Although petrol prices may drop in the coming months, the price of gas could stay high for years to come.
That’s according to the Centre for Economics and Business Research (CEBR), which has revealed that the cost of heating homes with gas “may well stay up for years rather than months.”
Its new report claims that the oil market should stabilise, however, as even if European sanctions on Russia continue, Putin can sell the oil at a discount price to other markets.
There are predictions that the price of Brent crude oil will fall below $90 in 2024, with much of the reduction expected before December of this year – it is currently at $107.60.
The reason that CEBR does not project the same outcome for the gas market is due to its difficulty in transportation.
Specialised terminals are needed for loading and unloading, meaning it is not as easy to send it to other markets, as is the case with oil.
Liquefied natural gas (LNG) terminals will need to be built and become operational to combat the issues of supply, which will take years rather than months.
It has also stated that although countries such as Germany have stated they would rather face a recession than pay in roubles for Russian gas, both scenarios are likely to occur, until it builds the two LNG terminals it is planning for.
Given Europe’s heavy reliance on Russian gas, prices will only increase until there is enough infrastructure in place for countries to become more self-sufficient, the study suggests.
Mike McWilliams, Chief Energy Adviser at CEBR, said: “There is some hope for early relief at the petrol stations – but the cost of heating your house on gas may well stay up for years rather than months.
“We expect in most scenarios that in five years’ time prices of both oil and gas will be noticeably lower than today – but developments after that will depend much more on the scale of progress to net zero than simply on the impact of sanctions.”