As a result of the Russian war against Ukraine, natural gas prices rose drastically last year, peaking at more than 300 euros per megawatt hour in the summer. However, prices have been falling significantly for a few weeks – thanks to well-stocked gas storage facilities, high imports of liquid gas and lower demand. At the end of last week, the price for the trend-setting futures contract TTF for delivery in a month fell below the mark of 50 euros per megawatt hour – the lowest level in one and a half years.
However, these are wholesale prices that only reach consumers with a delay. The suppliers usually make their purchases at least one to one and a half years in advance – this is intended to slow down the effects of volatility on the energy exchanges and protect customers from sharp price jumps.
Prices of the previous year are reflected
While households can certainly benefit from the strategy of long-term procurement, the opposite is currently the case: the gas that is being sold to end customers this year was procured last year and at the high prices at the time. And the energy suppliers are now including this in the bills of the consumers.
How long it takes before the falling wholesale prices are also felt privately depends heavily on the contract with the utility. Some still had a price guarantee until the end of last year, for which the increase was only passed on afterwards, as Karina Knaus, head of the Center for Economics, Consumers and Prices at the Austrian Energy Agency, said recently in ZIB2. A rapid renewed reduction is unrealistic in these cases. In general, however, Knaus expects an easing in the second half of 2023 at the latest – “if nothing to the contrary happens on the wholesale markets”.
Gas price has gone down
At its peak in August 2022, the gas price reached an unbelievable 339 euros. It is now only a sixth of that, 51 euros. But the customers don’t feel any of it yet.
Falling prices realistic
Johannes Mayer, head of the economics department at E-Control, also assumes this. In the regulatory authority’s tariff calculator, where all suppliers have to enter their prices, most tariffs are already a lot lower than they were a few weeks ago, he said on Monday in the Ö1-Mittagsjournal. “We are now seeing prices for natural gas from under eight cents to around ten cents per kilowatt hour. That’s the range of the better providers.”
The price was twice as high. Mayer advises anyone who has signed a new supply contract at this point in time to switch tariffs. However, he recommends not making a long-term commitment: “You can definitely switch, but to contracts where you can get out again at any time.” Because prices, according to Mayer, could definitely fall further. After all, the European market is currently very well supplied with natural gas. “Therefore, if you don’t want to switch providers every year, it can pay off to wait a little longer.”
Energy expert Knaus shares this assessment: even if new customers should find cheaper offers again, changing providers should be carefully considered. And you should definitely not make a long-term commitment, according to the expert. Because if the prices continue to fall, you cannot benefit from it.
