Natural gas: will prices continue to rise?

Published on : 24 June 20204 min reading time

Every month, natural gas rates are reviewed and usually go up. This was particularly marked in 2018 with a 24% increase in the last nine months. So, will they continue on this path or can consumers hope for a truce?

Millions of French people concerned by the rise in gas prices

Regulated rates increased throughout the year and November was no exception with a 5.8% increase on November

Consecutive increases that are passed on to consumers’ bills by around 100 euros

This affects 4.5 million households subscribing to the regulated tariffs that are set every month by the CRE (Energy Regulation Commission). Six other million consumers also use natural gas for heating and/or hot water production but have subscribed to market offers that are 5 to 10% cheaper, hence the interest in choosing a good gas supplier. However, for them too, the price of gas is likely to rise since these market offers are indexed to the regulated tariffs.

Reasons for the increase in natural gas rates

The primary reason for natural gas rate increases is all politics. The government has decided to raise the price per kilowatt-hour from €5.88 to €8.45. The aim of the move is to get the French more involved in the energy transition and to encourage them to consume less and differently.

The increase is even generalized on the European market because the costs of transport, storage and distribution of gas have risen sharply, especially since last July.

In addition, it is important to know that the price of gas is indexed to the price of oil and that the latter has not stopped increasing in recent months. In addition to this, there are other taxes such as the Inland Consumption Tax on natural gas, which has increased by 44%.

A possible truce

After months of increases during which everything suggested that the price of gas would continue to rise, a decrease is announced for December 1st due to a fall in the price of a barrel of oil. Indeed, the perpetual relationship between supply and demand is currently in the consumer’s favour. A barrel of North Sea Brent fell below $60 a barrel for the first time in a year as shown on this page. This is having a positive influence on natural gas prices.

However, while the regulated rate will not be re-evaluated by the Energy Regulatory Commission until July next year, the international market price of gas continues to evolve. And, on the wholesale markets, the prices of long-term contracts continue to rise. This suggests that the drop in gas prices is only temporary and will not be the rule this winter.

So what can you do to protect yourself from this increase?

If you want to protect yourself from a continuous increase in your natural gas bill, it may be wise to turn away from regulated rate offers. In fact, you should be aware that they will certainly disappear by 2023 because they are contrary to competition law.

You have the opportunity to make competition work in order to benefit from the best rate offered. And, a fixed-rate offer will allow you to have a price that does not change for one to three years, depending on the duration of your contract when you sign it.

There are also offers indexed to the market price which evolve according to the regulated tariffs but by respecting an index planned in advance. As a general rule, this still allows you to pay less than with regulated natural gas rates.

Finally, since prices fluctuate, remember to re-evaluate your needs and your contract regularly so that you always get the best price.

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