Energy prices are rising across Europe because of the conflict in the Middle East. The region still depends heavily on imported fossil fuels, so higher prices hurt its economy quickly. Since tensions escalated, the European Union has paid over 24 billion euros extra for imported energy. In August, inflation in the euro area reached 3.3 percent. To cool prices, the European Central Bank raised its key interest rate to 2.5 percent.
The pressure does not stop there. Europe's gas storage is unusually low, and experts warn about future supply shortages. The International Energy Agency has urged governments to build strategic reserves and cooperate more closely. The EU is also expanding clean energy and building storage systems for renewable electricity. Demand for power keeps growing because of electric cars, heat pumps and data centres.