According to the Centre for Economics and Business Research (CEBR), a think tank associated with the Western Washington University in the USA, petrol prices may drop in the coming months but the price of gas could stay high for years to come.
A view from the south of German LNG Terminal’s upcoming terminal at Brunsbuettel, Germany. Credit: German LNG Terminal website
According to the Centre for Economics and Business Research (CEBR), a think tank associated with the Western Washington University in the USA, petrol prices may drop in the coming months but the price of gas could stay high for years to come.
The think tank’s recent research has concluded that the cost of heating homes with gas “may well stay up for years rather than months.” Their report claims that the oil market should stabilise: even if European sanctions on Russia continue, Putin can sell the oil at a discount price to other markets.
There are predictions that the price of Brent crude oil will fall below $90 in 2024, with much of the reduction expected before December of this year – it is currently at $107.60. However, CEBR does not project the same outcome for the gas market because of the difficulty in transportation of gas. Specialised terminals are needed for loading and unloading, meaning it is not as easy to send it to other markets, as is the case with oil. Liquefied natural gas (LNG) terminals will need to be built and become operational to combat the issues of supply, which will take years rather than months.
It has also stated that although countries such as Germany have stated they would rather face a recession than pay in roubles for Russian gas, both scenarios are likely to occur until the country builds the two LNG terminals it is planning for. The study suggests that given Europe’s heavy reliance on Russian gas, prices will only increase until there is enough infrastructure in place for countries to become more self-sufficient.
Mike McWilliams, Chief Energy Adviser at CEBR, said: “There is some hope for early relief at the petrol stations – but the cost of heating your house on gas may well stay up for years rather than months. We expect in most scenarios that in five years’ time prices of both oil and gas will be noticeably lower than today – but developments after that will depend much more on the scale of progress to net zero than simply on the impact of sanctions.”
