Less than 83 euros for a megawatt hour, that was the price of gas today, according to the Future FTTs. It is the wholesale price that energy companies pay for the gas they buy and this price is indicative of the gas price that consumers and companies pay in Europe.
The wholesale price is now about 37% lower than it was a week ago. The last time gas prices approached that level was in mid-June.
Consumers
The energy supplier Eneco already has it announced which lowers the price of gas for consumers. But many consumers won’t immediately benefit from the lower wholesale gas price.
After all, consumers have to deal with it price limit, which means that they pay a maximum of 1.45 euros per cubic meter of gas up to a consumption of 1200 cubic meters of gas. That is, below the gas price reduction announced by Eneco.
Only if consumers consume more gas will they notice if the gas price is lowered because the wholesale price falls.
Industry
The situation is slightly different for industry, according to energy expert Jilles van den Beukel of the Center for Strategic Studies in The Hague. Some companies are passed on a wholesale price increase or decrease very quickly, she says.
But others have long-term contracts for a portion of their consumption.
Gas consumption has decreased
The price of gas has come down so much recently, because gas depots are now well filled, a lot of LNG (liquefied natural gas) comes in by ship, and we’ve all started using less gas, says Van den Beukel.
“In the Netherlands, gas consumption has decreased by around 30 percent and in the European Union as a whole by around 20 percent.”
Higher price soon?
That consumers and businesses have started using less gas is because the price of gas had risen sharply earlier, says Van den Beukel. At the beginning of December last year, the TTF gas price was still around 50 euros and increased to 345 euros at the end of August.
According to him, the question is whether, now that the gas price has dropped sharply, we will have a reverse situation and start using more gas again. Such high demand can then drive the price up again.
“Companies will produce more”
It is difficult to estimate when and by how much gas consumption will increase, says Van den Beukel. In the EU, consumers (mainly for heating homes), industry and electricity companies each account for around a third of gas consumption, he says.
“If the gas price for companies is reduced, I expect companies to produce less sooner due to the high gas price and actually increase their production.” But whether that will be the case within a month or two, or within a quarter or two, Van den Beukel has a hard time estimating.
Demand from gas-fired power plants will depend on electricity demand, Van den Beukel says.
In this video you can see why energy tariffs were still rising, while market prices fell:
