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Natural Gas Prices and The Energy Market

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Last December, our energy provider, the Vlaamse Energieleverancier, got bust. The problem wasn’t (only) the electricity, but the steady increase in gas prices. At the end of 2020, we were fed up with our then current provider, and switched to the Vlaamse. A bad move, apparently. Our new contract involved a fixed price of 2.25 c€/kWh, in hindsight, a ridiculously low one in 2021. Our new energy provider charged 7.14 c€/kWh in December, and it looks like for January, it’s going to climb to 12.50. No wonder the company went bust. Help! What’s going on here?

I decided to take a look at the history of charged prices (indicated in red, solid line) in relation to our actual usage (green, dashed line, multiply by 1000) and the mean temperatures for each quarter in the past five years (blue, dotted line, multiply by 10). Here’s the result:

The final bill isn’t in yet so I can’t plot the 2021 actual usage part. This only accompanies for central heating (natural gas) prices. We have solar panels installed and I wasn’t interested in electricity prices.

What does that teach us, besides the fact that Q4 2021 and Q1 2022 are outrageously expensive? (Our effective advance amount to pay more than quadrupled. FOUR times as much. In one month. BAM. Of course that was our own fault since we switched to a too low fixed contract. The final bill is yet to come, hold on tight…)

  • Raw natural gas prices were actually fairly stable from 2015 to 2020.
  • Our effective usage dropped in the recent years (an imaginary green trend line would point towards lower y values)
  • The quarterly effective usages correlate nicely with the weather conditions. High green values (more central heating) overlap with low blue values (colder outside temperatures).
  • Overall, the winters in Limburg, Belgium are less harsh, compared to 2015 and earlier. The blue line rises ever so slightly (higher average temperatures each quarter). Thus less gas usage over time does make sense.

While constructing the graph, I’ve had a lot of trouble just getting hold of historic local temperature data. That shouldn’t be too hard to find, right, considering the governmental “open data” cries everywhere? Wrong. I had a sudden flashback to my rising water levels as public data blog post where I encountered similar issues. After a lot of poking around, I eventually grabbed the data manually via wunderground.com, everything but a local data source. That didn’t feel right at all.

Here’s the raw data, in case you’d like to compile your own graph:

years = ["Q1/15", "Q2/15", "Q3/15", "Q4/15", "Q1/16", "Q2/16", "Q3/16", "Q4/16", "Q1/17", "Q2/17", "Q3/17", "Q4/17", "Q1/18", "Q2/18", "Q3/18", "Q4/18", "Q1/19", "Q2/19", "Q3/19", "Q4/19", "Q1/20", "Q2/20", "Q3/20", "Q4/20", "Q1/21", "Q2/21", "Q3/21", "Q4/21", "Q1/22"]
prices = [2.93, 2.78, 2.68, 2.59,   2.31, 1.90, 2.16, 2.17,    2.44, 2.29, 2.19, 2.45,   2.75, 2.49, 2.87, 3.52,    3.09, 2.28, 1.85, 2.29,      2.14, 1.57, 1.29, 1.99,     2.25, 2.25, 2.25, 7.14,     12.50]
usage = [5.81, 1.68, 0.77, 5.09,   6.17, 1.68, 0.57, 5.48,    5.10, 1.45, 0.70, 4.41,   5.30, 0.98, 0.57, 4.35,    4.64, 1.51, 0.63, 4.49,      4.45, 1.21, 0.58, 4.30]
# these are for each month, calculate avg. per 3 to plot quarterly
temp2015 = [5.58, 6.11, 10.1, 14.73, 17.74, 21.6, 24.48, 24.68, 17.47, 13.1, 12.4, 11.71]
temp2016 = [7.1, 7.24, 8.55, 13.1, 18.77, 21.1, 23.55, 23.39, 23.57, 13.29, 8.57, 7.26]
temp2017 = [3.13, 8.68, 13.58, 13.03, 20.9, 24.37, 23.84, 22.52, 18.47, 16.29, 9.1, 6.29]
temp2018 = [8, 3.57, 9, 18.3, 22.42, 22.6, 28.13, 25.06, 21.13, 17.03, 10.2, 7.84]
temp2019 = [4.42, 11.18, 11.74, 16, 16.45, 25.03, 23.74, 24.45, 19.87, 15.48, 9.4, 8.06]
temp2020 = [7.9, 9.66, 10.97, 18.23, 19.55, 22.67, 22.65, 26.77, 21.67, 14.29, 12.1, 7.55]

Does my data make sense? Let’s compare it to a few others out there:

  • EU Natural Gas Trading Economics (click on Stats, 5Y): Jup, same steep increase between 2020 and 2022.
  • Our Belgian overseeing energy provider Engie has a page dedicated to the evolution of gas prices, but to my dismay, you have to log in first. Of course you do.
  • Our current supplier Eneco has a short page explaining the high gas prices that contains a similar graph, an evolution of the wholesale price of gas, although a source is missing, with the following info (translation mine):

At the moment the wholesale price of gas is historically high compared to the past months and even years. On the graph below you’lll see a general overview of the price level. The wholesale price of natural gas has risen fast after the summer of 2021.

I put in all this effort because I was frightened to death after opening the advance invoice two days ago. “This can’t be right, what the …?” Okay so now I know it is the right amount. We’ll probably have to fork over even more after the final yearly bill. What the… I’ve read local news stories of people who suddenly have to pay over a thousand euros—that suddenly has you scraping by just to pay for utilities! It’s not like our wage quadrupled after the summer of 2021.

What are the alternatives? We don’t have room to place a solar water heater, even though I’d love to. The Flemish government is going to fine people who install an oil boiler (still fossil fuels!). We don’t have enough solar panels to revert to heating using electric systems. The price of pellets and stoves has gone up accordingly, and burning wood is not exactly great for the environment—and no central heating system.

Anyone in the same predicament? Also just coughing up or building a plan of action? Let me know!

I'm Wouter Groeneveld, a level 36 Brain Baker, and I love the smell of freshly baked thoughts (and bread) in the morning. I sometimes convince others to bake their brain (and bread) too.

If you found this article amusing and/or helpful, you can buy me a coffee - although I'm more of a tea fan myself. I also like to hear your feedback via Mastodon or e-mail. Thanks!

In reply to Natural Gas Prices and The Energy Market by Wouter Groeneveld Well, yes, in the same predicament. Here in NL the energy prices usually are set two times each year (January and July), so our energy prices hadn’t changed yet until this mo...

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