Those who rely on gas and portable gas bottles for a number of activities are no doubt wondering what will happen to the cost of gas next year. There are uncertain times ahead with the impact of Brexit and other financial issues across the world.
We can use past trends in gas prices to inform our predictions for future trends to give us some idea of what to expect.
Past Trends
Looking at the past few years, we notice mixed fortunes for the price of gas. In 2008, gas prices were really high in Europe and Japan, with the cost of gas trading at $13.78/mmbtu. This was followed by a massive crash in gas prices throughout Europe and Japan until about July 2009, when the price was $6.92/mmbtu.
After this there was a small, gradual increase in the average price of gas to $12.88/mmbtu in April 2013. Prices then declined to their lowest point in the last ten years, plummeting to $3.91 in March 2016.
In the UK, the 2016/2017 price per therm was on average 34.6 pence. This was a price that was very similar to those seen in the 1990s. However, the price made a dramatic increase of 26.9% to 43.9 pence per therm in 2017/2018, which matched the global trend of gas prices, particularly those in Europe.
Uncertainty across the world is the major factor. Generally speaking, the price trends in Japan and Europe generally match. Those in the US often don’t correspond to those across the rest of the world. For example, US gas prices in November 2017 dropped 15.2% compared to the price in October 2017. This was the steepest drop in gas prices in America since December 2015.
In contrast to this, Europe saw one of the biggest price surges in nearly two decades when the cost of gas increased by 14.4% during the same two months.
A similar contrast in costs can be seen in 2018 when the cost of gas in America increased by 33% between September 2018 and November 2018. In Europe, during the same period, the cost of gas decreased by 8%.
A Decline in the Future?
Many experts in the trading of commodities believe that we have seen the price of gas peak across the world in 2018. Even in America, where the price hasn’t changed much over the past decade, there is expected to be a decline in the cost of gas moving forward.
For instance, experts have stated that the average cost of gas over the 2019 calendar year should be approximately $7.5/mmbtu. This is down $0.5/mmbtu on the average 2018 price. Experts also forecast that the price will be further reduced in 2020, with an average of $7.0/mmbtu.
After this period, the cost of gas is likely to rise again, but the rate of increase is not expected to be as sudden or as quick as we’ve seen in recent years.
Why the Sudden Decline in the Cost of Gas?
As with all commodities across the world, there are always going to be price fluctuations throughout the year. Notably, this is related to supply and demand requirements. In January 2018, many parts of the US experienced unusually cold weather and at the same time, the cost of gas increased.
Likewise, in the UK, there were increases in the price of gas as cold weather set upon us. However, the difference in the UK is that prices for gas in Europe continued to climb. This could be because there are concerns that the average production of gas is set to decrease in the future.
The amount of production for 2021/22 is predicted to be 3.3 billion therms less than 2016/2017. This could contribute to higher costs if the demand for gas does not slacken, as well.
There have also been two major concerns. The first is that Brexit will have a major impact on supplies in the UK. Many commentators have noted firms stockpiling supplies in preparation for the UK’s departure from the European trading block, with some manufacturers stating they’ve got enough supplies to keep going for six months should the worst happen. If these supplies include gas, this could have contributed to an increase in demand and an increase in recent prices.
Another concern has been energy companies worried about gas stocks running out thanks to a colder than normal spring, the two previous cold winters and predictions of another cold winter. Therefore, energy companies have been stockpiling gas supplies for the past few months in order to ensure continuous service. This has increased the price of gas on the market.
However, it should be noted that energy companies are trying to replace reserves that have dwindled in recent years. According to gas experts, the storage levels across Europe have only just returned to the same levels achieved in the five-year average. Therefore, there is likely to be a reduction in the coming months for gas demand, especially if the winter is warmer than predicted.
The Future is…?
The price of gas in 2019 is hard to predict. There are many factors to consider. Some experts suggest that the price will take a quick dip in 2019 and 2020 before steadily rising, but generally speaking, the average price will increase over the next decade, if a bit slower than we’ve been used to over the last decade. For more information about our portable gas bottles, contact us at Adams Gas today.
