ZEW Energy Market Barometer - Experts Expect Medium-Term Energy Price Increases on a Broad Front

Industrial energy consumers, especially energy-intensive companies – e.g. in the chemical industry or in steel production or aluminium production – larger business enterprises, local authorities and other final consumers with high energy needs should expect rising costs of electricity, natural gas, oil and coal. However, in the short-term, that is until around the end of 2011, customers can assume that prices for the energy sources listed above, except for electricity, will remain relatively stable. These are the findings of the ZEW Energy Market Barometer conducted by the Centre for European Economic Research (ZEW)in Mannheim among around 200 energy market experts. They were interviewed about the short- and medium-term trends for energy prices for wholesale customers.

In light of the change in energy policy in Germany, more and more of the experts, who are surveyed by ZEW every six months, expect an increase in energy prices during the next five years. By now 93 per cent of the experts questioned believe that electricity prices for wholesale customers will continue to rise until 2016. For the same period of time, around 85 per cent expect an increase in the prices for natural gas and 76 per cent expect rising prices for coal. Crude oil is the only energy source for which the share of experts expecting a medium-term rise has decreased. Since the last Energy Market Barometer survey conducted by ZEW in November 2010, the number of experts convinced that the price for crucial oil will rise has fallen from 91 to 84 per cent.

But for the short-term, that is until around the end of 2011, the majority of the energy experts expect stagnant prices. The only exception is the price of electricity: 51 per cent of the survey participants are of the opinion that the price for electricity will rise as early as in the coming months. Compared to the survey conducted in the end of 2010, the share of experts expecting higher electricity prices has increased by nine per cent. This development might be a first reaction to the discussion on the phasing out of nuclear energy and its consequences on electricity prices.

"The majority of the energy market experts seem to be convinced that energy, especially electricity, will become more expensive in Germany due to the change in energy policy," says Prof. Dr. Andreas Löschel, head of the department Environmental and Resource Economics, Environmental Management at ZEW. "In particular large-scale consumers and thus also energy-intensive companies could be faced with additional energy costs. In order not to endanger their international competitiveness, a new energy policy needs to be implemented with soundjudgement. With regard to securing jobs, it should be prevented that energy prices will be used to lure energy-intensive companies to relocate."

For further information please contact

Prof. Dr. Andreas Löschel, Phone +49 621/1235-200, E-mail loeschel@zew.de

The ZEW Energiemarktbarometer (Energy Market Barometer)

The ZEW Energiemarktbarometer (Energy Market Barometer) is an industry-specific indicator of economic sentiment based on a semi-annual survey of the energy supply, trade, and services industries, as well as regional suppliers in Germany. It comprises the expectations of around 200 experts concerning short- and long-term developments in the national and international energy markets. The results of the current ZEW Energiemarktbarometer (survey period April 2011) will be published in the ZEWnews July/August 2011 (in German only).