What Is Happening To Energy Prices?
It’s the question the whole of the UK is asking… what the HELL is happening with energy prices?
As news reaches us all that the October 2022 energy price cap is expected to involve a whopping 78% increase on top of the 54% increase that already hit households in April 2022, OneHeat explores why energy prices are rising, and what you can do about it.
How much are energy prices are rising by?
The latest forecasting is that prices will likely rise another 78% in October 2022, which in real terms means that households will pay around £3,500 on typical use this Winter. Worse still, further rises are expected in both January and April 2023, compounding money misery for millions of households in the UK.
Energy prices have already risen twice in the last 12 months, including a 12% rise in October 2021, and the 54% rise in April 2022.
Take a look at the graph below that helps illustrate just how massive these increases are.
Why are energy prices rising?
That’s a complicated but important question to ask.
Every few months, the energy sector regulator (Ofgem) reviews the cost of energy prices, and places a cap on the per-unit price that energy companies can charge consumers. The idea is that this way, the public can’t theoretically be held to ransom over their bills by The Big Six energy companies, and no single company can create a total monopoly for themselves, further hurting the market.
But in the last few reviews, a number of global and domestic issues has meant that those price caps are sky-high in comparison to what they were.
It’s a bit of a perfect storm, and includes (but is not limited to):
- The Russia/Ukraine conflict.
- Russia is a huge supplier of natural gas to Western Europe, and some say that Europe has become dependent on it. But since the conflict in Ukraine began and Western countries lined up to support Ukraine, Russia has arguably been using its gas supply to the West as leverage.
- The lingering after-effects of the Covid pandemic on the economy.
It’s all caused a monumentally huge spike in wholesale gas energy prices, some of which is being passed on to us as consumers.
How can I guard against rising energy prices?
At this point in the year, that’s going to be a tough challenge as the cheaper fixed rate deals that were available in 2020 and early 2021 have all but vanished from the market.
Those who are dependent on the grid for their gas and electricity and who remain on a variable rate (which includes almost as much as 70% of the UK) are at the relative mercy of the price rises.
This has raised the question of whether or not to fix your household’s prices now in the hope that this guards against even further rises.
Doing so MAY be sensible, but if something else happens and gas prices take a big tumble, people may see themselves stuck paying more than they need to. Essentially, it’s a gamble in either direction.
At OneHeat, we don’t have a crystal ball and can’t give you advice about whether or not to fix your energy prices or not.
But we can talk about how to run your boiler more efficiently so you use less gas and spend more money, or give you a great deal on a more energy efficient boiler.
Don’t forget, having an older boiler that is less efficient may be adding hundreds of pounds to your gas bill. In fact, in light of the huge rises in energy prices, this may now be thousands.
Check out our new boiler prices to see if you can get a more efficient boiler to take the edge off rising energy prices this Winter.
