Gas price continues to fall after Russian action: ‘Worries not over yet’

Russia, which accounts for a third of gas supplies to Europe, will transport more gas to Europe. The Russians are increasing deliveries by roughly two-thirds compared to the level at the beginning of the month. And that puts pressure on the gas price.

At the beginning of October, a megawatt hour of gas still cost 160 euros and now it is only about 67 euros. After all the commotion about the increased energy prices of recent times, it seems that things are going in the right direction. But do not forget that at the beginning of this year the price was still around 20 euros.

And there is another reason for consumers not to turn up the heating again, despite the almost 8 percent drop in gas prices today. After all, it has no direct influence on your energy bill.

Household price

If you pay a fixed rate, that will continue to apply. And for consumers with a variable contract, the price is adjusted twice a year: on January 1 and July 1. They also do not immediately notice the drop in the wholesale price.

The wholesale price is the price that energy companies pay for gas. But that is not the price that consumers pay, because for them there are some additional costs and taxes. The price for households therefore does not rise or fall one-on-one with the gas price, but less quickly.

‘Worries not over yet’

Of course, the fall in the wholesale price is very convenient for consumers and companies, but we cannot breathe a sigh of relief yet, says energy expert Hans van Cleef of ABN Amro. “It remains exciting whether we will have a cold winter and therefore have enough gas.”

Stocks in Europe are low and the extra supply of gas from Russia is not enough to replenish stocks to the levels that are usual for this time of year, says Van Cleef. If it becomes a cold winter, some companies may have to close temporarily, he thinks.

But even if it turns into a mild winter here, we won’t be out of trouble, he thinks. Because if it becomes a severe winter in Asia or North America, it will push up the gas price because extra gas will then go to those areas.

What will happen to Nordstream 2?

The extra supply of Russian gas is done via the pipeline through Ukraine that has been in existence for years, says Van Cleef. But what really matters is whether the pumping of natural gas through the controversial Nordstream 2 gas pipeline can start soon, adds energy expert Jilles van den Beukel.

Russia has recently kept the supply of gas to Europe low in order to put pressure on Germany to quickly agree to the opening of Nordstream 2. That pipeline has been causing controversy between the US and Europe for some time. that Europe is becoming too dependent on Russia for the supply of gas with Nordstream 2.

Need approval

“If Nordstream 2 gets up to speed in the short term, the gas price may drop substantially, again depending on how severe the winter will be,” says Van den Beukel.

That pipeline from Russia to northern Germany is ready, but permission is still needed from the German regulator to actually start using the pipeline. The European Commission also still has to agree.

Days or six months?

The German regulator has until January 8 to give approval, according to Reuters news agency. The European Commission then has two months to agree.

“But it is also possible that due to the social unrest about the high gas price, the German regulator will temporarily agree to transport gas through Nordstream 2 in the short term,” thinks Van den Beukel.

But you create a precedent and it is difficult to withdraw such a provisional approval after the winter, thinks Van Cleef.

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