Consumer boost as global currency movements cause energy prices to fall

CONSUMERS will be pleased that global currency movements continue to push down energy prices, according to the latest Bord Gáis energy index.

This Irish-specific index, designed to measure the prices in the wholesale energy markets, fell by 2% in August to 108, the first time the index has dropped out of the 110-112 range since April. The index is made up of the key energy commodities of oil, gas, coal and electricity.

The index notes that the price of oil fell from $78 a barrel to $74 in August, while the price of natural gas fell by 7% due to reduced storage injections in Britain.

The price of electricity fell by 2% last month. However, there were signs of growth in evening demand as the summer ends.

Prices in the coal market rose at first in August to $93 a tonne due to higher power prices in Germany. But high stockpile levels in Europe and decreased demand from China helped prices ease. Coal closed at $91 a tonne by the end of the month.

Bord Gáis energy trading analyst Michael Kelleher said: “Global macro-economic data continues to be the biggest driver of the movements in the Bord Gáis energy index as a result of its effects on both currency and commodity prices.”

Mr Kelleher said the futures markets will continue to price in a moderate rise in commodity prices in the coming months.

However: “The pace of economic recovery in developed economies in Europe and the Americas coupled with a confirmation of the rate of growth in developing economies could have a major impact on energy prices in the coming months, particularly oil and coal.”