"I found it strategically maybe not the best decision when we learned after the last winter that the storage of gas" went down, he said. "It didn't speed up at the beginning of spring to fill up the storage again."
He flagged the tougher price backdrop too. "We learned the lesson in a hard way, that the price is now even higher compared to the price level that we had in springtime." In his view, "upward risks dominate the inflation outlook for the euro area" and "gas prices are especially vulnerable."
Storage decisions made in summer end up setting the price of heat in winter. Market Briefs tracks the inflation inputs free every weekday.
Germany's gas sites are roughly 59% full, the lowest level for this point in the year in data back to 2009, and below the European Union average of 72%, according to Gas Infrastructure Europe. Grid and storage operators have cautioned that, given how slowly gas is being injected right now, hitting the roughly 70% legal threshold by Nov. 1 is next to impossible.
This year, Berlin relied on market participants to top up stocks that had been depleted after last winter. The Iran war has scrambled the economics of storing gas for a second year, with prompt prices sitting above winter-dated contracts and eroding traders' motivation to park fuel underground.
In recent days, the government told the state-owned SEFE Securing Energy for Europe GmbH to buy gas and inject it into storage over the next few weeks. For most of the stockpiling season, Economy Minister Katherina Reiche held off, saying utilities and traders should handle injections and that even unusually low inventories did not endanger energy security. In contrast, in the 2022 energy crisis, Berlin put billions of euros toward state-backed gas purchases, which shored up winter reserves but also helped drive prices to record highs.
Nagel also has the broader policy picture on his mind. The European Central Bank has lifted interest rates twice because of the Iran war, officials haven't closed the door on further increases, and economists are penciling in one last hike in December. Since the war began, European gas prices have climbed to over twice their previous level. If Europe ends up buying additional supply at elevated winter prices, that pressure can feed through to inflation.
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