Piebalgs: energy prices to remain high

  • 2008-06-11
  • Staff and wire reports

Piebalgs said energy prices would not stabalize anytime soon.

RIGA - European Energy Commis-sioner Andris Piebalgs has warned that he only sees "bad news" in the energy sector and that energy prices 's for oil, fuel, natural gas and electricity 's would remain at their current highs for some time.
He also downplayed fears of a dependence on Russia's natural gas that to a large extent have paralyzed decision-making in the European Union and individual member states such as Latvia, saying that the "energy dependence" between the EU and Russia was mutual.

Speaking to the Dienas Bizness daily in an interview, the Valmiera-born Piebalgs said that price stabilization for energy resources would not appear in the near future.
"I believe that the oil prices will start falling at some moment, yet the disaster is in the fact that gas prices usually follow the oil prices with some delay, and electricity prices change after some time as well. This means that we cannot believe that the energy resources could cost less," Piebalgs said.
Worse, the energy commissioner said that 1 lat per liter of gasoline was a real possibility.
"It could be so. A pound for a liter of fuel in the U.K. once seemed impossible, but now this level has been reached. I hope that by the time the aforementioned price becomes real for Latvia, a certain amount of time will pass," he said.

"Oil prices are very high at the moment, and they do not have any grounds to be that high. Yet we cannot fully predict further changes in oil prices," he said.
The interview with Piebalgs was published on June 6. Over the two days June 5 's 6 the price for a barrel of oil soared 13 percent on the New York Mercantile Exchange to reach $139.
Piebalgs advised better efficiency and economy.

"Unfortunately no better advice than energy efficiency can be given, by using the fuel in smaller amounts. The need obliges all EU states to support citizens with investments enhancing energy effectivity. A better tax regimen for energy efficient cars" is one idea, he said.
Commenting European-Russian energy relations, Piebalgs stressed that the dependence everyone speaks about goes both ways and that Russia's energy exports to Europe account for 50 percent of the country's national budget.

He said Russia provides the EU with 23 percent of its natural gas, while Norway provides another 18 percent.
"I do not believe that Europe is very dependent on Russia as far as natural gas, at least it is not as huge as pictured," he said. "Russia has an important role, but not a decisive one."
Piebalgs said that it is important that the Baltic states implement a united, sensible and pragmatic energy policy. If Estonia invests in shale, Lithuania builds a new nuclear power plant, then a small gas-fueled plant will cause no problems in Latvia.

"In other words, construction of one gas power plant should not be overdramatized," he said.
Latvian ministers and lawmakers are currently debating whether to build a gas-fired plant or one that would run on coal. Some say that the country needs both, though in the past Piebalgs has warned against building too much capacity.
Speaking to Dienas Bizness, he said, "I am not opposed to any kind of plant, but if you look strategically, the diversification possibilities should be considered. If there is no possibility to diversify, the fuel that is accessible should be used."

Latvia already has two power plants running on natural gas, and Piebalgs admitted that building a third would be the easiest option for Latvia.
"Such a station can be constructed fast. It requires relatively low investments, and it may be operated with base or peak capacities. I see pragmatism in this decision," the commissioner said.
Crucially, Piebalgs said that there are alternatives to Russia's natural gas: the first is hooking up to the gas pipeline stretching from Norway, and the second is liquefied gas.