The final months of 2021 saw spot contracts continue to rise to record highs, well above €100 megawatt-hours, as wholesale gas market prices became very volatile. Photo: Shutterstock.

The final months of 2021 saw spot contracts continue to rise to record highs, well above €100 megawatt-hours, as wholesale gas market prices became very volatile. Photo: Shutterstock.

Annual inflation is expected to continue to rise with Eurostat estimating it will reach 5.1% in the EU while dropping in Luxembourg to 4.6%, a 0.8 percentage decrease. Energy costs continue to rocket.

The main components of the euro area’s rise in inflation is energy, which is predicted to have the highest annual rate in January (28.6%, compared with 25.9% in December), followed by food, alcohol & tobacco (3.6%, up from 3.2% in December), services (2.4%, stable compared with December) and non-energy industrial goods (2.3%, compared with 2.9% in December).

Wholesale gas prices in Europe continued their sharp increase in the third quarter of 2021, as spot contracts rose from €37 per megawatt-hours to €85 per megawatt-hours, resulting in highs that have hardly ever been seen before for Europe, according to a quarterly report on European gas markets by the European Commission.

The final months of 2021 saw spot contracts continue to rise to record highs, well above €100 megawatt-hours, as wholesale gas market prices became very volatile.

Forward contracts also rose significantly, which point to a lack of certainty in the market and that they do not anticipate a quick return to the price levels seen in the previous years.

High wholesale gas prices resulted in soaring wholesale electricity prices as well.

The ministry of energy estimates that between 1 January and 1 October 2021 domestic customers will have experienced a 32% absolute increase in the price of gas, including network usage and various taxes.

The price of coal also rose to it’s highest point in the last two decades during the autumn months, and oil prices were up in Q3 2021, and rose further to seven years’ high in October 2021

How gas is bought in Luxembourg:

"Gas is bought on exchanges. The biggest one is in the Netherlands. On the wholesale market, you can buy gas for the next month, but also for the next quarter, for a band covering the whole of next year or even the years 2023 or 2024,", last September.

For example, the same amount of gas throughout the year, was selling at the beginning of 2021 at €16 per kilowatt-hour. In September, the same product was priced at €43.

In Luxembourg, around 90,000 households (out of 265,000) consume natural gas for heating, which represents 40% of the country’s imported natural gas.