Minister for the Environment Eamon Ryan believes gas and electricity prices are likely to remain high for the next two years because of the Ukraine war.
In an interview with political reporters on Thursday, the Green Party leader said it was difficult to predict with any certainty how energy prices might change next year, even though the price of petrol and diesel have fallen in recent weeks.
“No one knows is the honest answer because there’s so many variables … what happens with that Russian oil [is] there’s about a three-million barrels a day shortfall because they’re not allowed in the western markets,” he said.
‘Alternative supply’
Mr Ryan said the US dollar to euro exchange rate helps to determine oil prices at the moment and in recent weeks it had been “in favour” of the euro.
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“That’s one of the reasons why the price [of oil] has already changed. I don’t expect it to come down to very low rates, historically low rates ... because of the uncertainty and also there isn’t big other alternative supply.”
He also said the Organisation of the Petroleum Exporting Countries had made a political decision to cut supply.
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Mr Ryan said gas prices were a bit easier to forecast, but it looked like these were going to stay high for the foreseeable future.
“It is by any comparison a historical high. I wrote to the International Energy Agency [IEA] last month and asked for a special emergency meeting on how we manage gas stocks,” he said.
“We need to bring the Norwegians, Americans, Canadians and Australians, who are all the big liquified natural gas suppliers, within the IEA. We also need to bring in countries like Japan and South Korea. That can help us co-ordinate our energy use, and our gas purchasing, so that we don’t see what happened last August being repeated in 2023.
German LNG terminal
“There was this huge spike and crazy prices. Part of the reason was that there wasn’t common procurement and purchasing of gas. The biggest energy challenge facing us this year is how we refill our gas storage without Russian gas. And that’s likely to be difficult, and it’s likely to keep prices high.”
The Minister said Russian gas historically accounted for some 40 per cent of European needs, but this had fallen to some 10 per cent at present.
“That gap is not easy to close. Even with that new LNG [liquefied natural gas] terminal in Germany — which opened last week — that will only close a small percentage,” he said. “So gas, unfortunately, is likely to remain expensive. And because of that both gas and electricity are likely to remain expensive for the next two years.”
