Gas prices are the highest in more than a year

This article was last updated on January 2, 2025

Canada: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
USA: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…

Gas prices are the highest in more than a year

The price of gas has not been this high in over a year. At the beginning of last year, the price at the international trade fair TTF in Amsterdam was still 30 euros per megawatt hour, now it is around 50 euros.

It appears that gas will remain expensive for the time being. The causes of the price increase include a decrease in Russian gas, shortages on the liquefied gas (LNG) market and weather conditions.

The gray winter weather with little wind recently led to less wind and solar energy, so that more gas was needed to produce electricity. That drove up the price.

The increased gas price also means higher energy rates from January 1 at the major energy companies. Due to uncertainty about future energy prices, most households now have a fixed energy contract. The prices of gas and electricity are fixed for one or more years.

The high gas price means that stocks in Europe are smaller than usual at this time of year. The filling rate in European gas storage facilities is currently below 75 percent, compared to more than 85 percent last year.

The filling rate in Dutch gas storage facilities is even less than 60 percent, compared to more than 80 percent at this time last year. For the owners of the gas supply in the Netherlands, the high prices “make it commercially interesting” to put the stored gas on the market, Energy Minister Hermans wrote to the House of Representatives last month.

Despite the low gas supplies, energy experts and the cabinet do not think there will be a gas shortage in Europe this winter. The government also sees no reason to do anything about the small gas supply in the Netherlands. Because the Netherlands also supplies gas from its reserves abroad, the filling percentage gives a distorted picture, according to Hermans.

According to the minister, the situation is therefore less serious than it seems. If the filling level does reach a worrying level, the government can purchase large quantities of additional gas via Energie Beheer Nederland to increase the filling percentage.

Experts also see no problems for the coming winter for the time being. Energy expert Jilles van den Beukel assumes that there will be enough gas in the coming months despite the tight supply. However, it will be expensive to replenish gas supplies this year. Because the expected prices for gas in the coming summer are also high. This can be seen in the futures on the gas market. These are the prices that energy companies pay when they purchase gas for the future for their customers on the TTF gas exchange.

A price drop at the end of 2025

The absurdly high gas prices of just after Russia’s invasion of Ukraine are behind us. But the average price is still much higher than before the war. The loss of Russian gas and the closure of the Groningen field have made us dependent on gas from Norway, the United States and Qatar.

A threat from Qatar to stop supplies, long-term maintenance in Norway or a fire at a terminal in Texas immediately cause the gas price to rise.

So far, Europe has benefited from limited demand in China for liquefied gas, but that may change. If demand increases, this will lead to even more tightness on the market and even higher prices.

Van den Beukel does not expect a cautious decrease in the tightness on the LNG market until the end of this year. “The market now has to recover from the cutoff of Russian gas and other developments. In addition, countries such as Qatar and the United States are expanding their liquefied gas capacity, but this is a gradual process.”