Marginal rise in cost of energy

There was a marginal increase in the cost of energy in January with the Bord Gáis Energy Index increasing by 1% in the first month of the year.

Ireland was insulated from the increase of the Brent crude oil and wholesale UK gas prices as the strengthening of the value of the euro cancelled out energy inflation.

Power trader at Bord Gáis Energy, John Heffernan, said that despite the unpredictability of oil prices due to instability in the Middle East, Irish energy buyers were relatively unaffected.

“Overall, Irish consumers were insulated from the full impact of these higher wholesale commodity prices due to a strengthening euro, which outperformed the US dollar and British pound. The January Bord Gáis Energy Index rose 1%, but if it had not been for a strengthening euro, the rise could have been as much as 3%,” he said,

The strengthening in the world economy could actually result in the price of energy rising but the revolution in unconventional energy, from tar sands and fracking, is expected to meet rising demand.

“However, a growing optimism about the prospects for the world’s economy, as expressed in outstanding equity performances, added an additional stimulus to oil prices, as the market positively reassesses the prospects for global oil demand in 2013. Right now, it is likely that oil prices will be high in 2013 but positive price relief could potentially come in the form of rising non-OPEC oil production, particularly in the US where the EIA predicts production will rise by the largest amount on record in 2013 due to the unconventional oil revolution,” he said.

He said Ireland remains vulnerable to fluctuations in the global economy and the trend of the strong euro against the dollar will not continue indefinitely.