ZEW Energy Market Barometer - Increase in Natural Gas Prices Expected

In Germany, prices for natural gas will likely rise over the coming six months. Coal prices, by contrast, are expected to remain stable.

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. The six-month forecasts for rising and stagnating electricity and crude oil prices balance each other. On a five-year horizon, however, all energy sources are expected to become more expensive.

65 per cent of the experts assume increasing, 33 per cent stagnating and only 2 per cent falling natural gas prices in the coming six months. The fact that a large majority of participants forecast short-term price increases can probably be put down to the link between oil and natural gas prices. On a five-year horizon, 74 per cent expect rising, 20 per cent stagnating and 6 per cent decreasing gas prices.

29 per cent of the experts consider an increase in coal prices to be likely in the next six months, whereas a clear majority of 66 per cent forecast stagnating and 6 per cent falling coal prices. In the long term, however, the experts estimate that prices for coal will grow as well. 55 per cent expect increasing, 35 per cent stagnating and 10 per cent decreasing coal prices in the coming five years.

With regard to electricity, 50 per cent of the respondents assume that prices will rise over the coming six months; about 47 per cent expect them to stagnate and merely 3 per cent to drop. The large majority of 77 per cent forecasts electricity price increases over the next five years. 18 per cent expect stagnating and only 5 per cent falling electricity prices.

Despite the present high oil prices, 42 per cent of the surveyed experts forecast short-term price increases for crude oil. 47 per cent believe prices will stagnate and 11 per cent expect them to fall. The experts furthermore assume that oil prices will increase in the medium term: 72 per cent expect a price increase, 19 per cent a stagnation and 9 per cent a drop in crude oil prices. Possible reasons for the high costs of oil are a speculative bubble or limited production capacities with a simultaneous increase in demand. At a current stand of approximately one million barrel per day, back-up capacities have reached a 20-year low.

Contact

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