Why aren’t low gas prices showing up on your bill?
On Monday, the price of natural gas in Europe fluctuated around 73 euros per megawatt hour. In August, the astronomical amount reached 342 euros. Consumers automatically start dreaming of instant translation of their invoices. This will not happen.
How to explain the drop in prices?
First, since European gas stocks are much higher than they were a year ago, before the war in Ukraine, there is less reason to buy it, which pushes prices down. “The fill rate is 56% on the same date last year, compared to 83% on January 1,” says Thierry Bros, energy market analyst and lecturer at Sciences Po.
The second factor: the decrease in consumption. Due to the modest efforts of individuals and businesses, demand fell by 15%. Finally, a mild winter further reduced consumption. “For now, the weather is playing for us and against Putin,” said Thierry Bros.
What about electricity?
To determine the price, we look at the demand for electricity at time T. And we match the price with the production facilities needed to meet the needs. When demand is low, nuclear or renewables are sufficient. But when demand is high, thermal power plants are brought into operation and the cost of electricity is then based on the price of gas (or coal).
Thus, the price of wholesale electricity in France, which exceeded 1,000 euros/MW at the end of August, fell to 240 euros last Friday, taking advantage of the drop in wholesale gas prices.
Will consumer bills go down?
The answer is no. “The first is because the gas we will burn at home from January to March has been collected and purchased at the highest level this summer,” – Thierry Bros.
The French then benefit from tariffs that limit gas growth to 4%, while “prices rose tenfold in August compared to the historical average”. Even if the price increase for individuals is now capped at 15%, we are “still very protected,” the analyst points out. “At the start of the year, gas prices may look like they’re going to drop sharply, but they’re still more than double the historic long-term price. »
What can we expect in the coming months?
“Everything depends on Putin. It may choose to send us less gas. But he may also decide to open the floodgates in the hope of dividing European countries between them,” said Thierry Bros. He cites the possibility of Russia exporting gas through a gas pipeline through Belarus “with the hope of interested countries such as Italy or Germany”.
This is why the ongoing negotiations on the part of the European Union to return to long-term contracts with exporting countries such as Norway, Qatar, Nigeria and even Iraq are important.
Sobriety, the solution?
“More vigilance, quite simple and effective,” answers Thierry Bros. But in order to avoid the risk of blocking in the future, we must first think about what energy mix we want to achieve. Energy is a long time, and today we are paying the price for the incompetence of the last 10-15 years. At the moment, we are not really doing anything significant to increase our independence. This crisis reminds us that we are still far from a carbon-free world. »
Gas, electricity, wood… In the context of exploding energy costs, which heating solution should be preferred?
Nathalie Van Praagh
