E.ON planning German gas price hikes due oil – report
German gas consumers may face price increases of up to 25% in the wake of adjustments to be made by market leader E.ON Ruhrgas due to record oil prices, the weekly magazine Der Spiegel reported on Monday.
E.ON Ruhrgas, the E.ON utility’s German wholesale gas arm, declined to comment on the report, which cited unnamed internal company sources as giving this figure and suggesting a two-step price hike. A spokesman for E.ON said that his company’s gas procurement costs were rising due to recent rallies in the oil market, to which gas is index-linked.
The magazine also said that other companies in the 1,000 terawatt hours/year market were likely to follow suit. A household currently paying €1,600 a year for its gas may then be faced with a bill of €2,000, it said. Germany imports 80% of the gas it consumes and prices follow those of oil with a certain lag under long-term supply contracts.
Oil has risen to over $135 a barrel spurred on by a weaker US dollar, failure by producer group OPEC to raise output significantly, and concerns that output outside OPEC may also not keep up with demand, which could lead to supply squeezes. E.ON Ruhrgas sells three quarters of its gas to long distance shippers and local utilities and the rest to power stations and customers abroad. Economists and politicians cited by the magazine said there was rising concern about the impact of high energy prices on spending power and general economic growth. (Reuters)
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