While we’re all enjoying some Autumn sunshine, the mild weather has ensured that short-term gas and power prices are set at historic lows for the winter season.
The demand for gas and heating will be low thanks to warmer temperatures seeing the UK gas imports in abundant supply, driving the gas and power prices down.
An analyst at Thomson Reuters Point Carbon explains:
“Temperature forecasts indicate mild weather for early October, meaning sluggish residential demand while supply is picking up. We expect more Norwegian and UK gas this week. LNG sendout remains robust and there could be Russian gas via the Dutch gas pipeline from October 1.”
Cue more pressure from the government on suppliers to cut prices as the wholesale costs drop. We imagine the Conservatives will use this ploy to gain the favour they’ve fast been losing over cuts to renewables subsidies and a heightened interest in fracking despite public opposition.
Amber Rudd has already written to the Big Six earlier in the year to push for lower energy prices. We expect there’ll be a high profile campaign coming up.
While wholesale costs may have dropped 2p per therm below the current winter pricing, we can’t expect to see the knock on effect on retail prices.
As we’ve explained before, wholesale costs only account for 46% of the overall cost with taxes and network costs making up the rest.
Perhaps Rudd can focus on cutting government levies on energy prices rather than the rather more popular renewables subsidies.
For advice on long-term gas pricing or for an instant business energy quote, give Business Juice a call on 0800 051 5770, email us at quote@businessjuice.co.uk or use our contact form.