CASE. Will the gas price finally come down for the French?

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As the price of European natural gas hits a new low in nearly two years, the French are wondering when this drop will affect their bills. An issue that arises in the context of the end of the regulated tariff on July 1 and the end of the tariff shield year.

Will gas prices rise, stagnate, fall? For the moment, it is very difficult to make predictions because the energy crisis has remained very volatile since the outbreak of war in Ukraine. Not enough to reassure the French, who are also concerned about the end of the regulated gas sales tariff (TRVG) on 1um next July and the end of the tariff shield on the price of gas “from this year”, as announced by the Minister of Economy Bruno Le Maire, while the tariff shield for electricity will remain in force at least until the beginning of 2025.

Will the gas price finally come down for the French?

Yet the price of gas is falling. On Thursday 18 May, the price of European natural gas hit a new low for almost two years; threshold reached thanks to comfortable storage levels in Europe and rising temperatures that are holding back demand.

Gas purchases grouped in Europe

“The combination of a mild winter, record exports of liquefied natural gas (LNG) from the United States and subdued demand from the residential and industrial sectors” drove down European gas prices, explained Biraj Borkhataria, analyst by RBC Capital Markets. “Global warming reduces the demand for gas for heating,” Seb analyst Bjarne Schieldrop said in a statement, with heating demand making up the largest item of gas consumption for individuals.

Storage levels in Europe are even “close to record levels for this time of year”, confirms the expert. Europe is therefore on track to rebuild its stocks before next winter. The European Union also launched its first international tender for bundled gas purchases last week, in order to obtain better prices to replenish stocks before winter 2023-2024. Twenty-five suppliers have already answered this call. These European group purchases should make it possible to avoid the situation of last summer, when governments and companies simultaneously rushed to the gas market to stockpile, fueling the surge in prices.

Will the gas price finally come down for the French?

Will the gas price finally come down for the French?
DDM Philippe Rioux

So is everything for the best? Not so sure. Qatar’s energy minister warned on Tuesday that ‘the worst’ was yet to come for Europe’s oil and gas shortages… unless he appeals to the emirate’s oil and gas companies ready to move forward with long-term agreements.

On the other hand, experts warn of the risks of demand shocks that current inventories could not meet…

Far from these strategies, the French expect their bills to go down. But fear hangs over the households subject to the regulated gas tariff which will expire on the 1stum July, a decision taken some time ago by the Council of State and validated by the Energy-Climate law of 2019. As of 30 September 2022, this tariff concerned 2.6 million families, or 24.66% of families equipped with gas.

A reference price that is not protective enough

To “replace” the regulated rate set by public authorities, the Energy Regulatory Commission (CRE) last week published the first values ​​of its “reference price” for the sale of natural gas to domestic consumers.

“Consumers who have not left the TRVG by 30 June 2023 will be transferred from 1um July 2023 in a default offer, called swing, at their historical supplier. At the same time, consumers with a market offer whose evolution is indexed to the TRVG will see the contractual conditions of their offer evolve according to their supplier”, specifies CRE, which states that its indicative reference price, calculated as the regulated tariff,” is intended to serve as a compass for consumers looking to compare supply deals starting in June. »

For the UFC-Que Choisir association, this reference price “is not protective for consumers since it will not be imposed on any gas supplier, it does not exist for fixed-price offers and at present, it is only foreseen for one year. The truth about the price will come with the end of the tariff shield. It remains to be hoped that the offers will be based on the CRE reference price, or even below. »

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