What's going on?

Data out on Monday showed that prices of energy have surged to record highs in Europe, but just remember: with great power comes great responsibility.

What does this mean?

The demand for energy picked up coming out of the pandemic, but providers didn�t seem to get the memo in time: there have been a variety of supply issues with natural gas, which is used to generate electricity. That�s pushed up the cost of power for the whole of Europe, with gas prices up more than 170% this year alone, and an index tracking German energy prices hitting an all-time high on Monday.

That has to make the European Central Bank (the ECB) nervous: soaring energy prices are synonymous with inflation, which the ECB shrugged off again last week as a temporary consequence of the pandemic. If it continues, the central bank may be forced to rethink its economic support policies much sooner than expected to keep price rises in check�

Why should I care?

The bigger picture: The road to energy hell is paved with good intentions.
Germany is Europe�s biggest energy market, and it�s leading the way in the transition to greener power. Not that it�s not doing the country any favors right now, mind you: poor weather conditions have seen its renewable energy production come in well below par this year. And since the country�s planning to shut down the equivalent of nine nuclear reactors by 2023, it�s staring down the barrel of a supply shortage that�ll push prices even higher.

Zooming out: Settle in.
It looks like this spike in energy demand could be here to stay: data out Monday showed that German factory orders rose unexpectedly in July, driven by a boom in demand for exports. That increase in orders will only push energy usage higher going forward, and prices along with them.