Value-starved Irish consumers will be breathing a sigh of relief after The Irish Times reported on Monday that the State’s energy watchdog expects gas and electricity prices for domestic users to start falling within weeks. The Commission for the Regulation of Utilities said that while, globally, energy prices remained high, it anticipates that a fall from the highs recorded in 2022 would be passed on to Irish consumers before the end of the year.
On the face of it, that is good news for households and businesses alike. There is, however, another, altogether less reassuring winter scenario that market analysts have been mapping out in recent weeks amid a sharp jump in wholesale natural gas futures. It involves an industrial dispute at Australian company Woodside Energy Group where unions last week signalled their intention to strike at several plants.
While Ireland gets precisely none of its natural gas from down under, Australia is a major exporter of liquefied natural gas (LNG), particularly to Asia. Closer to home, LNG has become an important substitute for Russian gas that has been lost to Europe since the invasion and escalation of the war in Ukraine. Ireland is not an importer of LNG so it is somewhat insulated from the direct effects.
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However, a significant drop-off in LNG shipments from Australia to Asia would leave countries scrambling around for alternatives like natural gas, potentially causing a significant jump in wholesale prices.
Ireland imports most of its natural gas from Scotland. The good news is that both the UK and European gas storage levels are elevated for this time of year, meaning there is some room to manoeuvre. Gas Networks Ireland said on Monday that it does not expect any major supply issues this winter. But there is always the possibility that a particularly cold winter — and the resulting jump in demand for natural gas for heating purposes — could rapidly deplete storage levels, leading to a spike in prices.
In a year characterised by freak, climate change-related weather events no one will be counting their chickens before the summer has even concluded.
