Responding to the latest plunge of oil prices in the international market, DEPA, the Public Gas Corporation, has decided to follow suit and cut natural gas rates for heating and transportation by ten percent in the new year, offering households, businesses and the economy a welcome and unanticipated festive season gift.
DEPA’s move comes just days after OPEC announced it will maintain output at current levels of 30 million barrels per day until June, 2015, despite an oversupply in the market and subdued demand. The 12-nation cartel, heavily influenced by the interests of Saudi Arabia, has evidently launched a price war against the USA, where the benefits of shale-oil exploitation have revolutionized the domestic energy market.
The sliding price of oil in the international market has prompted a 30 percent reduction in the domestic price of heating fuel, compared to last winter. Heating fuel in the domestic market is currently selling for between 0.98 euro to 1.02 euro per liter, a retreat to price levels last offered in 2009, while the cost for unpriveledged groups, eligible for a subsidized heating program, is between 63 to 67 cents per liter. Last winter, consumers backed by the subsidized program required 900 euros to fill a 1,000-liter tank, while the cost has now dropped to no more than 670 euros.
The retail price of natural gas, which is linked to oil price levels, is revised every three months based on the average price of oil during the previous six-month period.
Market analysts believe the slide in the price of oil has yet to reach rock bottom. Certain pundits believe oil prices will fall as low as 60 dollars a barrel before stabilizing. Yesterday, the WTI benchmark briefly dipped to 65 dollars per barrel before regaining some ground to 68 dollars.
In practical terms for domestic households, the gas heating cost for an 80-square meter flat in a 20-flat block, based on the current price level, is estimated to be about 520 euros for one winter season. The ten-percent cut will lower this cost to at least 460 euros.
For major-scale industrial companies, the prospective savings will be considerable. Energy-intensive industrial plants, such as glass producers, for example, stand to save about 200,000 euros in just the first three months of the new year.
The benefits of the gas rate reduction will cover all industries, reduce production costs, and lead to lower retail prices.