The downward trend in gas prices we were just getting used to seems to be ending abruptly. Since the beginning of June, gas prices have been rising by as much as 65 percent. This increase has several causes, including a tightness in the market due to reduced imports from Russia and halted gas deliveries from Norway. In addition, there is increased demand from Asia and the recovery of the Chinese economy. What does this increase mean for your energy bill and what can we expect for gas prices in 2023? In this article, we also share some tips for cutting costs amid rising gas prices.
Causes of rising gas prices
Favorable conditions prevailed in the wholesale market in recent months, with gas prices in the Netherlands around 38 euros per megawatt hour (MWh). Unfortunately, the tide has turned and gas prices are steadily rising. Here are the main causes:
- Reduced imports from Russia: The tightness in the market is partly caused by a decline in gas imports from Russia, contributing to the rising price of gas.
- Stalled gas deliveries from Norway: A large Norwegian gas field is currently shut down due to long-term maintenance work. It is uncertain when gas deliveries from Norway will resume, causing gas prices to rise further.
- Increased demand from Asia: Unusually hot weather in Asia is causing increased power consumption for air conditioning, with gas power plants being used in part for electricity generation. Asia has long-term contracts to purchase LNG, further influencing the rising gas price.
- Recovery of China's economy: Following the effects of the corona pandemic, China's economy is recovering. This is creating greater demand for LNG, leading to scarcity in the world market and higher prices.
Impact on your energy bill
Currently, there is a price cap in place, so you may not yet notice the full impact of the rising gas price. However, by the end of 2023 this price ceiling will disappear and you will feel the increase directly in your wallet. Currently, the Netherlands pays about €1.67 per cubic meter of gas. This is expected to be between three and four euros without the price ceiling, almost double. But there is good news! By using solar panels, you can realize significant savings on your energy bill. Although solar panels generate electricity and not gas, there are other steps you can take to reduce your gas consumption. Consider electric cooking and heating, for example. By being less dependent on the rising price of gas, you can ultimately enjoy lower energy bills. It's a win-win situation!
Rising gas prices have several causes, including reduced imports, halted gas supplies and increased demand from Asia. These developments have a direct impact on your energy bill. Although the price cap currently limits the impact somewhat, its disappearance by the end of 2023 will result in higher gas prices that will be felt immediately. It is therefore wise to take steps to reduce your gas consumption and invest in sustainable alternatives such as solar panels.
By switching to electric cooking and heating, you can reduce your dependence on rising gas prices and benefit from lower energy costs. Although gas prices are expected to continue to rise and energy suppliers will pass these rates on to their customers, switching to renewable energy sources such as solar power offers a positive outlook for the future. By making conscious choices and embracing sustainable solutions, a lot is possible. By doing so, we can reduce our energy consumption and contribute to a greener and more affordable energy future.
