It might be assumed that gas prices will be set to rise because of the deterioration of relations between Russia and Europe and the crisis in Ukraine. However, despite the fact that Russia has increased the price of gas for Ukraine by 44%, the gas prices in rest of the world stand at a 3 year low.
Nick Butler in his blog for FT argues that prices could well fall further:
- we have used less gas than usual because of the mild winter.
- the Russian energy companies understand that if the supply was interrupted, we would not trust Russia again
- EU can diversify supplies and reduce dependency on Russia eg Norway, Nigeria, US
- EU energy policy will be endorsed at European Council meeting in June
The Ukraine crisis has given the renewables business a new lease of life.