Our picture is just an illustration! The measuring station of the natural gas pipeline between Hungary and Serbia in Kiskundorozsmán (Photo: Péter Szijjártó/Facebook)
In the past two years, the price of natural gas has never been as low as it is now, the Zeit Online article revealed. The last time you had to pay as much for it as you do now was in June 2021. According to experts, this can be explained by oversupply, and the price may even fall further in the future. The price of 25.80 euros per megawatt hour is unprecedented in the last two years, especially in the period after the outbreak of the war.
The price of European natural gas started to fall at the end of last year, after in the summer more than three hundred euros had to be paid per megawatt hour. Compared to this, the current amount is practically insignificant, and compared to the peak of 339 euros reached in August 2022, it is already 90 percent less. The previous uncertainty and price record was caused by the non-arrival of Russian natural gas, and for a long time it was not known how the European countries would cope with the energy crisis. Now, however, gas prices are falling and German gas reservoirs are starting to fill up.
According to the latest data from the European Gas Reservoir Association GIE, the level of saturation in Germany is already 72.76 percent. This is much higher than the rate calculated for the same period of the previous year. Next winter, according to the Federal Network Agency, they can go full charge. The current favorable data is explained by LNG imports, a mild winter and savings. According to the analyst interviewed by Portfolio, subdued Asian demand is added to these factors. After last year’s price shock, China’s manufacturing industry has not regained momentum for the time being, and the weaker-than-expected demand for LNG in China can also be explained by the fact that instead of imported natural gas, it seems that they would rather start the economy with domestically produced coal, which is the cheapest source, since it is not a priority right now for them, cleaning the air in cities by using a higher proportion of less polluted natural gas.
Utility cuts are a blow to the economy, but the government won’t let them go.
According to experts, European gas prices have now fallen to a much lower level than previously expected. There is an analyst who writes that the Russian energy crisis seems to be over, since gas can be purchased at the price of spring 2021, but someone can even buy it for October delivery for 36 euros now, if they are worried that there will not be enough, which with longer-term contracts engaged.
The continuous gap in the gas price is also an important phenomenon for Hungary, because the price to be paid based on the long-term Hungarian-Russian gas purchase contract is adjusted to the nearest monthly futures TTF quote. At the beginning of May, Viktor Orbán said the following on Kossuth radio: “there is a creeping effect in the prices imported from the Russians, it is always felt two months later in Hungary. Now prices look better than before, although this is relative, still one and a half times or rather double the pre-war prices. But soon you will be able to feel the falling gas prices at home as well.” Despite this, there is no question that the government would end the reduction of utilities, according to which residential consumers must pay seven times the “market” price for gas above a certain average consumption.
The decrease in the price of the energy carrier affects the amounts spent by the Orbán government on overhead protection. According to the Portfolio’s calculations, the state used about 3.5 billion cubic meters of the 4.5 billion cubic meter annual contract last year in the universal (reserved) residential gas service, and this year, given the favorable winter and the reduction in consumption, this could be 2.9 billion cubic meters according to their estimate. .
