Falling oil price?

bigcraig73

If oil prices start to fall, will electricity and gas prices also fall?
Why are prices being predicted to rise by so much is it because they think the price of oil will continue to go up or are there other reasons?
If the price of oil is the key thing is it's price going to keep going up?

I would be very grateful if anyone can answer any of these questions before I commit to a capped tarriff.

Thank you

asandwhen

I think the reason is that prices have only risen once since oil prices were around the $50 a barral mark - it seems to take alot longer to filter into gas/electric prices - if oil prices keep falling and end up at the expected $70-$80 a barral next year hopefully we will see a fall in gas and electric prices by next summer. The point is that you use more in the winter so its best to fix now to get todays prices during this winter. Scottish power fixed rate is fixed until August 2009 so hopefully by then we will be back to this point. Saying that though oil prices could still carry on going up and we could end up with a massive hike when the fixed rate comes to an end in august next year.

freddykrueger

bigcraig73 wrote: »

If oil prices start to fall, will electricity and gas prices also fall?
Why are prices being predicted to rise by so much is it because they think the price of oil will continue to go up or are there other reasons?
If the price of oil is the key thing is it's price going to keep going up?

I would be very grateful if anyone can answer any of these questions before I commit to a capped tarriff.

Thank you

I could be wrong but don't think the energy hikes are down to the price of a barrel of oil - we should really keep an eye on things like the price of natural gas which in the past month has actually fallen along with oil.....prepared to be corrected though!!

asandwhen

freddykrueger wrote: »

I could be wrong but don't think the energy hikes are down to the price of a barrel of oil - we should really keep an eye on things like the price of natural gas which in the past month has actually fallen along with oil.....prepared to be corrected though!!

The price of gas is linked to the price of oil so when it rises so does gas - I think that the reason it takes longer to filter through to gas is because these companys disolve the extra costs for a time but then pass them onto the customers - your energy company couldnt keep changing its prices like the petrol forecourts do.

freddykrueger

Quoted from a recent news report......



The prices of oil and gas have been linked historically because factories used to heat their premises using oil and gas together.

The contracts they signed for supply of fuel linked these two fuels to regulate price.
Suppliers say they are tied by the wholesale market, but consumer groups say the price link between oil and gas should no longer exist.
Energywatch described the link as "toxic" and said bills would fall significantly if they were decoupled.

asandwhen

[FONT=verdana,Helvetica,sans serif]Why are gas prices linked to the oil price?[/FONT][FONT=verdana,Helvetica,sans serif]

There are a number of historical and technical reasons, not least the fact that oil and gas are often produced from the same reservoir and can substitute for each other across a range of domestic and industrial uses. However, one of the main reasons is that oil has been traded for longer than gas. Indeed, gas was seen as a waste product initially and was simply burnt at the wellhead. When gas was first used as a competing fuel, it was important that it remained competitively priced for those customers switching from oil derivative products. Indexing gas prices to those of oil therefore ensured that gas remained competitive with its substitutes. It also ensured that there was not a distortion in exploration and production activities, whereby investment was diverted to pursuing only oil, but not gas (as happened in the UK in the late 1970s and early 1980s) or vice versa. Nonetheless, the value of gas is only about two thirds of that of oil per unit of energy delivered.
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