Electricity and gas remain unprecedentedly expensive. The extremes in the market have now also penetrated the European leaders. Brussels presented measures to protect consumers and businesses. The oil price is less in the spotlight, but it also continues to rise steadily.
Calm has returned to some extent on the gas and electricity markets. The current energy crisis makes it painfully clear that Europe is largely dependent on gas from Russia. Russian President Putin's promise that he will make every effort to supply sufficient gas to Europe has calmed emotions somewhat.
Expensive but stable
Electricity remains expensive, but we have not seen a peak of €300 per MWh like last week. On Sunday, October 10, the price on the EPEX Spot was €147,02 per MWh. That price has risen and in recent days the price has fluctuated around €190 per MWh.
Analysts are very cautious when making predictions in today's highly volatile market. The slightly increasing wind and above-average temperatures predicted in the weather reports for the coming week normally ensure a greater supply of electricity and slightly lower prices. But some analysts doubt whether this will also apply this week.
Protection against high prices
Brussels presented a 'toolbox' on Wednesday, October 13, with measures that member states can use to protect companies and consumers against high energy prices. In the short term, these are mainly measures in the field of tax reductions, support for companies and/or sectors (within the applicable EU standards in the field of state aid), market transparency and anti-cartel formation. Investments in sustainable energy and energy storage are mentioned, among other things, for the medium term.
According to the Commission, the high prices are not caused by the EU's green ambitions, but by high demand on the world market. The prices of green electricity are now lower and remain more stable than those of gray electricity, according to the Commission. It is precisely by investing in clean renewable energy that the EU becomes less dependent on suppliers of fossil fuels outside the Union.
Energy transition is not happening fast enough
The International Energy Agency (IEA) states in the World Energy Outlook 11, also published on Wednesday 2021 October, that the energy transition is not happening fast enough. “Clean energy is building momentum but still has to compete with the persistent presence of fossil fuels in our energy systems,” wrote Fatih Birol, director of the IEA, commenting on the report. "Governments and government leaders must send a clear and unmissable signal at the UN climate summit that they are fully committed to clean and sustainable energy. The social and economic benefits of accelerating the energy transition are great and the costs of doing nothing are enormous. "
Oil price is secretly climbing
The oil price continues to rise steadily. Brent crude oil has been trading above $80 per barrel for almost two weeks and is cautiously climbing towards $85. On Monday, October 11, Brent oil stood at $83,62 per barrel. That has now risen to $84,72 today (Friday, October 15). The oil price has therefore surpassed the peak in 2018 and is heading towards the highest level since 2014.
Opinions differ among analysts about the cause of the price increase. The world economy is recovering faster than expected and during the summer, US crude oil and fuel supplies in particular have shrunk. The oil market also keeps a close eye on what is happening on the (European) natural gas market. A shortage of natural gas can be partly compensated by switching to oil for certain applications.
It is striking that the demand for fuel has started to weaken somewhat in recent weeks. According to figures from the Energy Information Administration (EIA), refineries are operating at an 89,6% capacity utilization rate and gasoline supplies are growing. In addition, the damage to the oil industry in the Gulf of Mexico has been fully recovered in a few weeks.
According to several analysts, it is almost certain that speculators have played a role in the price rally of recent weeks that should not be underestimated. Inflation is rising (partly due to expensive oil) and investors see rising raw material prices in products such as oil as a way to make a return or at least hedge against inflation.
Record fuel prices
The diesel price has remained stable this week just above €119 per 100 liters. The average recommended prices for diesel, but also for petrol and LPG, have now surpassed the levels of 2012, 2013 and 2014 and are setting new records. That can be said to be striking in a sense. In those years, the price of crude oil was almost structurally above and often well above $100 per barrel.