Oil price peg

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The oil price link refers to the coupling of the price for natural gas to the oil prices in Germany .

definition

Sales prices of natural gas according to an investigation by the Federal Cartel Office of November 15, 2006, sorted by supplier. Investigated case: decrease of 7000 kWh per year, typical for a private household with an apartment.

The oil price link was an invention of the Dutch Minister for Economic Affairs, De Pous, together with Exxon and Royal Dutch Shell, and formed the basis for marketing the huge gas discoveries from Groningen in the Netherlands. At the end of the 1970s, this type of pricing was also adopted for Dutch exports. After a phase of fixed prices with possible price adjustments, natural gas could only be obtained with such an oil price link. The principle also asserted itself in the Russian treaties as a pricing instrument. In times of scarce reserves at the beginning of the 1980s, producers even demanded "crude oil parity" for gas purchases - despite the significantly higher distribution costs for gas. This phenomenon still exists with LNG , but has not caught on with pipeline gas in Western Europe. Escalation clauses are actually prohibited in Germany. There are, however, some exceptions, for example for gas, where the price is linked to competing energy sources (so-called tension clause). This pricing continues across all supply levels from the producer to the importers, long-distance gas companies and gas supply companies down to the end consumer. Basically, there are the most diverse variants of oil price linkages: linkage to types of crude oil , linkage to oil products ( light heating oil , heavy heating oil ), definition of reference prices ( Federal Statistical Office , Rotterdam, etc.). There are also bonds with coal. As a rule, for this reason alone, natural gas has a price development that is three to six months later than oil. The price adjustments are made on a monthly, quarterly or half-yearly basis. Natural gas and heating oil prices never correspond - regardless of the fact that the pricing of both energy sources are not comparable - also because of the time lag.

The Federal Court of Justice (BGH) ruled on March 24, 2010 that gas suppliers in contracts with consumers are no longer allowed to link their prices exclusively to the development of the oil price. A corresponding price change clause in the gas supply contracts with end consumers is, according to the case law of the BGH AGB, legally ineffective due to a violation of § 307 BGB , because it enables a subsequent increase in the profit share of the clause user in the agreed price due to non-consideration of other price-forming cost factors such as network costs. It is also unsuitable as a so-called tension clause, since a market price for natural gas, which is based on supply and demand in competition, has not yet been ascertainable. In any case, the development of the oil price is unsuitable for even forecasting the development of a gas price formed in competition.

This case law of the Federal Court of Justice was confirmed by the Federal Constitutional Court in September 2010.

In two rulings of May 14, 2014, the Federal Court of Justice also ruled that in gas supply contracts in business transactions, unlike those with household customers, a link between gas prices and the development of heating oil prices / index values ​​is still permissible.

Heating market

In the global heating market , heating oil is the most important energy competing with natural gas. Large consumers in the chemical industry and in the energy sector are often equipped with systems in which either of the two energy sources can be used. When it comes to new investments in energy generation, both energy sources compete with one another alongside hydropower, nuclear energy, domestic or imported hard coal and lignite and renewable energies. Heating oil is rarely used here. The prices for crude oil and the mineral oil products made from it are not based on this competition with competing energies, but are largely determined by the powerful price cartel of OPEC , which strives for the highest possible crude oil prices and high prices for oil products on the international markets through cartelized production quotas.

In the Federal Republic of Germany itself, according to the case law of the Federal Court of Justice, there is no uniform market for heat energy (heat market). Rather, it can be assumed that there will also be an independent, regionally limited market for pipeline-based gas supply.

The oil price link was introduced in the 1960s at about the same time as the founding of OPEC and initially also served to secure investments in the extraction and pipeline of natural gas: Because large investments were required for the extraction and transport of natural gas, the producers also took part signed long-term contracts with German importers, which are also used to secure investment financing. In contrast to crude oil, there are hardly any free quantities of natural gas due to purchase and purchase obligations in long-term contracts and therefore no market for natural gas in which freely available quantities are traded, so that a market price for natural gas could develop at all.

Only the cartel of a few gas importers has the necessary gas volumes. Territory agreements ("demarcations"), total purchase obligations and confidentiality obligations were previously agreed with the gas supply companies downstream in the respective supply chain, so that closed sales areas protected against competition were created. The Cartel Senate at the Federal Court of Justice has declared such demarcations to be contrary to cartel law and inadmissible.

As a rule, the volume risk is borne by the selling GVU - it must purchase or pay for the agreed natural gas in any case ( take-or-pay contracts ). The price risk, on the other hand, lies with the producer: since natural gas is not in price competition and therefore in no competition for substitution with oil due to the oil price link , the producer is paid the price that can be achieved on the market due to the OPEC price cartel, among other things. The existing cartels in the energy sector always ensure the highest possible price.

purpose

The point of pegging oil is to ensure that natural gas prices rise when oil prices rise. In view of the expected rapid shortage of crude oil and speculation about this raw material as a result of geopolitical crises, " market gains " in the billions are constantly generated along the traditional natural gas supply chain from the well to the customer by eliminating the market . At the same time, it should be ensured that natural gas prices cannot push oil prices down through price competition, which would not have been in the interests of the large oil companies traditionally involved in gas production (BP, Shell, Esso).

If the oil price is fixed, a so-called substitute labor price (EAP) is usually an essential part of the contract. This represents the price of natural gas based on the cost of delivery. The EAP comes into effect as the lower price limit when the oil price falls below the agreed value of a corresponding quotation. This ensures that the gas price cannot follow the oil price below a certain limit. As a result, the GVU are repeatedly accused of having fixed the oil price as a "one-way street". The EAP was agreed at the time, because the transport of natural gas over long distances would no longer be economical due to the high compression costs and very low oil prices (usually <$ 15 / barrel). Since such a low oil price is not foreseeable in the future, the EAP is currently hardly relevant.

A new development - towards an independent market price - could, however, result from the ever stronger and more flexible market development for liquefied natural gas (LNG).

criticism

The Federal Cartel Office and consumer protection organizations criticize the oil price link as outdated, especially since it does not exist for a number of other countries (including Great Britain ).

It should be noted that Great Britain itself had large natural gas reserves and, until recently, was a natural gas exporter on the market. Therefore, Great Britain did not have to fear for its supply of sufficient natural gas in the past. In the meantime, Great Britain has also become dependent on imports. In the winter of 2005/2006 it experienced a price explosion after its own reserves were exhausted earlier than forecast and the severe winter had disrupted the interconnector through which natural gas was imported from the continent to the island. In addition, the largest gas storage facility was also affected by an explosion and a large fire. Since Great Britain is increasingly dependent on a few producers - mainly Norway - the introduction of the oil price link is currently being discussed there.

Although Germany was spared such adversities and there was an adequate supply of natural gas, natural gas prices in Germany rose at a rate similar to that in Great Britain. Only the oil price link is mentioned as the reason for the price explosion.

Large gas exporters, such as Gazprom in Russia, continue to insist on the oil price link because it is particularly useful for consumer protection.

However, gas prices in long-term import contracts are linked to international crude oil prices (IPE Brent , WTI ) on a US dollar basis, so the prices are given in USD per 1,000 cubic meters. This coupling causes the fluctuation of the average natural gas import prices statistically recorded by BAFA in Eschborn and published monthly (also known as cross-border prices, which reflect the value of the imported natural gas at the German border).

Local supply

This must be distinguished from the oil price link, which German importers sometimes practice with regional suppliers and municipal utilities due to their strong market position in their respective sales areas. This is linked to the HEL listings of the Federal Statistical Office. Since 2005 at the latest, providers such as WINGAS, but also E.ON Ruhrgas, have been offering flexible contracts on the sales side for regional and municipal utilities as well as industrial and power plant customers, even without oil price control.

Price increase

While the average natural gas import prices (value of natural gas at the German border) between May 2003 and February 2007 only rose from 1.30 cents / kWh to around 2.20 cents / kWh by around 0.90 cents / kWh Final consumer prices for small customers - for example at the Oldenburg regional supplier EWE - sometimes even by over 1.50 cents / kWh (net) at the same time.

This is precisely where consumer advocates see abuse. Increased natural gas import prices are not only passed on to consumers, but considerable additional profits are made within the traditional supply chain from the German border, which, according to the findings of the Federal Court of Justice in the decisions of March 24, 2010, makes such price coupling impermissible.

The blanket justification often given for the price increase with reference to a fixed oil price therefore proves to be incorrect. In any case, the natural gas import prices are based on a completely different oil price link.

This abuse was particularly evident in the 2004/2005 heating period. While the natural gas import prices rose from May 2003 to May 2005 only from 1.30 cents / kWh to 1.45 cents / kWh, i.e. by 0.15 cents / kWh, consumers achieved price increases of over 0.50 cents at the same time / kWh.

unit

The consumption of gas is generally calculated using the energy content in kWh (kilowatt hours), while the gas meters measure the volume in cubic meters (m³). The ratio of the two units results from the calorific value , which is between 8 and 11 kWh per cubic meter depending on the gas composition. At a price of 6 cents / kWh, this results in a cubic meter price of around 60 cents.

Reference price, 6/1/3 rule

In Germany, the price for light heating oil (HEL), which is determined and published by the Federal Statistical Office for delivery in tank trucks, free consumers, with 40 to 50 hl per order, is often used as the reference price for the oil price control of gas prices  . These publications can be accessed free of charge on the website of the Federal Statistical Office (see web link below).

In order to smooth the development of gas prices over time, the so-called "6/1/3 rule" is often applied to gas supply contracts:

  • 6 months reference period
  • 1 month time lag ("time lag")
  • 3 months price validity

example

Light heating oil (HEL), 40–50 hl, Rheinschiene, time of price determination 11/04,

Month year HEL Rheinschiene, EUR / hl Average of 6 months 1 month time lag Reference price with 3 months price validity
01/2004 28.54      
02/2004 27.33      
03/2004 29.74      
04/2004 31.34 33.70  
05/2004 32.74    
06/2004 31.33    
07/2004 33.06    
08/2004 36.24    
09/2004 37.50    
10/2004      
11/2004       33.70
12/2004       33.70
01/2005       33.70

Further typical regulations in gas supply contracts:

  • 3/1/3 rule
  • 6/3/3 rule

Further development in the gas market

Since autumn 1997, gas prices have risen by around 70% overall.

In 2005, the Federal Cartel Office prohibited long-term gas supply contracts between German importers such as E.ON Ruhrgas and regional suppliers and municipal utilities after they had long since violated German and European antitrust law due to their market-foreclosing effect and were therefore void.

In addition, the Federal Network Agency has prohibited the single-booking variant gas network access model on which these city and regional gates were based.

These contracts and pricing using the so-called applicable price can therefore no longer be carried out.

E.ON Ruhrgas as well as the East German VNG-Verbundnetz Gas AG Leipzig had therefore released their customers from the old contracts on October 1, 2006, which contained the HEL oil price link. Gas suppliers can now choose new suppliers with lower purchase prices on the free gas market and pass the corresponding advantage on to their customers.

In the gas-to-gas competition, an independent natural gas price must now develop. As expected, this will consist of the average natural gas import prices and the efficient costs of gas transport from the German border to the respective so-called virtual trading points in the various market areas ( marginal cost pricing according to the theory of perfect competition). The phenomena observed so far, that natural gas became more expensive for municipal utilities and consumers, while power plant gas remained relatively stable or even experienced price reductions, will thus belong to history.

The current boom in shale gas could make the price link to oil obsolete in the long run.

According to a widespread opinion, the cartel of gas price formation based on the industry-internal agreement on a fixed oil price violates European and German antitrust law. Automatic price coupling can also be null and void due to a violation of Section 2 (1) of the Price Indication and Price Clause Act (PaPkG). According to this law, there is a fundamental ban on indexing in order to counter the risk of inflation inherent in every automatic price linkage.

At least there is the possibility within the supply chain after the German importers to link the gas prices to the development of the natural gas import prices published monthly by the Federal Office of Economics and Export Control (BAFA). Such a coupling, if there was a corresponding, objectively justified need for indexation at all, would be more appropriate and would prevent the end consumer prices from rising more strongly than the natural gas import prices and, for the few German importers, incurring additional profits that are objectively unjustifiable and significantly burdensome for end consumers.

The energy companies themselves link the gas prices to the natural gas import prices published by BAFA. An indexing of natural gas import prices takes place among other things. a. in the natural gas storage contracts of RWE and E.ON Gastransport AG & Co. KG 2007/2008 application for the evaluation of so-called balance quantities between contractually stored and actually withdrawn gas quantities, which are purchased and paid for either by the storage operator or the storage customer.

literature

See also

Web links

Individual evidence

  1. ↑ a b BGH, judgment of March 24, 2010 , Az. VIII ZR 178/08, full text and press release No. 61/2010 of March 24, 2010.
  2. ↑ BVerfG, decision of September 7, 2010 , Az. 1 BvR 2160/09, 1 BvR 851/10, full text and press release No. 76/2010 of September 14, 2010.
  3. ↑ Uteol, May 14, 2014
  4. ↑ Oil price fixing for deliveries to companies is legal
  5. ↑ BGH, judgment of April 29, 2008 , Az.KZR 2/07, full text and press release No. 86/08 of April 29, 2008.
  6. ↑ BGH, decision of December 10, 2008 , Az. KVR 2/08, full text, Rn. 12 and press release No. 231/08 of December 10, 2008.
  7. ^ BGH, judgment of June 23, 2009 , Az.KZR 21/08, full text.
  8. ^ BGH, judgment of November 19, 2008 , Az. VIII ZR 138/07, full text and press release No. 211/08 of November 19, 2008.
  9. ↑ BGH, judgment of October 28, 2009 , Az. VIII ZR 320/07, full text, Rn. 35 and press release No. 220/09 of October 28, 2009.
  10. ↑ BGH, decision of February 18, 2003 , Az. KVR 24/01, full text - "Verbundnetz I" and press release No. 23/03 of February 18, 2003.
  11. ↑ BGH, decision of February 2003 , Az. KVR 25/01, full text - "Verbundnetz II" and press release no. 23/03 of February 18, 2003.
  12. ↑ BGH, judgment of March 24, 2010 , Az. VIII ZR 304/08, full text.
  13. ↑ Gas will be significantly more expensive in autumn , Spiegel.de: September 21, 2011
  14. ↑ Gas price development ( Memento of the original from September 3, 2011 in the Internet Archive ) Info: The archive link was automatically inserted and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. , steckdose.de September 13, 2011 @1@ 2Template: Webachiv / IABot / www.steckdose.de
  15. ↑ confirmed by the Düsseldorf Higher Regional Court .
  16. ↑ Global gas glut unhinges natural gas and crude oil prices , Finfacts March 2, 2011
  17. ↑ BAFA Statistics "Volume and Export of Natural Gas - Development of Cross-Border Prices from 1991"