-high gas prices well into 2024, with preparations for a shut-off of supplies from Russia lacking in a number of countries, warns Bickley Consulting's William Parsons.

The continent's precarious gas supply situation has been a prime focus for markets ever since Russia invaded Ukraine on February 24th, with the situation becoming critical following a slowdown of supplies from Russia in response to western sanctions, reducing supplies to zero in some instances.

And Parsons believes the pain is set to continue for an extended period, with measures to drive down demand not enough to rein in prices. 

High prices can be tackled by either reducing demand or increasing supply. Increased supply cannot be achieved instantly though, with significant infrastructure investment required.

To tackle shortages EU member states recently agreed to a voluntary 15% reduction in gas consumption, whilst an almost-400% year-on-year increase in energy prices will inevitably result in reduced consumer demand.

"Measures to dampen demand cannot go far enough," said Parsons. "There are only so many ways to reduce commercial consumption without causing major disruption. This alone will not be enough to have a significant impact on prices, neither will reduced consumer demand." 

"Until supply increases, Europe will remain the premium market for gas, with prices significantly higher than those in the US or Asia."

European nations have been investing heavily in the required infrastructure to receive gas supplies from alternative sources, but the most advanced of these projects will not be operational until 2024, with supply issues expected to drag on into 2025.

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