What Is Happening With Energy Prices?

December 2021 Geopolitics

Adriatic staff

The global market price of electricity has risen by 175% in the last year.

No later than 10 December, electricity providers must publish new price lists for business users (applies to all providers) – these prices will be the same as global market prices. In Slovenia, there is a significant share of such companies (estimated at 40%) that have not yet secured electricity prices for the next year – for them, the cost of electricity will rise by a factor of 2.5 compared to 2021.

Energy sources abroad

Some economists expect that the problems with the procurement of (various) energy raw materials will continue strongly next year. However, demand for a sharp post-pandemic rebound will slow down, reducing price pressures. Some providers do not even want to change the current situation as this would lower their sales prices. In this context, current price levels suit Russia and some other producing countries, which treat energy as their strategic good. Much will also depend on supply constraints elsewhere: if talking about oil, the US surely deserves a mention. Slower supply is also expected for other energy sources such as liquefied petroleum gas.

Rising energy prices also raised the price of crude oil

In October, crude oil prices rose by more than 12%. The increase is due to rising energy prices in Europe and Asia. An important factor in the price hikes was the mass transition from gas to oil energy sources.

Although the price of oil continues to rise, the situation may change, the IEA said.

It will continue to strengthen in the future to meet the growing demand for oil, which has still failed to catch up to pre-crisis levels. Refineries are becoming more lively after the autumn maintenance work, while end consumers are stepping up demand for petroleum products by opening borders, reviving mobility and increasing vaccination coverage. New viral outbreaks around the world and a slight slowdown in industrial activity will – together with higher oil prices – affect the way demand develops in the coming weeks and months. Opec predicts that demand will be higher next year than in 2019 – it will exceed the level of 100.1 million barrels per day.