The price for 1 megawatt hour of gas briefly fell below 97 euros on Wednesday. It is the first time since October that traders on the main European stock exchange have lost less than 100 euros.
The cause of the decline is warmer weather. Another factor is that the EU concluded an agreement on a gas cap last Monday. This should ensure that extreme price hikes are a thing of the past.
The gas price reached an unprecedented level of around 350 euros at the end of August. This was due to limited supplies from Russia, French nuclear power plants failing, and many European countries wanting to replenish their gas supplies before winter.
As a result, the demand for gas was high, while supply was limited. This drove up the price significantly. Since then the price has come down a lot.
However, 97 euros is still a relatively high price. Before the price of gas started to rise in the fall of 2021, 1 megawatt hour cost only a few dozen.
If the price of gas stays low for a longer period of time, this can be good for our energy bills. If energy companies have to pay less when they buy their gas, they can also offer it cheaper to consumers and businesses in the long run.
Recently, many households’ energy bills have increased at an unprecedented rate, which has led to many payment problems. A price cap will go into effect on January 1 which should take away much of that pain.
