Friday, 21 October 2011

Almost the cheapest gas prices in Europe

It seems our gas prices are going up yet again, and we are in for a tough winter. It may not be any consolation to hear that our gas prices are currently almost the cheapest in Europe - as of late 2010 at least, the only country where domestic gas bills were cheaper was Luxembourg. The chart below shows the current price of domestic gas supply in some selected countries in Europe - and how they changed between 2007 and 2010 (1). I have also shown Denmark here which is renowned for high energy prices but the most expensive was actually Bulgaria.

In Germany and France the price is considerably higher than here, although there seems to be a tendency to convergance, with prices going up where it is currently low and vice versa.

A fair bit of the difference in price is due to tax. For example in Germany and the UK the basic price is much the same but we pay just 5% in VAT (the lowest in Europe) and in Germany tax adds 26% to the overall price.

It is also interesting to look at the difference between the prices paid by industrial consumers and domestic. It seems that in Germany the industrial price is close to the domestic price, even though industrial users have much lower tax there, in the UK  there is no difference between the tax on industrial gas and that on domestic gas.

Judging by this it seems we are getting a good deal - low prices and low taxes too. However, I do worry about lack of investment in infrastructure in the UK. For example, Britain has very little in the way of gas storage facilities compared to other countries in Europe. We only have stocks of about 15 days supply (even less if the weather is very cold) compared to 99 days in France and 122 in Germany (2). This makes us more vulnerable to disputes and pipeline cutoffs, as well as short term peaks in the global trade prices.

(1) Electricity and gas price statistic (EU) The first chart uses values read off from figure 13, in PPS which is purchasing power standard - so adjusted for the cost of living in different countries. However I got the inflation from table 14 which is in national currency, and adjusted the numbers to match the 2010 PPS figure. The second chart using figures for the industrial price from table 17, again adjusted for PPS.

(2) More UK gas storage needed to ensure integrity of supply from

1 comment:

  1. The Energy and Climate Change Committee at Westminster agrees that we have far too small gas reserves and are worried about energy security in general: