Falling oil and electricity in the markets: will this have an impact on your bill?

Falling oil and electricity in the markets: will this have an impact on your bill?

Fuel shortages, supply difficulties associated with the international context…the question of energy, and more specifically its price, never ceases to concern individuals and professionals alike. If devices, such as a tariff shield or specific assistance to businesses, have been put in place by the state, they do not prevent legitimate concerns about rising bills.

The cost of energy depends on several factors that, to varying degrees, play a role in raising or lowering the final price. Among them, prices in international markets. Its development regularly makes headlines, especially when it reaches its peak. A situation that Vincent did not escape from, who believes that many articles are written when “The prices are skyrocketing [mais] never the other way around”while asking us: What are the prices of a barrel of oil and what are the prices of megawatt-hours (MWh) at the moment? »

How do oil and electricity prices change in the markets? What are the consequences of these changes to the consumer’s final bill? West of France answer you.

Low market price…

It should be borne in mind that the electricity market and the oil market are very different. “For electricity, as much as it is a commodity that cannot be stored, price fluctuations are very strong Explains Anna Crete, Professor of Economics at Paris Dauphine University PSL and Scientific Director of the Natural Gas Economics Chair.

Admittedly, electricity prices are currently declining, but this observation must nonetheless qualify and put it into perspective for the long term. “It is true that our price has decreased but everything is relative, compared to last year it is still very high. There, our price is 90 euros per MWh and this summer we have reached 700 euros, “ Anna Kriti points out.

In terms of oil, the price fluctuates between $90 and $95 a barrel of Brent (European standard barrel, Ed). The trend again to decrease compared to previous months. At the beginning of June 2022, its price was at an all-time high of around $124.

… which may not last

Many uncertain factors can push prices higher again. In the short term, markets are reassured by reduced demand and the prospect of an improvement in the availability of the nuclear fleet. On the other hand, if we go into winter, potential cold spells and concerns about demand management could resurface. We do not have a market that can reach the historical average, which is between 40 and 45 euros per MWh. »

The find is similar to oil, with one difference. while for electricity, “Determinants are more European, even French”The oil market, for its part, is facing “Global Uncertainty Due to Its Status as a Globalized Commodity”.

It must be said that there are many reasons for concern related to the international context: “The increase in the main rates, which has an impact on the dollar and on the cost of oil exports, the decrease in production by OPEC + countries (the Organization of Petroleum Exporting Countries and its partners), the Russian oil embargo …”

It should be noted that the danger is not so much a disruption in the oil supply as it is an increase in the price of a barrel.

What effect on the consumer?

Whether we are talking about electricity or oil, the logic is similar: price changes in the market have an effect but, on their own, do not explain higher and lower prices for the consumer. In fact, many other costs must be taken into account. In the case of electricity “The consumer also pays for transmission and distribution costs, which are regulated by the Energy Regulatory Commission (CRE), but also for taxes in various forms. This last part does not differ with the megawatt-hour price.”Anna Kriti says.

With this process, consumers “A little bit more protection when prices go up but you earn a little more on your bills when they go down”The researcher adds.

This doesn’t mean your bill can’t go down, but it will take some time. be careful, “The fact that the price of electricity is low today should not make us relax our efforts in sobriety.” Anna Kriti insists.

for oil barrel “Its price passes to the price of fuel” But, again, the final cost to the consumer includes other elements including ‘Too much tax’. In addition, it is also necessary to take into account the delay in the adaptation of supply contracts for refineries. They are created for the long term and change very slowly with the price of crude oil. »

But then, why do we feel the heights more than the difficulties? The increase was sudden so the fallout took into account values ​​that were too high. This has led to higher fuel prices. Currently, we are in a gradual and uncertain decline. Between $100 a barrel and $95 a barrel, we won’t see a price change at the pump anytime soon. »

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