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Date Published: 25/04/2022

ARCHIVED - Gas prices in Spain unlikely to drop before May

ARCHIVED ARTICLE

Brussels is delaying a decision on limiting the price of gas in Spain and Portugal

<span style='color:#780948'>ARCHIVED</span> - Gas prices in Spain unlikely to drop before May

The Spanish government has conceded that it is now highly unlikely that gas prices will come down by May as the European Commission is still debating the proposal by Spain and Portugal to put a limit of 30 euros/MWh on gas. Gas prices, which are currently the highest of all energy sources, directly impact the cost of electricity, and a regulated price would significantly reduce household bills.

Despite the negotiations being agreed in principal in Europe last month, the regulation is facing stiff opposition from Germany and the Netherlands, and energy companies in Spain, like Iberdrola and Endesa, have now joined the fray, arguing that Spain regulating its gas prices separately to the rest of Europe is akin to the country deciding “to leave the euro and return to the peseta".

Of course, the higher the price of gas, the bigger the profit margin for energy companies, but Iberdrola fears that this interference of the Spanish government would open the door to further interference in the wider market.

"Tomorrow it will be cement, after that it will be steel and then it will be the shipyards,” the president of Iberdrola, Ignacio Sánchez-Galán, said.

According to government sources, the war in Ukraine has triggered an unprecedented rise in gas prices which has had an unfair impact on Spain and Portugal, and with Brussels dragging its heels, all eyes will be on Europe this Wednesday April 27 to see if a final decision will be made.

If the proposal is finally given the green light and gas is limited at 30 euros, the price of electricity would stabilise around the 120 euro mark, greatly reducing consumer costs.

However, Spain has come up against another obstacle – the return of the good weather. Where a month ago the Spanish delegation insisted that regulating gas was an “urgent” matter since electricity averaged at 500 euros per MWh, the sunshine and lengthening days have brought a boost in the use of renewable energies, and the need for natural gas to heat homes has diminished. This has resulted in electricity costing less than 10 euros at some points of the day for the first time in months, and the daily average has dipped below 100 euros.

Image: Wikimedia Commons

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