TÁNAISTE LEO VARADKAR has said the cost of gas and the price of food is likely to rise as the conflict between Russia and Ukraine escalates.
Speaking in the Dáil, Varadkar moved to ease concerns about energy shortages, stating that the “lights won’t go out”.
Ireland does not import very much gas from Russia, he said, adding that roughly half of Ireland’s gas supplies comes from a site north of Mayo with the other half coming from the UK, which is mainly sourced from Qatar and the North Sea.
“We’re not particularly dependent on Russian gas,” said Varadkar.
However, he added:
Obviously if the gas stopped flowing into Eastern Europe that will have an effect on the price. And that is very likely in the period ahead.
Earlier this week in Berlin, the Taoiseach confirmed to The Journal that there are no plans to give an energy credit towards gas customers, similar to the one due to be issued next month to all householders for electricity.
Micheál Martin also said there are no plans to delay the increase to the carbon tax which is due to kick in in May.
Varadkar told the Dáil today there will be a rise in cost of food, but said he didn’t believe there would be any food shortages.
“It is true that both Russia and Ukraine are major exporters of food, particularly exporters of grain, but so are we,” he said.
“We don’t need to be concerned about food security or shortages here in Ireland,” he said, before adding “prices may rise, you’re right about that”.
He said the question the Government will have to deal with now is how to contend with that, stating that chasing inflation is not a means in which prices will be reduced.
Varadkar said there are costs that the State can control, and they need to be looked at and reduced.
Oil and gas futures
News of the invasion is roiling commodities and equities markets today.
European wholesale gas futures rose sharply in early trading.
The price of gas for delivery in March has increased by as much as 41% today to nearly €123 per megawatt-hour, according to Dutch TTF futures contracts — the European wholesale gas benchmark — traded on the ICE exchange in London.
The price of wholesale gas for delivery in April, meanwhile, has jumped as much as 40% to €123 per megawatt-hour.
Oil futures were also on the march today. The price of a barrel of Brent crude oil — the main benchmark for the pricing of European oil — jumped as much as 8.2% in trading today, rising to $105 (€94) a barrel this afternoon.
Gas prices have been elevated across Europe in recent months due to a number of factors, including lower-than-normal gas flows from Russia.
Energy companies have been passing on higher wholesale gas costs to customers in their monthly bills over the past eight months or so.
Higher household electricity and heating prices along with higher petrol costs have been the main culprits behind surging Irish and Eurozone headline inflation in the last year.
Experts say it takes up to two months for fluctuations in wholesale oil and gas prices to trickle down to consumers.
But if prices keep trending in this direction, Ireland and Europe generally are unlikely to see much relief from soaring energy costs that have dogged households and businesses over the past six months or so.
Amid rising tension with Russia, Germany decided to postpone the certification process for the Nord Stream 2 natural gas pipeline, which was due to come on stream this year, relieving some of the supply issues.
Earlier this week, Taoiseach Micheál Martin said the current crisis in Ukraine could make the situation worse.
“This is a situation that Europe never wanted to be in. Particularly coming out of the pandemic. This is the last thing the European continent needs or the world needs,” he said.
‘A sea of red’
Meanwhile, stock markets across the globe have slumped today after news of Russia’s invasion broke.
“There is a sea of red across global markets,” said Interactive Investor analyst Victoria Scholar.
European and Asian stock markets have plunged today.
The ISEQ index of shares trading on Euronext Dublin has tumbled over 5% today so far.
Shares in building materials and concrete giant CRH — a long-standing presence in the Ukrainian cement market — have fallen nearly 7% today.
Bank of Ireland’s share price, meanwhile, has fallen 4.9% while AIB’s share price has declined by close to 6%.
Banks — particularly those with exposures to Russian loans — have been among the biggest losers across Europe so far today.
Germany’s Deutsche Bank has shed almost 9%.
Additional reporting by Ian Curran and © AFP 2022
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