Energy News

4 Reasons Gas Prices are Going Down – An Extended View

           Energy News
news-pic-generic

Since the start of the year, gas prices have tumbled dramatically to historic lows. There are several reasons for this as we shall highlight each in detail.


The decreasing possibility of Russia shutting gas supplies will cause prices to lower. It is not in Russia’s interest to cut off gas supplies as it is facing economic hardship with low oil prices and economic sanctions.

Fortunately, the UK’s exposure to Russian gas is non-existent, so there is no need to worry that we will be cut off. The map below shows the amount of gas imported from Russia. The former Soviet Union states and much of the Baltic nations are at risk, with 100% reliance on Russian gas. Germans and Belgium are second in line, due to a heavy reliance on Russia. France and Italy both have exposure to Russia, but since the UK exports to the continent, there is a slight impact on UK gas prices.

It is no longer in Russia’s interest to cut off supplies. Low oil prices have reduced the government’s revenue, added with economic sanctions, any further loss in revenues would see Russia in a full recession. Unlike the previous cut off, Russia does not have the financial reserves to weather the loss of revenue and will seek a path of collaboration rather than a dramatic stance.


Alfa Energy Group

We are an international energy and sustainability consultancy that develops relevant strategies for clients in all industries and keeps them running.