ZEW Energy Market Barometer – The security of natural gas supply will worsen over the mid-term

The dispute between Russia, a gas producer, and the Ukraine, a transit country for gas delivery, has had consequences in particular for Eastern European EU member states, and has shifted energy security to the forefront of political concern in Europe. The ZEW Energy Market Barometer is a survey of energy-market experts conducted on a biannual basis by the Centre for European Economic Research (ZEW). In November and December of 2008, the participating experts were asked to assess supply security with regard to various energy sources. "Over the mid-term a worsening of supply security for gas and oil is to be expected. Experts anticipate that the current dispute over natural gas supplies will not have a dramatic impact on Germany. The country should take heed of recent events, however, and boost energy security by increasing the use of liquefied natural gas and by investing in new pipelines and storage reservoirs", says Dr Andreas Löschel, head of the ZEW-research department "Environmental and Resource Economics, Environmental Management".

The experts surveyed for the ZEW Energy Market Barometer fear that oil and gas energy supplies will become less secure over the coming decade. The experts foresee a problematic development in particular for oil: 70 per cent of those surveyed predict a decline in oil supply security. Supply security for natural gas will also deteriorate over the next ten years, 48 percent of the experts say. 43 percent predict no significant change, and only 9 percent see natural gas supply less endangered ten years from now. While 68 percent of experts see supply security for coal unchanged in ten years, the assessments for the electricity sector are alarming: 41 percent of the surveyed experts anticipate electricity supply will be less secure in ten years. Only 49 percent expect electricity supply to be as secure in ten years’ time.

As a result of the financial crisis and expectations of economic slowdown, massive price declines have been witnessed in commodity markets. The experts surveyed for the ZEW Energy Market Barometer were also asked if recent market events have produced a fundamentally new situation for energy supply security. The vast majority said no. Over 80 percent indicated that their basic assessment of supply security for oil, gas, coal and electricity, as well as for supply security on the whole, had not changed over the last six months. This assessment is also a reflection of the long-term nature of investment in the energy sector. The extreme price fluctuations in 2008 – in the case of crude oil, for example – appear not be reflective of any fundamental change in the supply situation.

Some 200 academics and industry experts from energy supply, trading and service companies are surveyed on a biannual basis for the ZEW Energy Market Barometer. They are asked to share their expectations regarding short- and mid-term developments in national and international energy markets.

For further information please contact

Nikolas Wölfing, Phone: +49/621/1235-217, E-mail: woelfing@zew.de

Prof. Dr. Andreas Löschel, Phone: +49/621/1235-200, E-mail: loeschel@zew.de