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LONDON — European and UK gas prices surged on Wednesday to record peaks, energised by fears of runaway demand in the upcoming northern hemisphere winter.

Europe's reference Dutch TTF gas price hit 162.12 euros per megawatt hour and UK prices leapt to 407.82 pence per therm in morning deals.

However, prices later erased gains to flatline in early afternoon trade.

"It's panic and fear with winter just around the corner," Commerzbank analyst Carsten Fritsch said.

Soaring gas prices — coupled with oil which has struck multiyear highs — have fuelled fears over spiking inflation and rocketing domestic energy bills.

Gas demand is also heightened in Asia, particularly from China, while key Russian exports are falling.

Europe to blame: Putin 

However, Russian President Vladimir Putin declared on Wednesday that Europe was to blame for the current energy crisis, after soaring gas prices spurred accusations that Moscow is withholding supplies to pressure the West.

"They've made mistakes," Putin said in a televised meeting with Russian energy officials.

He said that one of the factors influencing the prices was the termination of "long-term contracts" in favour of the spot market.

Some critics have accused Moscow of intentionally limiting gas supplies to Europe in an effort to hasten the launch of Nord Stream 2, a controversial pipeline connecting Russia with Germany.

At the same time, global gas stockpiles remain worryingly low.

"Natural gas prices have climbed to new peaks... as insufficient levels of inventories ahead of the winter season drive concerns for a spike in inflation and energy prices for consumers," XTB analyst Walid Koudmani said.

"These supply constraints could translate into higher costs of fuel moving into the winter months, a prospect which could further slow down economic recovery and worsen moods across markets."

Europe's energy crisis has also been exacerbated by a lack of wind for turbine sites, coupled with ongoing nuclear outages — and the winding down of coal mines by climate-conscious governments.

Gas demand has also galloped higher in recent months as economies reopened worldwide from their COVID-induced slumber.

"The rebound in industrial activity across the world following months of COVID-related restrictions and widespread remote working... boosted demand for natural gas," noted UniCredit economist Edoardo Campanella.

European gas futures have now multiplied by eight since April.

The market is set to shoot even higher, according to French bank Societe Generale.

"Never before have power prices risen so far, so fast," wrote Societe Generale analysts in a client note.

"And we are only a few days into autumn — temperatures are still mild.

"A cold winter could cause severe problems for Europe's energy markets, where politicians are already trying to contain the fallout."

European leaders are divided on how to respond to the record rise in energy prices, with France and Spain calling on Wednesday for bold EU-wide action, while others urged patience.

The European Commission — which is the European Union's executive arm — will next week propose measures to mitigate the price surge for consumers.

Those suggestions will then be discussed by the bloc's leaders at a summit in Brussels on October 21-22.

Britain is particularly exposed to Europe's energy crisis because of its reliance on natural gas to generate electricity.

PARIS — Hundreds of millions of people were unable to access Facebook, Instagram and WhatsApp for more than six hours on Monday, underscoring the world’s reliance on platforms owned by the Silicon Valley giant.

But what actually caused the outage? 

According to Facebook, this is what happened.

In an apologetic blog post, Santosh Janardhan, Facebook’s vice president of infrastructure, said that “configuration changes on the backbone routers that coordinate network traffic between our data centres caused issues that interrupted this communication”.

In plain English 

Cyber experts think the problem boils down to something called BGP, or Border Gateway Protocol — the system the Internet uses to pick the quickest route to move packets of information around. 

Sami Slim of data centre company Telehouse compared BGP to “the internet equivalent of air traffic control”. 

In the same way that air traffic controllers sometimes make changes to flight schedules, “Facebook did an update of these routes”, Slim said. 

But this update contained a crucial error.

It is not yet clear how or why, but Facebook’s routers essentially sent a message to the internet announcing that the company’s servers no longer existed. 

Why did it take so long to fix the problem?

Experts say Facebook’s technical infrastructure is unusually reliant on its own systems — and that proved disastrous on Monday. 

After Facebook sent the fateful routing update, its engineers got locked out of the system that would allow them to communicate that the update had, in fact, been an error. So they could not fix the problem. 

“Normally it’s good not to put all your eggs in one basket,” said Pierre Bonis of AFNIC, the association that manages domain names in France. 

“For security reasons, Facebook has had to very strongly concentrate its infrastructure,” he said. 

“That streamlines things on a daily basis — but because everything is in the same place, when that place has a problem, nothing works.”

The knock-on effects of the shutdown included some Facebook employees being unable to even enter their buildings because their security badges no longer worked, further slowing the response. 

Is this unprecedented?

Social media outages are not uncommon: Instagram alone has experienced more than 80 in the past year in the United States, according to website builder ToolTester. 

This week’s Facebook outage was rare in its length and scale, however. 

There is also a precedent for BGP meddling being at the root of a social media shutdown.

In 2008, when a Pakistani Internet service provider was attempting to block YouTube for domestic users, it inadvertently shut down the global website for several hours. 

Outage’s impact

Between Facebook, Instagram, WhatsApp and Facebook Messenger, “billions of users have been impacted by the services being entirely offline”, the Downdetector tracking service said.

Facebook, whose shares fell nearly 5 per cent over the outage, has stressed there is “no evidence that user data was compromised as a result of this downtime”.

But even though it lasted just a few hours, the impact of the shutdown ran deep. 

Facebook’s services are crucial for many businesses around the world, and users complained of being cut off from their livelihoods. 

Facebook accounts are also commonly used to log in to other websites, which faced additional problems due to the company’s technical meltdown.

Rival instant messaging services meanwhile reported that they had benefitted from the fact that WhatsApp and Facebook Messenger were down. 

Telegram went from the 56th most downloaded free app in the US to the fifth, according to monitoring firm SensorTower, while Signal tweeted that “millions” of new users had joined.

Among the more curious side-effects, several domain name registration companies listed Facebook.com as available for purchase. 

“There was never any reason to believe Facebook.com would actually be sold as a result, but it’s fun to consider how many billions of dollars it could fetch on the open market,” said cyber security expert Brian Krebs.

LONDON — World oil prices surged on Tuesday to new multi-year peaks, extending a bullish run one day after OPEC+ refrained from boosting output any further.

The news handed a boost to share prices of energy firms while European and US stock markets rebounded from losses a day earlier.

But Asia equities fell on concerns that soaring energy prices would further fuel inflation.

European benchmark London Brent North Sea oil jumped to a new three-year peak at $82.72 per barrel.

New York crude zoomed to a fresh seven-year pinnacle at $78.88.

The Organisation of the Petroleum Exporting Countries (OPEC) cartel and other major producers opted on Monday against increasing output by more than previously agreed — despite tightening supplies and rising demand.

The OPEC+ grouping decided to stick with their planned increase next month in oil production of 400,000 barrels.

 ‘Red rag’ 

“OPEC+ gave oil bulls a red rag to bid up futures contracts as it stuck to the planned increase,” said Markets.com analyst Neil Wilson.

“It’s not that demand is suddenly forecast to improve — it’s more that OPEC+ is keeping such a tight grip on supply.”

Runaway oil prices fuel higher inflation but boost the profits and revenues of energy giants.

In London, BP shares rose 0.6 per cent to 346.45 pence and Royal Dutch Shell’s "B" shares jumped 1.3 per cent to £16.93.

In Paris, France’s Total rallied 1.8 per cent to 42.83 euros and in New York shares in ExxonMobil climbed 1.1 per cent to $62.40.

“OPEC’s decision not to lift production volumes gave oil prices a lift into Tuesday, helping the FTSE 100 to solid gains as index heavyweights BP and Shell gushed higher,” said AJ Bell Investment Director Russ Mould.

Wall Street rebounded at the start of trading, shaking off losses on Monday over concerns about the impact of higher energy prices on economic growth and the ongoing standoff in Washington over raising the country’s borrowing limit, which has fuelled fears of a catastrophic US debt default.

“It remains to be seen whether the bulls will be able to hold their ground in the face of rising concerns over stagflation,” said ThinkMarkets analyst Fawad Razaqzada.

Elsewhere on Tuesday, most Asian markets fell following a Wall Street’s Monday slump as surging oil prices also put further upward pressure on inflation.

Investors were nervously monitoring developments in the crisis surrounding troubled property giant China Evergrande, which has raised warnings about contagion in the world’s number two economy and possibly beyond.

LONDON — The British military started delivering fuel to petrol stations on Monday, after a tanker driver shortage sparked two weeks of panic buying by motorists.

Troops in fatigues drove tankers from Buncefield Oil Depot in Hemel Hempstead 32 kilometres north of London after the military was put on stand-by last week.

Some 200 military personnel, half of them drivers, are taking part in Operation Escalin to alleviate fuel shortages in London and southeast England worst affected by the run on the pumps.

The military deployment has been requested for 31 days but will be subject to "discussions with industry", Prime Minister Boris Johnson's spokesman told reporters.

"What we've seen again over the weekend is a continual improving picture with fuel stocks increasing and more fuel being delivered," he added, cautioning that it was hard to say when the situation would return to normal.

The Petrol Retailers Association (PRA), which represents 65 per cent of Britain's 8,380 independent forecourts, welcomed the military's intervention.

But it warned that soldiers were still likely to have only a limited effect.

Refuelling 

At Thurrock in Essex, southeast England, members of the 3rd Logistic Support Regiment have been training with the haulage industry.

Uniformed soldiers stood with crossed arms as a civilian instructor in a high-visibility jacket and hard hat showed them how to refill giant tankers.

In Hamble, near the port city of Southampton on England's south coast, tankers were filled with petrol from a BP oil refinery and rolled out to deliver to forecourts.

One in five filling stations in London and southeast England remained out of fuel, PRA chairman Brian Madderson said.

But the crisis in the rest of the country is "virtually over", he added. 

Britain's roads have been clogged by long queues of motorists at petrol stations for more than two weeks.

Frustrations have boiled over into anger, and violence has even broken out between motorists desperate to fill up, including with jerrycans and even old water bottles.

Critics have blamed the chaos on Britain's exit from the European Union, coronavirus and a lack of government planning to replace thousands of foreign drivers who have left the country. 

Johnson said Britain's supply chain problems were a "function of the world economy, particularly the UK economy, coming back to life after COVID".

Poland, the United States and China are also experiencing driver shortages, he said.

No 'magic wand' 

The government has made a U-turn on its tougher post-Brexit immigration policy, relaxing curbs to give short-term visas to 5,000 foreign lorry drivers and 5,000 poultry workers to help plug staffing gaps.

But Johnson is resisting any further easing, saying he wants to see a "high-wage, high-skill economy" rather than mass immigration which would drive down salaries.

He called for the road haulage industry to invest in drivers' wages to make jobs in the sector more attractive.

Finance minister Rishi Sunak told the BBC the government is doing everything it can to address the fuel crisis and food shortages also attributed to driver shortfalls and vacancies in the meat processing sector.

"There are things that we can do and should do," he said but warned: "We can't wave a magic wand and make global supply chain challenges disappear overnight." 

Shortfalls in foreign workers have raised fears of a shortage of turkeys for Christmas.

Pig farmers protested outside the annual conference of Johnson's ruling Conservative Party in Manchester, northwest England, on Monday to highlight a lack of skilled butchers.

They said the lack of butchers and abattoir workers — many from overseas — could see up to 120,000 animals slaughtered and incinerated rather than going into the food chain.

"Do you really want to see this again?" one poster read, showing a photograph of burning pyres of cows slaughtered during the "mad cow" crisis of 2001.

LONDON — The sharp rise in wholesale gas prices is spilling over into the oil market, with looming demand for electricity generation and heating likely to further spur the sector this winter.

The spike in demand and consumption could lead the OPEC+ alliance of oil exporters, which meets in Vienna on Monday, to scale up their production plans.

"We could see an additional oil demand boost of nearly 1 million barrels per day [bpd] for December 2021, half of which we deem quite likely to materialise from incremental oil-for-power generation in Asia," said Bjornar Tonhaugen, an analyst Rystad Energy.

"The remaining half is more uncertain and hinges on a colder-than-normal start of winter in the Northern Hemisphere, which would drive oil for heating."

Switch to oil 

If gas prices remain prohibitively high, some countries in the Middle East and Asia may explore temporarily increasing use of their oil-fired power plants, according to Fitch analyst Dmitry Marinchenko.

Overall, oil-fired generation represents only a small portion of global electricity production, around three percent in 2019, according to the International Energy Agency (IEA).

That lags far behind 37 per cent for coal and 24 per cent for natural gas.

However, Tony Syme, macroeconomic expert at the University of Salford Business School, said that only "a small minority of power plants" in Britain and the US can switch between coal and gas for power generation.

"This number has been declining over the last three decades as the environmental impact of burning fossil fuels has become more important," he said.

The price of crude oil, which is subject to many other factors, has risen following the surge in gas prices, but not as sharply.

OPEC intervention? 

The additional demand for oil amid the gas price spike is difficult to quantify, but could be "up to 320,000 bpd... over the next six months in Asia and Europe", according to S&P Global Platts Analytics.

US bank Goldman Sachs estimated "the potential capacity for gas-to-oil substitution could be larger should gas rally further, of up to 1.35 million bpd in power and 0.6 million bpd in industry" in Asia and Europe.

However, this volume represents only two percent of global oil demand, which is expected to pass the 100 million barrels per day mark next year, according to the Organisation of Petroleum Exporting Countries, or OPEC.

"While manageable from an oil market perspective, such a one-standard deviation weather shock would nonetheless represent $5 per barrel upside to our $80 per barrel Brent forecast," Goldman Sachs said.

Members of the oil exporters' cartel and its allies, together known as OPEC+, must decide whether to ramp up oil production or risk further price inflation.

Olivier Daguin, an investor at OFI AM, told AFP the extent of the switch from gas to oil "will depend mainly on the difference in price between the two".

The gap has widened considerably in recent days.

'Irresistible' 

In Europe, gas prices continue to soar.

The Title Transfer Facility (TTF), a Europe-wide virtual trading point for natural gas in The Netherlands, reached the 100 euros ($116, £86) per megawatt-hour (MWh) mark for the first time in its history on Friday.

This is five times more than at the start of the year, while oil prices have doubled over the same period.

European gas is now roughly twice as expensive as Brent North Sea crude oil — which cost $80.75 per barrel on Tuesday, its highest price in three years — using notoriously difficult conversion methods

"Asia spot natural gas prices are now trading at near the equivalent of $180 per barrel of Brent crude, meaning that oil's appeal as a gas substitute for power generation is almost irresistible," said Jeffrey Halley, senior market analyst at OANDA.

By Esteban Rojas
Agence France-Presse

CARACAS — The official exchange rate of Venezuela's bolivar went from 4.18 million to the US dollar overnight to just 4.18 as the country slashed six zeroes off its inflation-battered currency on Friday to simplify transactions.

It is the third banknote reform in 13 years, with a staggering 14 zeroes shed since 2008 — giving Venezuela the "dubious" distinction of becoming the South American country to have lopped the most zeroes off its currency.

"Everything expressed in national currency shall be divided by a million," the central bank announced.

Housekeeper Josefina Galindo said that she "went shopping without problems this morning. The new prices were displayed above the old ones. And there was always the price in dollars". 

"The price [in dollars] has not changed," added the 52-year-old, who was shopping in the upscale Caracas district of Chacao but said she had still paid in old prices using the old bolivars when she took the bus from her working-class neighborhood of Coche.

The electronic platform of the public Banco de Venezuela, which has 14 million clients, was also down by mid-afternoon, with those trying to make internet transactions encountering a message apologising for the inconvenience.

Venezuela, the once-rich oil producer, is battling its eighth year of recession and hyperinflation that reached nearly 3,000 per cent in 2020 and more than 9,500 per cent the year before, according to central bank figures.

Economic consultancy Ecoanalitica expects the 2021 figure to come in at around 1,600.

In May, the government tripled the minimum monthly wage but the new amount was not enough even to buy a kilogramme of meat.

Three in four Venezuelans today live in extreme poverty, according to a recent study, with the economic crisis made worse by US sanctions and the coronavirus pandemic.

Millions have left the country in recent years to try their luck elsewhere.

'Lack of capacity' 

With the bolivar losing nearly all its value, seven 1 million bolivar notes — very hard to come by — were needed to pay for one loaf of bread before Friday's currency update.

The government issued new banknotes in denominations of five, 10, 20, 50 and 100 bolivars, as well as a one-bolivar coin, but has said that it wants the economy to become entirely digital.

Analysts read this as a way to avoid printing money that will just continue devaluing, eventually requiring another readjustment.

The biggest note in the retiring bolivar family, with a face value of a million, is worth barely $0.25 — not enough to buy a piece of candy. It will remain in circulation in parallel with the new notes for a few months.

"It [the bolivar] is not going to be worth more, it's not going to be worth less, it's just a monetary scale that we're applying by removing six zeros to facilitate transactions," Vice President Delcy Rodriguez said this week.

Salaries of worthless millions 

According to Luis Arturo Barcenas of Ecoanalitica, the readjustment reflected a "lack of capacity by the economic actors in Venezuela to control hyperinflation", a phenomenon that "has greatly impoverished the population".

Workers found themselves receiving salaries paid in millions of bolivars that are effectively worth nothing.

In Venezuela, the minimum public service wage is the equivalent of $2.5 per month and the average salary is about $50, while a basket of basic groceries for a family of five costs about $220.

With so many bolivars required for a simple purchase, and with notes in short supply, 70 per cent of transactions in the country are conducted in US dollars, according to private sector estimates.

Prices on many shop shelves are displayed in the US currency, to keep things simpler.

In Venezuela's border regions, it is common to also pay for goods in Colombian pesos or Brazilian reais, and even grams of gold.

In the 24 hours leading up to Friday's recalibration, the dollar soared on the black market though the central bank kept the official exchange rate stable.

By morning, some shops had already adopted the new bolivar and repriced their goods.

Others, fearful of operational problems, limited bolivar-based transactions. 

"I made purchases this morning without problems," Josefina Galindo, a domestic worker, told AFP. She used her debit card — the preferred method of payment when dealing in bolivars.

Jose Grasso Vecchio, president of Venezuela's largest private bank, Banesco, said the new, lower denominations would make the work of banks "easier, faster".