Homes and businesses face further energy price hikes in 2022 after natural gas costs soared once again in the days before Christmas. Gas traded at a new record high of €5.04 a therm – the unit in which it is traded – on the London market.
The latest surge repeats a pattern that began last spring as Covid began receding. As activity picked up, it became clear that there was not as much gas in storage as had been thought. Meanwhile, tensions between the European Union and Russia, which supplies much of the fuel, contributed to the squeeze. In the weeks before the latest peak, gas had been selling for five times the price it fetched a year earlier.
Rising gas prices on world markets have been driving up Irish energy costs since spring 2021. As burning the fuel generates almost 60 per cent of the electricity we use, homes and businesses saw energy costs rocketing also.
Most suppliers announced several increases between April and December. Price comparison specialist Bonkers.ie calculates that some families are paying €1,300 more a year for electricity than they were 12 months ago.
Government hopes that the problem is short term. With that in mind, it agreed that all customers should get €100 off their bills next March. Unfortunately it is likely the situation will persist well into 2022, past the point where everyone has spent and forgotten the €100.
From early January through to September 2021, electricity market overseers issued eight ‘amber alerts’ warning that demand had stretched the system
Suppliers buy gas and electricity months ahead to ensure they can meet their customers’ demand. Current prices are likely to determine the cost at which they are doing this, so they will continue to pass that on.
Before the Government begins praying for an unlikely easing in gas prices, it will be watching the weather forecast more keenly than usual in coming weeks for signs of a prolonged cold snap.
From early January through to September 2021, electricity market overseers issued eight “amber alerts” warning that demand had stretched the system close to its limit. In essence, the alerts pointed out that the capacity held in reserve was less than optimum, and that any problems on the system – say the unforeseen shutdown of a power plant – could bring the prospect of power cuts closer.