GAS PRICE. In an attempt to fight against the rise in gas prices after the invasion of Ukraine by Russia, the Minister of the Economy wishes to extend the tariff shield for an additional 6 months. Can prices soar in France because of the war?
[Mis à jour le 2 mars 2021 à 11h51] Guest on the set of France Info this Tuesday, March 1, the Minister of Economy, Finance and Recovery was clear about the protection of the French against the risk of soaring gas prices: “I would like the tariff shield to be extended“. Clear and clear. Something to reassure households in the face of a potential price explosion in France, and a hefty bill in the months to come. Logically, this will not be the case. In place until June 30 for the individualsthe famous tariff shield allowing gas prices to be frozen should therefore be extended until the end of the year, December 31, 2022. The second piece of good news concerns businesses. Some of them could now benefit from the tariff shield. Not all of them, of course, but the hardest hit by international competition, and those whose gas consumption is significant, and vital to its proper functioning. Measures under study which should quickly see the light of day. Keep in mind that a slight rise in inflation cannot be ruled out because of soaring gas prices internationally, and particularly in Russia after the invasion of Vladimir Putin’s troops in Ukraine.
The price of gas delivered to the Netherlands amounts to 194 euros the megawatt hour this Thursday March 3, a historic figure, it is quite simply unheard of and which had reason to worry Europe and France, before the announcements of the Minister of the Economy. Remember that France is much less dependent on Russian gas than some of its neighbors. 17% gas imports in France derived from Russia.
The exclusion of Russia from the Swift banking transaction processing system also cast serious doubt on the supply and prices of raw materials and gas in France and Europe. In all likelihood, this will not be the case for gas prices in France. Indeed, purchases of energy products may not be impacted. Significant example, the subsidiary of the Societe Generale, Rosbankwhich officially escapes the exclusion of Swift by European countries, it is not part of the 7 Russian banks already banned. Excellent news for France and Europe in the face of the risk involved.
Today, 40% of European gas is imported from Russia. Be careful, however, only 17% of French gas comes from Russia, there is the big difference with ultra-dependent countries like Germany. Across the Rhine, our neighbors are dependent from 55% to 60% towards the Russia in terms of gas imports. Also, the pipeline North Stream 2 has just been completed between Russia and Germany. German Chancellor Olaf Scholz has already suspended the authorization for this gas pipeline. Germany finds itself trapped, and could be in great difficulty in the event of a cold snap.
If Russia decides to no longer supply France with gas, France will still have the possibility of supplying itself with Norway (36% gas imported into France) or Algeria (8% gas imported into France), France’s other gas trading partners. Please note that these countries have much more limited supply capacities than Russia. This import of liquefied gas from Norway and Algeria remains, today, the most serious and interesting track if Russia were to stop supplying Europe.
The price of natural gas in Europe is already soaring to reach 108 euros per megawatt hour. First visible consequence of the war in Ukraine. So, is there a real risk of rising prices in France? For now, not really thanks to the introduction of the tariff shield by the executive. Purchases of energy products could be spared, there should not be a shortage either in France.
What about companies that are not protected by the price shield? The latter could bear the brunt of the effects of the war in Ukraine. Adverse effects that would immediately impact their competitiveness.
Presented as the European reference price for gas, the Dutch TTF has experienced a real explosion since the beginning of this week, around 194 euros per megawatt hour on Friday. Since Monday, contracts have soared by 50%. A bad omen before a potential rise in gas prices in France.
In France, there is no reason to worry, for the time being. Firstly, with Italy, France is the best European student in terms of gas storage according to The Parisian. This greatly protects us, initially, from the risk of lack of supply and variations in supply. Secondly, France has three LNG terminals: Montoir-de-Bretagne (Loire-Atlantique), Fos-sur-Mer (Bouches-du-Rhône) and Dunkirk (North). A considerable advantage which should make it possible to supply French customers with peace of mind in the coming weeks.
Remember that in France, suppliers are required to store gas for several months, in layers. And that’s good news, the French tablecloths are almost full. This covers 1/4 of the annual consumption. The difficulty will be to restock them at the end of winter. Otherwise, major difficulties are to be expected for next winter.
Good news for households that still depend today on regulated gas prices? In addition to the creation of an inflation allowance instead of a fuel check, the Prime Minister announced that the tariff shield used to freeze gas prices will be extended until the end of 2022, instead of April.
To justify this decision, Jean Castex explained that the decline in prices will be slower than expected. The tenant of Matignon has however ruled out, for the time being, any measure leading to a reduction in taxation. But concretely, what does this measure mean for consumers? Gas prices will, of course, be frozen until the end of the year next year. On the other hand, from the start of 2023, the price of gas will cost consumers a little more than market prices, so that the sums paid in addition during the winter by the operators are recovered. Since the beginning of the year, the regulated price has jumped by more than 50% since January. There was urgency as the mercury prepares to descend.
The consumer is facing a veritable spike in gas prices in recent months. For households using gas as a means of cooking, but also for heating, the successive increases will seriously affect the end-of-year budget. The Energy Regulatory Commission (CRE) has indeed announced a mess of increases in recent months, these increases affecting the regulated gas prices charged by Engie. They act indirectly on market prices. We summarize what has happened in recent months:
- +10% in July 2021
- +5% in August 2021
- +8.7% in September 2021
- +12.6% in October 2021
- +15% announced on November 1, 2021.
The government recently announced the payment of an additional energy check of 100 euros for the 5.8 million households benefiting from the energy check. Payment is scheduled for December. To find out more, see our dedicated article:
Are you still dependent on regulated gas prices? This price increase is not the only reason to look elsewhere! Since the Energy and Climate law adopted in 2019, regulated tariffs are gradually disappearing. Engie has ceased to market new contracts at regulated sales tariffs (TRV), since November 2019, which means that you will soon change your contract. If you have an Engie contract, don’t panic. It remains valid until June 30, 2023. In this context of crisis, are you studying the possibility of changing your energy supplier more seriously? Consult our dedicated file without further delay:
Be careful, however, since if you have not changed your contract yourself, you will see your contract automatically switch to a market offer from Engie, from July 1, 2023. If you change supplier, get information on the site of the national energy ombudsman, herewhich offers a comparator of offers to find the formula that meets your consumption needs.