German gas consumers will have to brace themselves for much steeper prices than the recent hikes announced by energy firms, Germany’s Deputy Environment Minister Michael Müller warned in an interview on Sunday.
“Beyond the already known 25 percent, there may another increase in the gas price of up to 40 percent by autumn,” Müller told newspaper Welt am Sonntag.
Recent surges in the oil market to which gas is index-linked, and speculation in spot markets are to blame, he said. “Energy firms always hike prices for gas with a delay of several months,” Müller added.
Germany imports 80 percent of the gas it consumes and prices follow those of oil with a certain lag under long-term supply contracts. On Friday, oil prices shot up to new record high of $139 a barrel.
At the end of May, the Federal Association of Energy and Water Economy (BDEW) had warned consumers of a 20-percent rise in gas costs while magazine Der Spiegel reported that energy market leader E.ON Ruhrgas was planning to raise prices by up to 25 percent.
“We can expect that the era of cheap energy is over. The price will in all probability stay at its current high level,” BDEW President Michael Feist said.
Gas in continental Europe is index-linked to oil prices with a certain time lag, a fact Müller said was no longer realistic. “The German government, with the approval of the European Union, should seek to develop a strategy to decouple prices so that we can have a more reasonable price development that excludes huge increases,” he said.
Economists and politicians in Germany are increasingly worried about the impact of high energy prices on spending power and general economic growth. Müller is to accompany Environment Minister Sigmar Gabriel to Russia, Germany’s chief gas supplier, next week to discuss possible tie-ups in environment technology and raw materials.