What Falling Gas Prices Mean for Bills?

 After skyrocketing all summer, the wholesale gas prices in the UK and Europe has dropped a lot in the past few weeks.

Analysts say they don’t think prices will stay low for a long time.

This is primarily because of how the gas market works.

As gas prices went up sharply on foreign markets at the beginning of this year, energy costs for both homes and businesses increased significantly. So, the government stepped in and paid for some of the costs with money from taxpayers.

Until April, the government’s program to guarantee energy prices puts a cap on the average household’s annual bill at about £2,500. After that, people who drive more will have to pay more for gas.

Since then, wholesale prices around the world have gone down. For example, 550p per therm in August was the highest price for gas to be delivered the next day in the UK. Last week, it fell to only 38p.

So, the government will have to pay fewer subsidies than it would have if wholesale prices had stayed high.

But wholesale prices will likely go up again as the weather gets colder.

Forecasters at Cornwall Insight say that if the government doesn’t do more, the average household bill cap will go up to £3,700 in April and stay over £3,000 until the end of the year. So even though prices have decreased, customers will still have to pay more.

Opportunity For Energy Providers

Most energy providers will only be able to take full advantage of the low prices right now if they buy a lot of their gas ahead of time at a higher price.

There is no set price for gas. It can be sold instead to be used in two years, the next month, the next day, or the following year. The price will depend on what you choose……Read More

Source: California Observer