Why gas prices are soaring and what it means for UK households

Several energy suppliers have bene put out of business and factories have been forced to stop production as the price of gas has soared in recent weeks.

Energy companies could receive emergency loans from the government as struggling firms battle to stay afloat amid a surge in wholesale gas prices in the UK.

Prime Minister Boris Johnson said “we’ll have to do everything we can” to prevent those companies from failing – with smaller suppliers facing potential ruin as price hikes mean they cannot fulfill their promises to customers.

Why gas prices are surging

OGUK, representing the offshore oil and gas industry, reported wholesale prices for gas have surged 250% since January – with a 70% rise since August alone.

The rise in gas prices has been blamed on a number of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

Following a meeting on Sunday with the regulator Ofgem, Mr Kwarteng said “well-rehearsed plans” were in place to ensure consumers were not cut off in the event of further failures.

However, he is expected on Monday to come under pressure from the big suppliers for a major Government support package to help them through the crisis.

The Financial Times reported the industry wants the creation of a so-called “bad bank” to absorb unprofitable customers from firms that fail.

What Boris Johnson said

Boris Johnson said: “I think people should be reassured in the sense that yes there are a lot of short-term problems not just in our country, the UK, but around the world caused by gas supplies and shortages of all kinds.

“This is really a function of the world economy waking up after Covid.

“We’ve got to try and fix it as fast as we can, make sure we have the supplies we want, make sure we don’t allow the companies we rely on to go under. We’ll have to do everything we can.

“But this will get better as the market starts to sort itself out, as the world economy gets back on its feet.”

He added: “It’s like everybody going back to put the kettle on at the end of a TV programme, you’re seeing huge stresses on the world supply systems.”

‘Worrying time’ for customers

Following a weekend locked in emergency talks, Mr Kwarteng acknowledged it was a “worrying time” for customers, but said he was confident supplies could be maintained.

He said consumers would be protected from sudden price hikes through the Government’s energy price cap.

However that puts pressure on the suppliers – particularly smaller companies – who are unable to pass on the increases in wholesale gas prices to their customers.

Four firms have already folded and there are fears that more could follow.

Will my energy bills rise?

It depends what kind of deal you are on. Prices were already set to rise for the 15 million households in Great Britain that are on their supplier’s default tariff because of a major hike in the energy price cap.

Regulator Ofgem had been criticised for the rise, which comes into force on October 1, however the price cap is now one of the better deals on the market.

Many other energy customers are locked into year-long deals which will fix their price for the 12 months of the contract. If your contract is coming to an end shortly you will probably have to change to a more expensive deal.

Ofgem has said consumers can expect an average price rise of £135 this winter.

What should I do if my energy supplier goes bust?

Sit tight. Ofgem will move you to a new supplier. Take pictures of your meters, and download or print out your bills from the old supplier.

If Ofgem moves you to a supplier or a deal you are not happy with, you can then shop around.

If your energy supplier owes you money, your money is protected and you should get it back.

Other than this you will not have to do anything. Ofgem will automatically move you to a new supplier. This might take a few weeks, but your new supplier will contact you when it is sorted.

You can continue to use your gas and electricity as before in the meanwhile.

Will fewer energy suppliers mean a worse deal for households?

Probably. Price comparison websites are showing little in the way of good deals at the moment. Regardless of what wholesale prices are doing, less competition could well mean fewer good deals in future as well. However this remains to be seen.



Source link

جواب دیں

آپ کا ای میل ایڈریس شائع نہیں کیا جائے گا۔ ضروری خانوں کو * سے نشان زد کیا گیا ہے