Gas rationing is a looming risk, and Irish people are facing 50 per cent higher electricity bills this year, industry figures have warned as the fuel’s price broke records on Monday.
Natural gas briefly hit a record £8.00 a therm – the unit in which it is sold – in London early on Monday, almost twice the rate that sparked sharp Irish electricity price rises last year.
Indications that Europe and the US could step up sanctions against Russia for invading Ukraine to include energy prompted further surges in oil and gas prices on world markets.
Industry figures predicted that Irish electricity prices will rise “40 to 50 per cent”, while gas customers could face a doubling in their bills as the volatility continued through the day.
Electricity generators and gas suppliers typically buy 80 per cent of the natural gas they need a year in advance so they are already covered for next winter. As they have done this at prices up to £4.00 a therm, “that will have to translate into domestic price increases to make those numbers work”, one insider said on Monday.
He believes that the volatility will continue until Europe increases imports of liquid natural gas (LNG), allowing it “to turn off the tap” on Russian supplies. “Then the price will drop back down,” he said.
Gas was selling for £6.60 a therm in London at around lunchtime on Monday. While it fell below this mark later it was still 40 per cent up on Friday’s prices.
Its prices reached between £4.50 and £5 late last year before slipping back to more than £2. Before Covid gas sold for between 40 pence and 60 pence a therm.
Voters
Two sources predicted that natural gas rationing, initially hitting industries, could result if the EU included energy in sanctions against Russia. While governments have stopped short of this, one argued that voters could pressure them to do so.
“In which case it will be their own people who will suffer first,” he said. “It depends how much pressure European governments come under.”
The industry insider said that we were in uncharted territory when it came to estimating future gas price movements, but warned a return to normality seemed unlikely.
He argued that the Government needed to allow the development of an LNG terminal to give the Republic an alternative source of natural gas to the Corrib field and a pipeline from Scotland.
The Government’s position is that, pending the outcome of an energy security review due shortly, it would “not be appropriate for an LNG terminal to proceed”.
