WOLFSBURG – German car group Volkswagen will make hundreds of millions of euros in profit as it sells gas stocks it previously bought cheaply. Volkswagen’s gas contract contains 2.6 terawatt hours of gas, according to the Bloomberg news agency. That is enough to supply gas to about 200,000 homes for one year.
Gas prices are now many times higher than when Volkswagen bought the stock. The price increase is the result of an unprecedented energy crisis in Europe. According to the latest prices, according to Bloomberg calculations, Volkswagen can make a profit of 400 million euros.
The company planned to use the gas in its two power plants in Wolfsburg next year. The gas was needed in the transition from coal to other fuels. However, rising prices, along with economic and political pressure to conserve oil, have led the company to sell off the gas and stick to coal for now, insiders told Bloomberg.
Volkswagen bought gas on the futures market through a so-called hedge contract, which prevents the price from falling. The gas would be bought in 2020 when the market price was about 30 euros per megawatt hour. Currently, the hourly price of a megawatt of gas is around 200 euros. The drop in price depends a lot on how the market price changes.
A Volkswagen spokesman declined to comment on the company’s internal operations. Earlier this year, the group’s commodity business also generated significant profits. The company saw its gains from positioning in commodities such as nickel contribute 3.5 billion euros to first-quarter profits.
In particular, the German government has encouraged energy-intensive industries to store gas in order to have sufficient stocks. Corporations find it more cost-effective to burn coal for energy production.