Social Unrest Risks Rise As German Power Prices Squeeze Households

Energy inflation is out of control in Germany as Russian natural gas supplies plunge as maintenance work begins on the Nord Stream 1 pipeline. Russia has been throttling Europe’s energy supplies since late 2021, and new concerns mount supplies could be halted after the scheduled end of the maintenance work later this month. One official has already warned if energy prices continue to soar, social unrest risks will flourish. 

Reuters spoke with the managing director of the municipal energy supplier “eins” in Chemnitz, Roland Warner, who warned the average household power bill is set to triple ahead of winter. 

“We must help average households and set an upper limit [price caps] for energy costs,” Warner said, noting annual bills of 1,500 euros could rise to 4,700 euros by October.

He warned that households crushed by the worst inflation in decades and unrelenting rise in power bills could incite social unrest: “If we get social unrest, the state won’t be able to cope.”

Klaus Mueller, the head of Germany’s energy regulator, believes Russia is throttling Europe’s energy supplies. He told CNBC last week: “We cannot rule out the possibility that gas transport will not be resumed afterward for political reasons.” 

Germany is a hotspot for energy discussions because it has Europe’s largest economy and population and is the continent’s biggest customer of Russian NatGas. The problem Germany faces ultimately spills over into the rest of Europe.  

Meanwhile, Energy minister Robert Habeck has denounced calls for price caps, saying the government cannot offset soaring energy costs because that would send a message to households and businesses to continue consuming instead of conserving. 

This is happening as European governments scramble to fill underground storage facilities with NatGas supplies ahead of winter. Supplies are already below average for this time of year, and shuttering Nord Stream 1 has increased NatGas prices. It could slow the region’s ability to refill storage facilities, a crisis that would mean continued skyrocketing energy bills for households and emergency measures from policymakers. 

The English-language Deutsche Welle has also reported the alarming situation of many German households already rationing hot water and electricity. Other local media outlets predict the squeeze on the working-class population could result in social instability.