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Bord Gais Energy Index falls in April

Tuesday, May 07 10:33:48

The Bord Gais Energy Index, a seasonally adjusted index designed to measure prices in the wholesale energy market, fell 12pc in April.

This was as a result of UK wholesale gas prices dropping from the record highs recorded in March. Lower Brent crude oil prices also contributed significantly to the reduction in the Index for April.

Wholesale energy prices are still 33pc higher than in April 2011.

Commenting on the Bord Gais Energy Index for April, John Heffernan, power trader at Bord Gais Energy, said "In April, Brent crude oil prices hit the lowest levels to date in 2013 and at times traded under the key USD$100 level.

The last time Brent crude traded below this level was in July 2012.

Eroding oil demand in Europe, the restoration of North Sea output and the easing of political tensions in the Middle East pushed oil prices down.

It remains to be seen whether global oil prices will stabilise at, or close to, USD$100. It appears that the USD$100 level is an acceptable price for OPEC members to produce oil in current quantities.

However, the shale oil revolution in North America is starting to change the global energy landscape and challenge the dominance and influence of OPEC producing countries.

Elsewhere the natural gas element of the index fell 16pc in April.

With temperatures across Britain starting to improve, the price of wholesale gas retreated from the record high experienced in March, which was the coldest March seen in the UK for over fifty years.

Supplies of gas to the UK also received a boost with an increasing number of ships delivering LNG arriving at British shores.

The coal element of the index was down 4pc as prices hit a three-year-low at the start of the month before rebounding modestly.

An oversupply of coal to the European market continues to weigh on prices.

Falling coal and carbon prices have supported coal based electricity generation across Europe at the expense of gas powered plants.

Finally the electricity element of the Index was down 17pc. With milder weather and increasing gas supplies to the UK, Ireland's cost of producing electricity benefited from lower wholesale UK gas prices.

In addition, the cost of producing power in Ireland was also lowered as only the most efficient gas plants were called upon to produce power. Higher volumes of electricity generated from wind turbines and falling demand also contributed to lowering wholesale electricity prices.