While fuel prices have already been on the rise for nearly six weeks, the price for household gas could also see a sharp rise from May, according to French industry experts.
Since the start of the war in Iran, prices at fuel stations have been soaring. Diesel prices haven’t been this high since 1985, averaging over €2.20 per litre over the course of a week.
The price surge is set to spread to another energy source: natural gas, which over 10.3 million households use in France for either heating, cooking or both.
“If markets stabilise at current levels, households’ gas bills could rise by 25 percent in the coming months,” said Sylvain Le Falher, co-founder and CEO of the French energy comparison site Hello Watt.
That amounts to an average of an additional €260 per year for a typical household (a family of four using gas for heating, with a consumption of 10,000 kilowatt-hours, or kWh) .
Meanwhile, Emmanuelle Wargon, president of the French Energy Regulatory Commission (CRE), has already announced a price hike of “around 15 percent” starting May 1st.
“Gas is a product we import,” she said during the program C dans l’air on French TV on April 1st. “We are completely dependent on the international situation. And I would say that it is concerning and extremely uncertain.”
Price hikes from April would not immediately affect households who are on a fixed rate tariff, which is about half of French households.
Why the delay in price?
While the surge in petrol prices was seen in just a few days, the increase observed in the gas markets, particularly for LNG (liquefied natural gas), took longer.
Le Falher explained to French media Le Parisien that the lag between wholesale markets and retail prices (for both households and businesses) isn’t the same for the two resources.
The reason is due to the way distributors set their rates. “In France, they’re revised every month,” he said. “Unlike electricity, where the energy component changes only once a year, in February. So it usually takes two months to see an adjustment.”
This is why there was a misleading drop in price rates applied by suppliers in April, as they were calculated based on market trends up through February, before the start of the war in Iran.
To help individuals cope with rising inflation, the government plans to unveil a major electrification plan this week, including new incentives for installing heat pumps. According to the French Environment and Energy Management Agency (Ademe), this technology could cut the price of heating bills in half.
