Increase in demand for gas pushes wholesale energy prices up

Higher than normal demand for natural gas helped spark an increase in wholesale energy prices last month, figures published on Monday by independent supplier Naturgy show.

The company's Energy Review and Forecast for July shows that wholesale electricity prices climbed 14 per cent last month while gas rose 6 per cent.

Naturgy's report states that demand for gas was higher than normal for the time of year in July as supply from some sources, such as Norway, was squeezed.

At the same time, global supplies of liquid natural gas (LNG) also slowed during the month, although the company says that this should pick up as new shipments are due from the United States.

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Gas prices have a significant impact on Irish energy bills because we generate about two-thirds of the electricity we use by burning the fuel.

Wholesale electricity prices, that is the price at which generators sell to businesses that supply electricity to customers, rose partly because two generators, Ballylumford in Co Antrim and Poolbeg in Dublin, unexpectedly halted operations during the month.

Low wind speeds, which hit the amount of electricity available from this source, also helped push up wholesale prices.

Renewables generated 24 per cent of the electricity used in July compared with 26 per cent in June. Wind is by far the biggest source of renewable energy in Ireland.

Meanwhile, oil rose to a high of $67 a barrel in early July as rigs in the Gulf of Mexico shut down and evacuated workers ahead of storms in the region.

Commenting on the review, Naturgy analyst Lauren Stewart said: "While wholesale gas and electricity prices are down 49 per cent and 15 per cent year on year respectively, July proved volatility can still be a risk even during the summer months."

Ms Stewart said natural gas prices were likely to fall as imports of LNG from the US pick up later in the summer. She noted that electricity prices fell later in July as wind speeds picked up.

Naturgy supplies gas, electricity and energy services to industries in the Republic and UK. The Spanish-owned company supplies about a fifth of Ireland’s biggest natural gas users.