Due to the mild winter weather in large parts of the world, fears of a possible gas crisis are ebbing away and prices on the gas markets are falling sharply. US gas prices even showed a drop of up to 12 percent at one point on Tuesday. European gas prices also fell further at the start of the new year because less heating is required.
“The risk of extreme market tightness that people worried about before winter now seems remote,” notes Abhishek Rohatgi, a Singapore-based analyst with research firm BloombergNEF. He also points out that Europe has built up substantial gas reserves. As a result, the chance that households and companies will suddenly no longer be able to get gas supplied here has shrunk considerably.
The price of a megawatt hour of gas on the leading exchange in Amsterdam is now around 70 euros. European gas was last this cheap in February last year, before the start of the war in Ukraine. As a result, energy companies can now buy cheaper gas. When Russia largely turned off the gas tap last summer, the price of gas rose sharply, to almost 350 euros per megawatt hour.
Price drop
Consumers are not immediately noticing the drop in prices in their energy bills in recent days. This is because energy companies do not adjust their rates immediately, but every so often. If the current trend continues, consumers will probably benefit from the lower prices in the gas markets at some point. For example, Eneco announced in December that it would further reduce the variable tariffs for power and energy for about a third of its customers as of February.
The Vastelastenbond recently said that it is concerned about possible exorbitant profits for energy companies because it does not or only late passes on the lower gas prices to customers. “The point is that it may take some time for this drop to be passed on, if at all. As long as the price drop is not passed on, consumers will continue to pay the full price for their energy bills,” said director Dirk-Jan Wolfert of the consumer organization.