THE BORD GÁIS Energy Index has seen its largest monthly increase since February due to rising oil prices and ongoing concerns about the weakness of the euro currency.
The Index rose 8 per cent in July to 144 – an increase of 4 per cent on July 2011.
Tensions between the US, Europe and Iran increased last month, heightening the possibility of Iran forcing the closure of the vital Straits of Hormuz oil transportation route. There is also increasing concern that conflict in Syria could destabilise the region – and oil supplies. Rising oil prices pushed that part of the Index up 10 per cent to 157 in July.
Bord Gáis also reports that the euro’s poor performance in July affected the commodity markets by impacting negatively on eurozone buyers.
The natural gas part of the Index rose 4 per cent to 201 in July, reflecting Ireland’s reliance on the British wholesale gas market and the euro’s weakness against the British Pound, which made Irish purchases of British gas more expensive.
Meanwhile, a Norwegian industrial dispute over oil workers’ pensions aroused concerns of a lockout and the potential suspension of Norway’s offshore oil and gas output. Norway supplies one-fifth of all gas deliveries to Europe.
Gas prices also impacted on the electricity part of the Index rising 2 per cent to 113 – because most of the power produced in Ireland is generated by burning gas.
A rail strike in Colombia is cited in the Index as the main reason coal rose 12 per cent to 131 last month; Ireland imports most of its coal from Colombia.
“As an importer of fuels, Ireland remains very exposed to market shocks and price movements,” John Heffernan, power trader at Bord Gáis Energy, says. “With the ongoing weakness of the euro, any potential future oil or gas price falls may not be fully realised by euro zone countries and any rises could be amplified.”
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