Mixed Picture on Energy Prices – Experts Expect Stable to Increasing Prices in the Short Term

Expectations regarding the development of wholesale prices for electricity, natural gas, coal and crude oil on a six-month horizon point to a mixed picture. While energy experts expect stable to increasing prices for both electricity and natural gas, crude oil is set to become more expensive in the short term. The only exception is coal, for which a clear majority of experts anticipate a stable price development. On the long term, however, the energy market experts expect price increases for almost all energy sources within the next five years. This is the result of the latest ZEW Energy Market Barometer, a survey carried out by the Centre for European Economic Research (ZEW), Mannheim, among energy market experts.

When it comes to the short-term development of electricity and natural gas prices, experts are divided between predictions of price stability and increases. While 45 per cent and 43 per cent of the experts expect the price of electricity and natural gas to go up, more than half of the respondents await stable prices. Expectations for coal, however, reveal a more clear-cut picture, with 70 per cent of the surveyed experts anticipating a stable price development in the short term. On a global scale, merely 30 per cent expect crude oil prices to remain stable. Around 60 per cent of the respondents rather await short-term increases in crude oil prices. These expected increases could, for instance, be rooted in the looming US sanctions against countries importing oil from Iran. If global imports of Iranian oil drop and the other OPEC countries are unable to satisfy this increasing demand for oil, this will most likely result in rising oil prices.

There is, however, a broad agreement among the surveyed experts when it comes to the long-term predictions for energy prices. The majority of experts expect prices for electricity (80 per cent), natural gas (60 per cent) and crude oil (63 per cent) to go up in the coming five years. The exception is coal, which is the subject of disagreement between the energy experts. While 44 per cent consider it likely that coal prices will remain stable for wholesale customers, 30 per cent of the experts expect price increases and 26 per cent price decreases in the next five years.

For further information please contact:

Dr. Nikolas Wölfing, Phone +49(0)21/1235-217, E-Mail woelfing@zew.de