Status: 09/30/2022 08:11 a.m
The development of gas prices is difficult for consumers to understand. Prices on the stock exchanges fluctuate greatly, and how high your own gas bill actually is depends, among other things, on where you live.
The consumer advocates from North Rhine-Westphalia had already expected that there would be significant regional differences in gas prices. But when they saw their own evaluation, they rubbed their eyes in amazement, because the price differences are enormous. A new basic service customer in Duisburg in October pays more than 4.5 times as much as in Rheine. Such differences are “amazing,” says Udo Sieverding from the consumer advice center in North Rhine-Westphalia.
Some price increases are yet to come
There are sometimes very simple explanations for this. In the case of Stadtwerke Rheine, for example, which is still so cheap at the moment, the big price increase is still to come. Starting in November, basic service prices will jump from seven cents per kilowatt hour to 29 cents. In expensive Duisburg, on the other hand, the prices for new customers even drop because new and existing customer tariffs are combined.
Nevertheless, consumer advocate Sieverding expects major regional differences to remain in the coming months. This depends, among other things, on the different procurement strategies of the energy suppliers.
Municipal utilities have purchased differently
Similar to private customers, municipal utilities and other energy suppliers also have the choice of whether they conclude long-term fixed contracts with fixed prices or whether they prefer to buy at short notice. “When prices rose in the summer of 2021, some municipal utilities reacted and procured additional delivery quantities, others did not react,” says Sieverding.
After that, gas prices continued to rise. Those who have taken a “riskier line” and now have to buy a lot of gas in the short term tend to have the highest prices, according to consumer advocate Sieverding: “In the long term, the prices will level out because everyone has to stock up on the same market.” It is not yet clear what the effects of the gas price brake planned by the federal government will be, as there are no concrete implementation plans yet.
“Nervousness in the Markets”
Contributing to the confusion are the large jumps in the price of gas on the exchange, which do not always seem to follow a rational logic. Prices have fallen significantly over the past few weeks. But when reports of gas leaks on the Nord Stream 1 and 2 pipelines emerged this week, prices shot up again, even though no gas was flowing through these pipelines to Europe anyway.
The price jumps are an expression of the “nervousness on the markets,” says Karen Pittel, an energy expert at the Munich economic research institute ifo. For the coming months, however, she expects wholesale prices to fall. From their point of view, a level of 100 to 150 euros per megawatt hour is conceivable. That would still be significantly more than before the Russian attack on Ukraine, but still less than this summer.
Good economic development increases gas price
According to Pittel, the fact that the replacement procurement of liquefied natural gas is going well could contribute to falling prices. In addition, the German gas storage facilities are already more than 90 percent full: “I wouldn’t have expected that just a few months ago,” says the economist.
How prices actually continue depends on how consumption develops, including how cold the winter gets. According to Pittel, the economic situation also has an influence, since it depends on how much gas is consumed in industry: “The better the economy is, the higher the gas price.”
Potential for pipeline gas limited
Demand is also a decisive factor for long-term price development, says Eren Çam from the Energy Economics Institute at the University of Cologne. His research team has examined how the gas market could develop in the coming years: “A 20 percent drop in demand in the EU could result in prices falling back to 2018 levels by 2030,” says Çam.
The researchers emphasize that the potential for more pipeline gas is limited – partly because of a lack of pipeline capacity, partly because countries like Norway or Algeria cannot supply much more. LNG liquefied natural gas, which comes by ship, will be all the more important. The construction of corresponding terminals, with the help of which liquefied natural gas can be converted again, is already underway in Germany. But the “bottleneck” is the “liquefaction capacity” in export countries like the USA, says EWI researcher Çam: “The construction of terminals for the export of liquid gas is about ten times as expensive as the construction of terminals for the import.”
Basic suppliers usually the cheapest
So, liquefied gas from the USA and Qatar cannot replace Russian gas at the same price. For consumers, this means that they have to adjust to higher gas prices in the longer term. In the short term, the only thing that will help them is to look for the cheapest energy supplier in each case. Unlike in the past, this is currently the basic supplier in most regions, in many cases the municipal utility. In the past, basic suppliers were often among the more expensive providers because they tended to buy long-term and with little risk. This cautious strategy is now benefiting them and their customers.