ZEW Energy Market Barometer – Electricity and Natural Gas Prices Expected to Increase

In Germany, prices for natural gas and electricity are likely to rise over the coming six months. By contrast, crude oil, mineral oil and coal prices are expected to remain stable in the short term. On a five-year horizon, however, experts assume that these energy sources will increase in price as well.

These are the findings of the recent ZEW Energy Market Barometer conducted by the Centre for European Economic Research (ZEW) in Mannheim. The biannual survey is conducted among more than 200 experts from the scientific sphere, energy supply companies, energy-trading companies, and energy service providers, who are asked to give their expectations concerning short and medium-term developments on the national and international energy markets.

55 per cent of the experts forecast increasing, 44 per cent stagnating and tiny minority falling electricity prices in the coming six months. A large majority of almost 80 per cent is convinced that electricity prices will grow over the next five years.

69 per cent of the experts consider an increase in natural gas prices to be likely. Only 27 per cent forecast stagnating and merely four per cent falling gas prices. Even in the long-term, the large majority does not expect the gas price to relax. One reason might be the fact that natural gas prices react with a certain delay to movements of the oil price, which grew significantly in the past. In addition to that, expectations regarding the future construction of new gas power plants in Europe could also be a major price driving force.

Half of the experts assume that, apart from the usual fluctuations on the market, the oil price will maintain its current level over the coming six months. A quarter of the respondents, by contrast, expect the prices to rise or fall. On a five-year horizon, about 70 per cent forecast an increasing, 20 per cent a stagnating and only 10 per cent a declining oil price. The mid-term expectations regarding price developments on the mineral oil market are very similar to those of crude oil.

32 per cent of the experts surveyed estimate that, over the next six months, coal prices will rise whereas 58 per cent  forecast stagnating prices. A majority of 52 per cent expect coal prices to increase in the long-term, whereas only 37 per cent assume that they will remain unchanged. One reason behind this development is China's unabated demand for coal to secure electricity generation, which is unlikely to prompt a fall in prices.

These are the findings of the recent ZEW Energy Market Barometer conducted by the Centre for European Economic Research (ZEW) in Mannheim. The biannual survey is conducted among more than 200 experts from the scientific sphere, energy supply companies, energy-trading companies, and energy service providers, who are asked to give their expectations concerning short and medium-term developments on the national and international energy markets.

55 per cent of the experts forecast increasing, 44 per cent stagnating and tiny minority falling electricity prices in the coming six months. A large majority of almost 80 per cent is convinced that electricity prices will grow over the next five years.

69 per cent of the experts consider an increase in natural gas prices to be likely. Only 27 per cent forecast stagnating and merely four per cent falling gas prices. Even in the long-term, the large majority does not expect the gas price to relax. One reason might be the fact that natural gas prices react with a certain delay to movements of the oil price, which grew significantly in the past. In addition to that, expectations regarding the future construction of new gas power plants in Europe could also be a major price driving force.

Half of the experts assume that, apart from the usual fluctuations on the market, the oil price will maintain its current level over the coming six months. A quarter of the respondents, by contrast, expect the prices to rise or fall. On a five-year horizon, about 70 per cent forecast an increasing, 20 per cent a stagnating and only 10 per cent a declining oil price. The mid-term expectations regarding price developments on the mineral oil market are very similar to those of crude oil.

32 per cent of the experts surveyed estimate that, over the next six months, coal prices will rise whereas 58 per cent  forecast stagnating prices. A majority of 52 per cent expect coal prices to increase in the long-term, whereas only 37 per cent assume that they will remain unchanged. One reason behind this development is China's unabated demand for coal to secure electricity generation, which is unlikely to prompt a fall in prices.

Contact

Dr. Ulf Moslener, E-mail: moslener@zew.de