Gas Prices Set To Rise
Worried about your energy bills and thinking about switch suppliers? Now maybe a good time as uSwitch explains…
The cost of wholesale gas has reached a six year high as temperatures continue to fall across Europe.
The price of wholesale gas is the main influence on domestic energy prices in the UK, leading to concerns that the UK could face rising energy costs once again.
UK energy suppliers cut their prices by an average of £34 earlier this year, following a drop in wholesale costs. However, the recent weather has seen that drop reversed, and UK gas supplies are once again under pressure.
ScottishPower boss Neil Clitheroe said at the time his company cut prices by 5%,
Although there has been a short-term fluctuation in the wholesale gas market that has allowed us to pass on today’s reductions, the global demand for energy is increasing faster than its supply.
This will inevitably lead to higher energy costs in the long-term.
Wholesale charges represent around 55% of the typical gas bill.
The cost of wholesale gas was also cited for a series of price rises that saw £224 added onto the average energy bill between 2010 and 2011.
Wholesale gas is becoming scarce as countries in the EU are forced to draw upon their reserve supplies due to widespread shortages throughout Europe.
Steven Fitzpatrick, chief executive of Ovo Energy, told the Telegraph that if wholesale gas prices stay unpredictable, domestic prices could also rise.
If wholesale prices rise faster than expected, it’s obvious retail prices will rise faster than expected too. But it’s not easy to predict whether prices are back up for long.
