Energy index falls as wholesale gas prices ease from record highsTuesday 07 May 2013 10.34
Energy prices fell by 12% last month after hitting a peak in March, according to the latest Bord Gáís Energy Index.
Bord Gáis said that UK wholesale gas prices dropped from the record highs recorded in March, while lower Brent crude prices were also a factor for the big fall.
The natural gas element of the index fell 16% last month as temperatures started to improve across the UK after the coldest March in over 50 years.
Supplies of gas to the UK were also boosted by an increasing number of ships delivering LNG arriving at UK shores.
The coal element of the index fell by 4% as prices hit a three year low at the start of April before recovering modestly. Bord Gáis said that an over supply of coal to the European market continues to weigh on prices.
Today's index shows that its electricity element slumped by 17%, as milder weather and increasing gas supplies to the UK eased the cost of producing electricity here. The cost of producing power also fell as only the most efficient gas plants were called upon to produce electricity.
In euro terms, the Brent crude oil price fell by 9% in April due to the resumption of North Sea output, reduced estimates for global demand and decreasing concerns that political tensions in the Middle East will hit the region's oil exports. Mixed economic releases from the US and a ''sombre assessment'' of European growth by the IMF also suggest that oil demand growth will be weak.
Power trader at Bord Gáis, John Heffernan, said that the ''shale revolution'' in North America is starting to change the global energy landscape and challenge the dominance and influence of OPEC producting countries.
''Despite falling oil prices, record equity markets combined with tumbling gold prices indicate that markets are optimistic about a recovery for the global economy. If these indicators are correct, oil prices could increase in the months ahead. In a world with few investment options, equities and commodities such as oil are receiving support from yield-hungry investors,'' he added.