Wednesday, December 1st, 2021
“A global energy storm”
Prices for fuel, gas and heating oil are going crazy
The word “energy crisis” has long been making the rounds. Consumers worry that heating and driving will become more and more expensive. The fact that oil and gas have skyrocketed is also related to the global economy in times of corona.
Exploding prices at filling stations and higher bills for electricity and, above all, gas and heating oil: the world energy markets have been going crazy for months, and millions of consumers are noticing that in their wallets. The comparison portal Verivox recently found that energy costs in Germany have risen to a record level. “Never before have private households had to pay so much for heating, electricity and fuel.” Within a year, energy has risen by 35 percent, “more than ever since the turn of the millennium”. Energy prices alone are responsible for at least a third of the excessive inflation of more than five percent and more recently.
The stimulus phrase of the “energy crisis” has also reached politics. The coalition agreement between the SPD, the Greens and the FDP also provides relief for consumers in terms of energy prices. In 2023, for example, the financing of the billions in the EEG levy to promote green electricity through the electricity price is to be abolished. In addition, the traffic light parties want to “strengthen the housing benefit, introduce a climate component and pay a one-time increased heating cost subsidy at short notice,” as stated in the 177-page contract. In addition, landlords will in future also contribute to the heating cost surcharge through the CO2 price – so far, this has only been borne by the tenants.
At least there are currently some indications that world markets could at least gradually calm down in 2022. In their most recent report, the “economic wise men” expect that rising energy and producer prices will continue to have an effect well into next year. The advisory body of the federal government assumes that the prices for natural gas will remain high in the winter half-year 2021/22, but will then “fall sharply” from spring onwards. In this forecast, you refer to market data from the European Energy Exchange EEX, according to which the prices for forward deliveries will be roughly halved from April compared to the current level and will continue to fall for the following years.
And in the case of crude oil, forecasts by the International Energy Agency IEA also suggest easing the situation. “The world oil market is still tense, but a break from the price rally could appear,” writes the IEA in its latest monthly report – although it is assumed that producers are gradually increasing the oil supply in response to the high prices. Drivers could see the result of the rapid rise in the price of oil at the petrol stations: At times, diesel prices climbed to a record high, and petrol prices at least near an all-time high.
Far from prices like 2011 to 2014
“In the last few months a global energy storm has broken out and oil has not been able to escape the turbulence. Gas, coal and electricity are in short supply,” write the energy analysts at the major French bank Société Générale. They are not expecting any significant decline in oil prices in 2022. “We now assume that Brent prices will be around $ 80 / barrel in the first quarter of 2022 and averaging $ 75 / barrel over the course of 2022.” Historically, the price of crude oil, which peaked more than $ 85 this fall, is a long way from 2011 to 2014, when the barrel climbed several times, in some cases well above the $ 100 mark.
The capers of the past few months also retrospectively show how shaky longer-term forecasts can be. A year ago, hardly anyone expected that world market prices would rise so rapidly after they had plummeted in the Corona recession in 2020.
But with the USA and China, the heavyweights of the global economy have left the deep Corona valley faster than was expected in many places. Empty markets for raw materials and primary products, scarce transport capacities and, of course, the rapidly rising energy prices were the result. The price driver on the oil market is “still the increased global demand in the wake of the recovery after the corona recession,” writes the Hamburg research institute HWWI about its monthly raw material price index. And the high gas prices, in addition to low inventories, also reflected “the increasing demand for natural gas in the wake of the catching-up process of the pandemic crisis”.
The receipt for pandemic effects
Meanwhile, more and more consumers are feeling the world market prices for energy in their homes too. The comparison portal Check24 recently reported on more than 640 gas suppliers who had implemented or announced price increases of an average of 25 percent in the basic supply. In addition to the world market, a number of other factors affect the price. “Consumers have to expect a wave of gas price increases this winter,” says Check24 energy expert Steffen Suttner. His Verivox colleague Thorsten Storck adds: “The rising CO2 price, higher network charges and historically high wholesale prices are currently forcing most utilities to raise their prices.”
The situation is similar when it comes to electricity prices, which in Germany are already considered to be the highest in an international comparison. “The electricity price for consumers reached an all-time high in November for the seventh time in a row,” reported Check24. More than 320 basic providers have already increased prices or announced increases, on average by almost 10 percent. “There are various reasons for this: the rising prices for natural gas, hard coal and CO2 emission certificates, the increasing demand for electricity, plus lower generation capacities due to the phase-out of hard coal.” It is therefore questionable whether the reduction in the EEG surcharge announced for 2022 will even reach consumers.