ZEW Survey Among Energy Market Experts - Release of Pressure on Energy Prices is Only Short-Lived

Until the end of 2012, major costumers in Germany probably do not have to expect further increases in energy prices. The picture, however, changes if looking on a five-year time horizon. Viewed from this mid-term perspective, industrial companies, commercial enterprises, municipalities, and other end consumers, which have a high demand of electricity, fossil oil, natural gas, and coal will have to prepare themselves for a significant increase in prices. This is the finding of a survey of the ZEW Energy Market Barometer among about 200 experts from the energy industry and the scientific world. They were interviewed in mid-2012 on the short-term and long-term trends with energy prices for major costumers.

Currently, there are clearly less experts than in the Energy Market Barometer at the end of 2011 expecting the prices for electricity, oil, gas, and coal to increase on the short term. Nearly 70 per cent of the survey participants expect an unchanged price level for electricity until the end of 2012. There are only about 30 per cent remaining who are convinced that the electricity prices will increase on a six-month horizon. In the survey conducted at the end of 2011, however, still 47 per cent expected increasing electricity prices on the short term.

"This assessment is in line with the stable forecasts on primary energy sources on the global markets. Therefore, an increase in electricity prices until the end of 2012 is rather unlikely", says Nikolas Wölfing, scientist at the ZEW research department ”Environmental and Resource Economics, Environmental Management”.

Not only with electricity but also with oil, gas, and coal, the share of the experts expecting short-term price increases has shrunken clearly compared to six months ago. In the current survey, only 25 per cent of the experts forecast increasing prices for oil within the next six months. In the previous survey 41 per cent held this view. However, 75 per cent of the experts expect that the oil price will be stable or will even decrease during the next six months.

The share of those expecting a price increase for gas until the end of the year, decreases to 21 per cent within the current survey. In the survey conducted at the end of 2011 this share was still at 38 per cent. Currently 65 per cent of the surveyed experts expect stagnating gas prices.

While at the end of 2011 31 per cent expected increasing coal prices on the short term, only 18 per cent in the current survey are convinced of such a scenario. Three quarters of the surveyed experts, however, expect an unchanged price level for coal until the end of 2012.

On the long term, on a five-year horizon, the energy prices, however, will increase. This is the conviction of the energy market experts surveyed by ZEW. Nearly 90 per cent of the surveyed experts expect that the electricity prices will increase during the next five years. 82 per cent forecast increasing oil prices on the long term. Nearly three quarters expect higher prices for natural gas, and nearly 70 per cent of the experts of the Energy Market Barometer expect increasing coal prices on the long term.

"The times of permanently cheap energy seem to be over.  The additional demand of the emerging countries pushes the prices on the global markets. And also the shift towards renewables is related to enormous costs", says Nikolas Wölfing summarizing the outlook.

For further information please contact

Nikolas Wölfing, Phone +49 621/1235-217, E-mail woelfing@zew.de

The ZEW Energy Market Barometer

The ZEW Energy Market Barometer is a twice-yearly survey of around 200 experts from academia and industry, including energy supply, trading, and service companies; regional suppliers; as well as electricity and green-power companies. The experts are asked about their expectations regarding short and medium term developments in national and international energy markets. The complete results of the current survey undertaken in May 2012 will appear in the July/ August 2012 edition of ZEWnews (German language only).