More gas price hikes in the pipeline so shop around
Former Russian president Dmitry Medvedev taunted European families with a further doubling of the already sky-high wholesale price for gas.
‘German chancellor Olaf Scholz has issued an order to halt the process of certifying the Nord Stream 2 gas pipeline,’ tweeted Medvedev, who is deputy chair of Russia’s security council.
‘Welcome to the brave new world where Europeans are very soon going to be paying €2,000 for 1,000 cubic meters of natural gas!’
His threatening tweet came after the invasion of Ukraine prompted Germany to halt the Nord Stream 2 pipeline delivering Russian gas to Europe via the Baltic Sea.
US president Joe Biden also sanctioned the builder of the project, which he described ‘now a piece of steel at the bottom of the ocean’.
We don’t need telling that gas prices have already shot up – but could they really double?
And, while most people support severe sanctions against Russia after its brutal invasion, it would
be interesting to know just how much it will cost us.
The Nord Stream 2 pipeline was actually built – it was just waiting on German certification. It bypassed an existing pipeline going through Ukraine, depriving it of billions in gas transit fees – that too would also now appear to
be at risk in a war-torn country.
So what’s all this mean for our energy bills? Ireland gets around 40% of our gas from our own reserves and the rest via the UK, which in turn imports a lot of gas from Norway. So we have little direct exposure to Russia.
However, if Russia turns off the gas taps to Germany, the Germans will then have to look elsewhere
(to Norway for example) and this would then affect us in terms of higher prices, said Daragh Cassidy of Bonkers.ie
A doubling of wholesale prices is possible and it will be painful, but it doesn’t necessarily translate into a doubling of actual bills, according to Mr Cassidy. That’s because gas prices fluctuate wildly and can level out over long periods of time. Prices went up eight-fold at one point last year as tensions over Ukraine mounted.
Yet ‘most energy suppliers try mitigate against the volatility of energy prices by buying some of their fuel months, or even a year or so in advance, through hedging. So in 2021 when gas and electricity
prices were skyrocketing for other reasons, energy suppliers were able to shield households from the worst of it as they had bought most of their fuel at 2020 prices’, he said.
And so ‘gas and electricity prices in Ireland have “only” increased by between around 25% and 70% since late 2020 despite a circa 200% increase in the price of gas’.
Unfortunately many suppliers’ hedging contracts are coming to an end, meaning they will have to buy at today’s hugely elevated prices.
‘In short, unless the price of gas drops dramatically over the coming weeks, we could see further price hikes for gas and electricity customers,’ Mr Cassidy warned.
‘In May, an increase in the carbon tax will also see the average annual gas bill rise by close to €20 a year.’
Ouch! The good news is that we can get back most of these increases by switching to a better plan using comparison sites such as Bonkers and Switcher.
Most deals involve one-off cash payments or one-year discounts that come to an end, meaning we have to shop around and start the ball rolling all over again, or cough up for truly exorbitant energy bills now that costs are truly skyrocketing.
Bonkers.ie reckons we can save an average of €527 on our energy bills alone, according to Mr Cassidy.