Essen (dpa)
Christoph Weber, an energy expert based in Essen, views the recent reports of an imminent gas price rise of up to 40 % by this autumn as "not understandable". Professor Weber from Duisburg-Essen University stated in an interview with the German Press Agency (dpa) that the upper limit was more likely to be 20 %.
The reason for the forthcoming rise was the pegging of gas prices to the oil price, which had risen steeply in recent months. In the medium term, however, a decrease in energy prices might be possible due to the expansion of production capacity or declining consumption. Mr. Weber said that there was no obligation to adhere to this price formula introduced by the gas industry in the 1960s. But he did not believe that prices would quickly fall if oil price indexing were abolished. "Abolishing oil price indexing has its advantages, but this will not alter prices in any way," Mr. Weber stated. This was evident in countries like the USA and the UK where the gas price was not pegged to the oil price. One benefit of abolishing the rigid price formula might be a faster response to fluctuations in demand, for instance in mild winters. The energy industry could benefit from this because it could step up the use of gas in power stations at a time of falling prices. However, one factor ruling out the abolition of oil price indexing were the long-term supply contracts signed, for example, by Germany's largest transmission company, E.ON Ruhrgas, with Gazprom, Russia's energy monopoly. Market power was clearly wielded by the Russian side. "Gazprom has more of a dominant position than E.ON Ruhrgas in this respect," said Mr. Weber. While such long-term contracts had been prohibited by the German Cartel Office, it was scarcely conceivable that German law could also be enforced in international business ties. By developing additional supply sources for liquefied natural gas (LNG), for instance in North Africa, German companies could at most try to stop a further increase in the power held by the Russian monopolist. The German Federation of Energy and Water Industries (BDEW) described reports of an increase in gas prices by up to 40 % this autumn as "speculative and unrealistic." The actual development of prices depended largely on the oil price trend in coming months and on the structure of individual suppliers in the respective region, BDEW stated in Berlin on Monday.