Latest gas price rises show crisis is not over

Natural gas prices are heating up again as Europe braces itself for a cold spell. Bloomberg reported earlier this week that the Dutch benchmark rose 2.9 per cent to €58.70 a megawatt-hour in Amsterdam on Thursday, while the British equivalent jumped 4 per cent.

While Irish families will not have noticed, gas prices eased this winter on key European markets. The weather was mostly milder than usual – hence those snowless ski slopes – and the region had stored most of the fuel that it needed following bouts of panic-buying last year.

So this week’s hike might be a blip, or the start of something more sustained, or somewhere in between – your guess is as good as those of the highly-paid economists who are supposed to predict these things. All it tells you is that the energy crisis is far from over even as Government subsidies to families run out in coming weeks.

Some optimistic industry figures say that households should see energy bills falling in around six months. This is because companies buy the gas used to supply homes and generate power several months ahead. So they paid high prices for the fuel we are using now but, by the same logic, will have paid less for the gas we will be using later in the year.

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There are a few problems with this. In six months the industry will already be gearing up for next winter. We have literally no idea what will happen between now and then. Russia could relent and flood Europe with natural gas or could have shut off supplies entirely.

There is a further complication. China was in the grip of yet another Covid lockdown last year so was not buying as much liquefied natural gas (LNG) as previously, which helped bail Europe out this winter. More competition for LNG obviously means higher prices for this as well.

So whatever the price is doing this week or next may have no bearing on anything. Few people know where the energy crisis is going. Those that do are mostly likely saying nothing while making millions trading gas futures.