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Businesses gaining from gas price drop

Irish businesses have benefited from a fall of more than a quarter in wholesale gas prices in 2014, according to a new report.

Decreased demand due to good weather and increased supply from places like Qatar are behind the fall, the report by gas and electricity supplier Vayu says.

The price drop has had a significant impact on business energy overheads linked to wholesale gas prices, Vayu said.

Vayu estimates that large industrial and commercial Irish businesses would have seen a 9pc to 18pc fall in the overall cost in their gas, depending on how much of their gas consumption is based on wholesale prices.

The majority of such businesses get some element of their gas based on wholesale prices.

"The outlook for gas supply remains very positive heading into 2015.

"If mild weather conditions prevail in first quarter and there are few unplanned outages, we could enter next summer with record high storage levels. This will have a direct impact on gas prices," Vayu senior energy analyst Joanne Daly said.

"A dark cloud of supply risk loomed over Europe throughout most of 2014, driven by a potential cut in Russian gas supply through Ukraine.

"Fortunately, this did not materialise and gas flows to Ukraine have been stable toward the end of 2014.

"However, the market is keeping a close eye on the situation as we enter 2015 and continue to factor in a geopolitical risk premium."

The report said average wholesale electricity prices this year fell 14pc on the average seen in 2013.

It said producing power in oil and gas plants is expected to become cheaper in 2015, which could reduce wholesale electricity prices further.