Gas prices on the Rotterdam exchange have hit their lowest level since August 2021, six months before Russia launched its military invasion of Ukraine. One MWh of gas was selling for €51.9 at the Rotterdam’s Title Transfer Facility, which is down more than 3.5% from Friday. Falling prices on the market have been consistent for several months due to favorable temperatures, leading to lower consumption and less pumping from filled underground storage tanks.

Adequate supplies of liquefied natural gas have also contributed to the drop in price. Some suppliers are offering prices below the ceiling set by the Czech government, which is CZK 3,050 per MWh (including VAT). Falling gas prices will bring much-needed relief to European households and industries, which have faced record energy prices over the past few months. The deepening energy crisis in Europe has been driven by several factors, including high demand, a shortage of natural gas, and low reserves.

The crisis has been compounded by Russia’s military invasion of Ukraine, which has led to a geopolitical standoff with the West and disrupted the flow of gas supplies to Europe. As the EU strives to reduce its dependence on fossil fuels, the energy sector has undergone a profound transformation. However, the transition to renewable energy sources has been slow, and the EU still relies heavily on fossil fuels. The crisis has highlighted the need for greater investment in renewable energy and energy efficiency, as well as better coordination and cooperation among EU member states to address supply security and affordability.

The EU has proposed several key reforms to address skyrocketing energy prices, including the reform of the electricity market and the strengthening of the security of supplies and emergency preparedness of the energy system. In the long term, the EU aims to achieve climate neutrality by 2050 and a 55% reduction in greenhouse gas emissions by 2030.

Article by Prague Forum