ZEW Energy Market Barometer: Consumers of Electricity, Mineral Oil and Natural Gas Will Need to Dig Even Deeper Into Their Pockets in the Future

Experts predict an increase in the price of electricity, crude oil, mineral oil and natural gas. The ZEW Energy Market Barometer, a biannual survey carried out by the Centre for European Economic Research (ZEW), in Mannheim, among around 180 experts from the field of energy economics, predicts somewhat unfavourable energy price developments for customers in the German energy market.

Around 80 per cent of the experts surveyed expect to see a significant rise in electricity prices in the next five years and 52 per cent consider it likely that such price rises will occur within the year. This suggests that the lowering effect of the 20 per cent fall in electricity prices for private customers, a result of the liberalisation of electricity markets in 1999, will run out by the end of 2003.

The pessimistic appraisals of the future development of electricity prices may be put down to tax increases implemented by the German government in the form of the German Renewable Energy Act, network charges (the cost of delivering electricity in Germany makes up around 40 per cent of the total price), as well as the loss of capacity expected to occur as a result of the Germany’s planned nuclear phase-out.

When it comes to the price of crude oil, experts expect to see a short-term ease in price developments. In the long-term, however, a majority of experts, 51 per cent of those surveyed, expect prices to rise. Given the interdependence of crude and mineral oils prices, a similar outlook emerges for both of these energy resources. The proportion of experts who expect to see the prices for mineral oil rise as early as in the second half of this year, however, is, at 25 per cent, significantly higher than the proportion of those who consider this to be the case for crude oil. In addition, the percentage of experts who predict a price rise within the coming five-year period is, at a total of 60 per cent for mineral oil, higher than for crude oil. This is not surprising; 72 per cent of the experts surveyed expect significant increases in the tax charged on mineral oils in Germany to be introduced within the next few years. Around four per cent fear large increases.

Whilst a clear majority of experts expect that the dependency of Germany and the EU on crude oil, quite in contrast to the USA, will not increase in the coming five years, 74 per cent of those surveyed do predict an increase in the use of natural gas in Germany. This may in part explain why experts also expect to see the price of natural gas rise in the next five years.

Contact

Dr. Tim Hoffmann, E-mail: hoffmann@zew.de