Due to the ongoing war in West Asia, gas prices in the Netherlands have blown up. It’s almost as though a missile hit your energy bill.
Iran has blocked shipping through the Strait of Hormuz, a critical route for the world to source its liquefied natural gas (LNG).
To make matters worse, Qatar also halted LNG production after Iranian drone strikes hit its energy facilities at Ras Laffan and Mesaieed. It remains unclear when production will resume.
The consequences are already visible on the Dutch gas market.
According to a report by RTL Z, the gas price on the Amsterdam exchange jumped 50% on Monday, 30% on Tuesday, and a further 11% on Wednesday morning, reaching €60 per Megawatt per hour.
What does this mean for your bill?
No need to start digging into your savings to pay the gas bill just yet.
According to the trade association Energie-Nederland, momentary price spikes do not immediately mean higher household bills because suppliers usually purchase gas in advance.
The type of contract you hold makes a big difference, though.
Dynamic contracts
If you’re on a dynamic contract, helaas pindakaas. Wholesale prices and how they are affected by geopolitics flow directly into your bill.
“Starting today, they’ll see that prices are significantly higher,” Ben Woldring of comparison site Gaslicht.com tells RTL Z.
The most recent figures from ACM Energy Monitor show that over half a million Dutch households hold dynamic contracts.
“Some of them will choose to fix the price now and opt for certainty,” Woldring believes.
Variable contracts
If you have a variable contract, you may be more immune to price changes caused by geopolitical events.
These contracts are adjusted periodically (at least twice a year), with the new rate based on market conditions at that time.
Depending on who your contract is with, you may be able to ride out the current crisis. For example, Essent customers with a variable gas contract will keep their current rate for the next three months, a spokesperson tells RTL Z.
That being said, the supplier is seeing growing concern among customers, who are unsure what prices will look like after that.
Fixed contracts
Commitment pays off! If you hold a fixed contract, you won’t experience any changes in your energy bill until your contract expires and it’s time to renew.
The bigger picture
However, it’s also important to remember that the wholesale price of gas is not the only factor behind your bill. There’s an energy tax, a VAT, and a surcharge from your supplier.
So realistically, geopolitical tensions may not hit your wallet as hard as you might think.
As power companies are inundated with calls from their customers, who are having flashbacks of the energy bills during Russia’s invasion of Ukraine, Finance Minister Eelco Heinen says, “It’s too early to panic.”
The Netherlands has learned its lesson: there’s safety in numbers.
Aside from West Asia, the Netherlands now imports a lot of its LNG from the US and Norway, among some domestic sources too.
“It makes us less vulnerable,” says the finance minister.
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