The European gas price continued to decline in the new year: At the beginning of the year, European natural gas was as cheap as it was in February 2022, and therefore before the start of the Russian war of aggression in Ukraine.
AUSTRIA/EUROPE. European gas prices continued to fall. On Monday, the TTF futures contract for Dutch natural gas started trading at EUR 70.30 per megawatt hour (MWh) – about 7 cents per kilowatt hour (kWh). This is the lowest gas price since February 2022, before the start of the war in Ukraine. Compared to August 2022, when the TTF reached its provisional maximum, this is a reduction of around 80 percent – at the time, record prices of around €345 per MWh (35 cents/kWh) had to be paid. After the start of the trading session, the TFF rose slightly throughout the day, being quoted at around 79 euros at the end of the trading session.
Mild climate means less consumption
The main reason for the drop in gas prices is this year’s comparatively mild winter. Due to high temperatures, gas consumption is reduced and gas storage tanks can continue to be filled. As the Austrian Press Agency (APA) reported on Monday, less gas was consumed in Austria than was supplied for eleven days. Thus, the level of gas storage increased from 21 to 31 December from 85 to 87 percent.
More gas from Russia, more energy from wind and sun
Another reason for the price drop is likely to be the recent sharp increase in gas imports from Russia. In particular, imports of Russian liquefied natural gas (LNG) into Europe recently hit a new record high, as Handelsblatt reported in early December.
In addition, more and more energy has recently been obtained from renewable energy sources. The current low gas consumption is therefore also due to the good production of electricity from wind and solar energy, as explained on Monday the Austrian Minister of Climate and Energy, Leonore Gewessler (Greens). “The less gasoline we consume now, the more we have left in stores and the better for next winter,” Gewessler told the APA. It still happens that “the cheapest energy is the one we don’t use”, said the minister.
Still expensive for consumers
As the price of gas drops in the trading venues, private consumers still have to dig deep in their pockets to pay their gas bills. According to E-Control, the price per kWh of gas in Austria is currently just under 30 cents.
Meanwhile, the Gas Wholesale Price Index (ÖGPI) calculated by the Austrian Energy Agency fell by 17.4% in January 2023. Compared to the same period last year (January 2022), however, it is still 28.3% higher.
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