Favorable weather, almost 100% capacity of warehouses and diversification of supply sources led to a constant decrease in gas prices at the level of the European Union. Gas has become so cheap that base prices have reached pre-energy crisis levels and are well below the highs seen since Russia invaded Ukraine. Since the beginning of the year, the situation has been calm, and not only have prices fallen, but we have also seen an impressive decrease in dependence on imports from Russia, which no longer has the power to manipulate the European market. Under such conditions, is the energy price cap imposed during the crisis still justified in Romania?

Gas prices are down nearly 90% from their 2022 peak

According to data from the TTF gas hub in Amsterdam, where reference prices are set at the European level, natural gas futures for delivery in November fell to around €37/MWh, even though it is a month on the cusp of winter. The difference is huge compared to the record quotes of €340/MWh from August 2022 on the Dutch stock exchange when compared to July-August 2021, months before the big price increase when the effects of the energy crisis began to be felt, possibly due to manipulation market of Russians in Gazprom.

In fact, they are almost 90% below the 2022 records. Prices have been consistently below €50/MWh since February 2023. They even fell below €25/MWh, the lowest level recorded since May 2021, according to Trading Economics. data

According to a Bloomberg analysis, benchmark prices continued to fall amid lower demand for gas caused by unusually warm weather for this time of year. Gas consumption in the European Union and Great Britain was 9% lower in September this year compared to September last year, said Tom Marzek-Manser, director of analysis at ICIS, quoted by Bloomberg, according to Agerpres. In addition, this is 20% less than the average figure for September 2017-2021. In Germany, gas demand from the commercial and residential sectors last month was almost half of what it was in September 2022.

All EU countries, including Romania, have full gas reserves

According to Gas Infrastructure Europe, the degree of filling of gas deposits in the EU is on average 96.1%. Romania is performing very well, with a fill rate of 98.1%, ranking third behind Spain, where warehouses are 100% filled, and Poland, with 99.7%. In conditions where warm weather persists, there is no reason to use gas from warehouses.

European countries managed to get rid of Russian gas to a large extent by diversifying their sources of supply. Before the war in Ukraine, Russia sent 155 billion cubic meters of gas to Europe every year (mostly through pipelines); According to a Reuters analysis, EU pipeline imports fell to 60 million cubic meters in 2022, and the EU expects a drop to 20 million cubic meters this year.

In January-November 2022, Russia (gas and LNG imports) accounted for less than a quarter of EU gas imports. Another quarter is from Norway, and 11.6% is from Algeria. According to the data of the European Council, LNG imports (excluding Russia – mainly from the USA, Qatar and Nigeria) amounted to 25.7%.

How justified is the price cap on energy carriers in Romania?

Baseline gas prices remain low at the European level, but it is very difficult to see what impact this will have on Romania’s energy market, given that it is not free. Gas and electricity prices are capped as imposed by the government at the height of the energy crisis. Can prices be lower than the limits? Maybe, but only the free market can set real prices.

In August, Energy Minister Sébastien Bourduilla tried to put the issue of lifting price caps on the backburner, but the next day he changed his mind and said that “abandoning gas compensation is out of the question.” – floor plan and electricity”.

The support scheme for limiting and compensating the price of energy carriers will remain unchanged this winter, the minister has repeatedly stated.

According to ANRE, this compensation limitation scheme cost the state budget more than 20.5 billion lei.

What are the ceilings?

Household electricity consumers until 31.03.2025:

• A maximum of 0.68 lei/kWh, based on the monthly tariff from 0 to 100 kWh inclusive
• Maximum 0.80 lei/kWh, for monthly consumption from 100.01 to 255 kWh inclusive
• From 0.8 lei/kWh to 1.3 lei/kWh, with a monthly consumption of more than 255 kWh but less than 300 kWh, the first 255 will be billed at 0.8 lei/kWh and the rest – 1.3 lei/kWh.
• A maximum of 1.30 lei/kWh, with a monthly consumption of more than 300 kWh

For non-household electricity consumers until 31.03.2025:

• A maximum of 1 lei/kWh, for 85% of the monthly consumption at the point of consumption, the difference in consumption is charged to a maximum of 1.3 lei/kWh.
• A maximum of 1 lei/kWh for hospitals, schools, kindergartens, nurseries, social service centers

Household consumers of natural gas until March 31, 2025:

• The price is limited to 0.31 lei/kWh

For non-household consumers of natural gas until March 31, 2025:

• A maximum of 0.37 lei/kWh, with an annual consumption of no more than 50,000 MWh and for thermal energy producers.