Fuel prices to ‘remain stable’

FUEL prices will remain stable in the short term, with upward pressures on oil being balanced by the deflationary effect of Europe’s economic crisis, according to the latest Bord Gáis Energy Index.

The overall trend is clearly upward.

The index, which now stands at 143, is 17% higher than it was in November 2010. The impact of the uncertain future of Europe’s central currency is also making longer-term prices more difficult to forecast.

Bord Gáis energy trading manager Michael Kelleher said: “The wholesale price has been going sideways for the last six months. The big story at the moment is the currency situation in Europe.

“Coal and oil are traded in dollars, which makes them more expensive than gas, which is sold in euro. Following the release of a number of downbeat economic figures, forecasts, statements and a growing concern about the future of the currency, the euro weakened substantially versus the US dollar in November.

“As a consequence, the euro price of commodities increased but the scale was curtailed by lower demand for commodities arising from reduced growth prospects and milder weather.

The tensions in the Middle East continued to be a driver of oil prices.

The lingering threat of a double-dip recession continues to be a major influence on the movements in the index.

The oil element of the index was up 5% to 151.

Month-on-month, oil prices were relatively unchanged in US dollar terms, but as the euro weakened relative to the dollar, the euro price of a barrel of oil increased by 5%.

The price of oil was supported by concerns over possible future supply disruption as a number of events occurred in oil producing regions.

Natural gas was up 6% to 191 on the index.

Prices fluctuated in the first half of the month as consumption varied due to changeable weather, and unstable British production was replaced by increased flows of gas from Norway.

Coal was down 1% to 142 on the index. Coal prices fell in the month due to a combination of subdued demand; healthy stockpiles; milder weather in Europe and uncertainty surrounding economic growth.

The electricity element of the index was up 3% to 121.

A major contributory factor to the rise was the unavailability of imported power, because the electricity interconnector between Ireland and Britain was on outage for repairs.

As a consequence, Ireland had to rely on its own generation fleet to meet demand and less efficient generators were called into production.