EU’s Energy Plan Beats Inaction

A perfect storm has hit European energy markets, pushing leaders to intervene. It isn’t all bad news for investors.

The confluence of extreme summer heat, dwindling Russian gas deliveries, unplanned outages of French nuclear plants, droughts reducing hydropower and low river-water levels limiting coal deliveries have pushed natural-gas prices to unprecedented levels. They are closely linked to electricity costs as it is the fuel that often sets European power markets’ marginal price, much like in the U.S.