Spiralling gas prices are causing chaos for companies and consumers. Smaller energy firms are going bust as they struggle to pay higher wholesale costs. And customers are likely to see huge increases in energy bills. It’s a bleak picture for many struggling families.
Here I take a look at why gas prices are surging, what the UK government might do about it and the options you have as a consumer if you face an increased gas bill.
Why are gas prices rising?
Wholesale gas prices for energy companies are up 250% this year according to the BBC. This is mainly due to last year’s extra cold winter across Europe and Asia pushing up demand. Prices have rocketed across Europe as there is less gas than usual held in storage.
To add insult to injury, there have been further UK-specific factors causing gas prices to rise. UK wind farms saw a dip in production this summer as the weather was unusually still. And a recent fire has knocked out a power line supplying energy from France to the UK.
Why are energy companies struggling with gas prices?
Energy companies are struggling financially and many could go bust. That’s because they are facing increased costs but can’t currently charge more to customers. In the UK, energy regulator Ofgem sets a price cap on how much energy firms can increase their standard tariffs. Also, many customers are on fixed yearly deals that don’t end for a while.
Four smaller energy companies have already gone out of business. And there are likely to be more companies in trouble before the crisis is over.
Will the UK government help?
Will the UK government step in to help struggling energy companies with gas prices? They are currently in talks and it’s a tricky decision.
Injecting cash into failing companies is a risky and very expensive option. However, to sit by and do nothing could plunge more families into fuel poverty over the winter. If smaller energy companies go bust, consumers will suffer as they are pushed onto higher tariffs with other suppliers.
What options do you have if gas prices rise?
If you are coming to the end of your deal and your gas price is rising, you could:
- Use an online price comparison website to see whether you can get a cheaper energy deal. Some energy firms have cheaper gas prices than others.
- Try to use less fuel over the winter. There are still grants available to help with loft and wall insulation. It’s also worth checking your thermostat timings as we head towards winter. Could you turn off the heating 30 minutes earlier before bed or 30 minutes before you head off for work?
- See if you can work back in the office. It’s hard to save money on fuel if you’re working from home. But you may be able to switch your heating off during the day if you go back to working outside the home.
- Make a budget to see if you could save money to offset the cost of the rise in gas prices. Do you have any subscriptions you’re not using or could you save money on your grocery shopping?
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