ZEW Energy Market Barometer - Energy Prices to Rise Further

Consumers will have to budget for rising oil, gas and electricity prices. This is the finding of the Energy Market Barometer carried out by the Mannheim Centre for European Economic Research (ZEW).

The Energy Market Barometer, which was carried out for the first time last year, is a biannual survey amongst 200 experts from the scientific research and corporate sectors (energy supply, trading and service). These experts are surveyed in regard to their expectations for short and medium-term developments in national and international energy markets. Two thirds of the respondents are convinced that electricity prices will rise in the next six months. When asked about the next five years, three out of four experts predicted rising electricity prices. In fact, the prices are already above the levels seen before the liberalisation of the energy market in 1999.

To a certain extent, the expectation of rising electricity prices can be explained by the scheduled nuclear phase-out. 30 per cent of electricity is currently still being produced in nuclear power plants. If nuclear power is done away with, electricity supplies will decrease. If demand for electricity remains stable, or even rises, new plants will have to be built, or more electricity will have to be imported. This is likely to lead to price rises for electricity.

Similarly, the surveyed experts do not expect prices for crude oil, mineral oil and gas to fall.  For the next six months, the majority of experts predict a stagnation in prices. After this period, however, price rises may be on the cards. For the next five years, 58 per cent of the respondents expect crude oil prices to rise; 70 per cent of experts expect to see rising mineral oil prices. The significantly higher estimation for the development of mineral oil prices is mostly likely explained by the fact that experts expect to see further tax raises for mineral oil.  In terms of gas prices in the next five years, two thirds expect these to rise, while only nine per cent of experts expect these to fall. In the long run, however, the increasing trade in liquid gas, which has become significantly cheaper in the last several years, could set gas prices in motion.

Contact

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