PROPERTY SEARCH
PROPERTY SEARCH
The Israel-Hamas conflict is driving up gas prices in Spain
Volatility in the market is causing a spike in gas prices, and consequently in electricity bills, in the EU and other countries
After the turbulent year 2022 in the energy market due to the war in Ukraine, gas prices in Europe have taken another hike due to the war between Israel and Hamas.
From February 2023 prices had begun to stabilise, meaning it was not been necessary to activate the so-called ‘Iberian exception’ which allows Spain and Portugal to receive discounted energy prices if gas exceeds 50 euros/MWh.
Now, though, since last October 7 when Hamas attacked Israel and the military situation escalated in the Middle East, gas prices are going up again form around 35 euros per Megawatt hour on October 7 to 52 euros on October 15.
Since the beginning of the attacks, Israel has suspended production of one of its offshore platforms for security reasons and has stopped the circulation of the gas pipeline that connects with Egypt.
Gas prices have a knock-on effect on the price of all electricity generation, and as such, limits to the supply of gas exports from Israel are driving up energy prices elsewhere. A recent study by the Bruegel Institute states, “The impact of the current situation on the domestic [Israel], regional [Middle East] and international gas balance depends on the duration.”
The report adds that this “would determine Egypt’s ability to meet its growing gas needs and would also affect exports of liquefied natural gas (LNG) to Turkey and several EU countries.”
Just at the time when governments like Spain are studying the possibility of ending transport aid or tax reductions on electricity or gas, the Twenty-Seven states of the European Commission included in their agreement to reform the electricity market an extension of the 180-euro/MWh cap that they had agreed in September 2022 to cut the extraordinary profits of electricity companies due to skyrocketing gas prices.
The Iberian exception is also due to expire at the end of this year, and if an agreement cannot be reached with the EU to extend it energy bills could become more expensive for consumers in Spain and across Europe.
Spain is among the countries trying to negotiate a ceasefire between Israel and Hamas, both for humanitarian reasons and to protect its domestic security and energy interests.
Image 1: Archive
Image 2: Mibgas
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