The natural gas price increase has turned into a problem for millions of people, mainly in Europe. But what has affected it? What will it be like in the future? The purpose of this article is to answer these questions. As usual, a little theory at the beginning. Economically speaking, if the price rises, it is a result of one of two factors:
- Increase in demand and inadequate supply response,
- Decrease in supply and inadequate demand response.
In the current situation, we are seeing a reduction of available volume while demand is rising. The post-pandemic world needs more and more energy like heat or electricity, but the political conflict between Western countries and Russia has resulted in a significant decrease of volume of gas on the market, and many buyers have to find a new supplier. To make matters worse, winter is coming! This had to end badly.
So we already know that the balance in the market has been disturbed, there is not enough gas, and interest in this fuel is growing. We already know the actual situation, but what about gas price forecasts in 2022 and 2023?
Forecasts and estimates
In July, Business Insider published an article about gas price forecasts for Q3 2022. Goldman Sachs analysts suggested that in Q3 2022, a MWh of energy in gas form will cost 153 EUR, instead of the previously predicted 104 EUR. We already know that prices will be IMMEDIATELY higher, as on August 6, 2022, gas prices exceed 196 euros per MWh. Although analysts got it a little wrong, it is almost sure that we cannot expect significant reductions (hope we were wrong). After all, it should be remembered that the ambiguous position of Germany, the existence of sanctions against Russia, the shutdown of the Nord Stream 1 pipeline, inflation and the slim chances of resolving the conflict in Ukraine constantly put pressure on the price of this hydrocarbon on the markets to rise. Therefore, we agree with GS in one aspect- it's unlikely that gas prices will fall.
Who is most affected by price increases?
While everyone will pay for the rising price of blue fuel, by far the most affected will be businesses, which pay up to 300% of last year's price for gas. Even if you're not an entrepreneur, this cost rise will be mirrored in more expensive goods, like food, medical services and electronics. Although many countries are already planning support policies by introducing subsidies and reducing the consumption of this fuel, we need to be realistic- prices will be high.
What can you do?
First of all, be patient. Many times in the past panic has caused the biggest problems. Commodity prices are rising, as inflation affects everything, including gas. Of course, it is a good idea to react to the change in gas prices by reducing your gas consumption. Decreasing the temperature in the house from 20 centigrade to 18 centigrade can result in a huge money saving every year. Or perhaps it might be a good idea to change your heating system? With PV panels, electrical heating seems to be a very sensible choice.
What if I can't reduce my gas consumption?
And that's exactly what Paidwork is for! With this platform, you can effectively increase your domestic budget, which will help alleviate the higher cost of living. It's also a good idea to plan your budget and leave yourself a reserve of money for later.
A rise in gas prices doesn't have to turn out to be a bad thing at all!
If someone is losing, undoubtedly there are people who gain. With the rise in commodity prices, many investors are making spectacular profits from trading on stock exchanges. If you have some spare money, be sure to check out our articles on investments and start making money from the rise in prices of commodities such as gas.