Will recent events cause an increase in energy bills

tghe-retford

Does anyone know if the recent events regarding:

• European gas supplies dispruted as a consequence of Russia cutting off gas supplies to Ukraine (Source: http://news.bbc.co.uk/1/hi/world/europe/7812860.stm)
• The ongoing cold snap where the long term forecasts has it going on until at least February (after getting a little milder toward the end of this week).
• The ongoing conflict in Gaza pushing up oil prices on a daily basis whilst the conflict continues.

would require energy companies to go back on their word and start a new round of price increases or hold off any decrease in gas and electric prices? Better start budgeting even tighter if it looks like another increase is on the way.

rhiwfield

Yes in the short term and it's already happened
http://www.bloomberg.com/markets/commodities/energyprices.html

This may give the leccy and gas companies an excuse to defer cuts to consumers, but if you're an oil user you will be used to seeing wholesdale prices reflected quite quickly in retail prices

filmnoir

Currently at the moment the one I'd watch for is the cold snap. Take a read on your meters and submit them to your suppliers to get an indication of what you've used. If you pushed for a lower DD over the last few weeks be careful you dont get caught out. It won't effect prices at the moment as long as its not a very very long prolonged snap as Winter Periods are calculated and predicted and ensured the system covers what we could use as a nation. I think we store up to and around enough for approx two weeks consumption which is topped up from the fields and the continent, plus there are emergency procedures to cut of large industrial users in the event of emergencies to ensure domestic suppliers. Again this wouldnt effect price.As for the Ukraine, if the EU or Ukraine don't give in then the European Wholesale will go up and that will mean the percentage we buy from the continent will be in more demand. This could have a negative impact on the prices with suppliers. And in this long running dispute Russia has yet to back down and conviently waited until Europe had this cold snap before flexing its might. OPEC have been looking for excuses since the downturn and have been reducing oil production and bump up prices. Although not directly linked to North Sea Gas Outputs, European Natural Gas is linked and could push prices. Overall it depends on how long the last two last whether suppliers will decide to drop prices, remain or worse case increase.

mech_2

What worries me is not that these events will affect the oil price directly, because they'll probably all be over in a couple of months and utility companies insulate themselves from short-term fluctuations by hedging - negotiating prices well in advance. In the short term the effect on us will be minimal. But my worry is that commodity speculators could consider that oil has hit the bottom of the market and that now is the time to start investing in it again. This might just cause another energy price surge and result in next winter's energy prices going straight back up again. The fact is: it's anybody's guess.

Don't forget the OPEC cuts in oil production either.

alared

Don`t forget the energy companies will use ANY excuse not to cut their prices.

When they increased their prices massively last year by about 50% (2 rises last year) they whined about the price of energy being linked to oil prices.
Well since then oil prices have fallen by SEVENTY % from $147 a barrel to $44.

So if they were telling the truth why hasn`t energy prices fallen by at least 50%?
Now they have another great excuse, "there`s a time lag" because energy has to be bought nine months in advance.
About the end of March we`ll hear them sprouting that they are going to greatly reduce prices by

---

10%
and only then to try and keep the "regulator" off their backs!

mech_2

alared wrote: »

Don`t forget the energy companies will use ANY excuse not to cut their prices.

When they increased their prices massively last year by about 50% (2 rises last year) they whined about the price of energy being linked to oil prices.
Well since then oil prices have fallen by SEVENTY % from $147 a barrel to $44.

So if they were telling the truth why hasn`t energy prices fallen by at least 50%?

Maybe because it doesn't work like that? I don't believe anyone said that it did.

Now they have another great excuse, "there`s a time lag" because energy has to be bought nine months in advance.

Nobody has managed to disprove this either. Trading information is publicly available for gas deliveries months from now. If the utility companies are not buying this gas then who is?

About the end of March we`ll hear them sprouting that they are going to greatly reduce prices by

---

10%
and only then to try and keep the "regulator" off their backs!

You are arguing against your own assertion. No one has been told what the reductions might be yet.

tghe-retford

Thanks for the replies so far. Just read an article from the Telegraph, and they say that if the gas crisis between Russia and the Ukraine keeps continuing to affect the rest of Europe, energy price decreases could be delayed and the decreases at a smaller percentage. The article does say there is a very small chance that prices could increase in the short term, but in my view, considering the current economic climate and the prolonged cold snap, doing so would cause anger and negative publicity.

Source: http://www.telegraph.co.uk/finance/personalfinance/consumertips/4141542/Russian-gas-crisis-could-affect-energy-bills-in-Britain.html

Although I have to say that ScottishPower's move on cutting bills on one of its fixed rate deals is welcome, even though personally I would prefer a cut of more than 10%.

Colin_London

alared wrote: »

Don`t forget the energy companies will use ANY excuse not to cut their prices.

When they increased their prices massively last year by about 50% (2 rises last year) they whined about the price of energy being linked to oil prices.
Well since then oil prices have fallen by SEVENTY % from $147 a barrel to $44.

So if they were telling the truth why hasn`t energy prices fallen by at least 50%?
Now they have another great excuse, "there`s a time lag" because energy has to be bought nine months in advance.
About the end of March we`ll hear them sprouting that they are going to greatly reduce prices by

---

10%
and only then to try and keep the "regulator" off their backs!

The current crisis stemming from the Ukraine / Russia dispute, and the current plunging temperatures sound like fairly good excuses to me.

Whereas there has historically been a link between gas and oil prices, it is gas-specific issues such as these that lead to divergences. Gas Wholesale prices have surged upwards today (I believe it was an 18% increase in just a few hours this morning).

Unfortunately I think we can wave goodbye to those large reductions that were forecast before Christmas - the Government will probably drop their pressure on the energy companies given the changed situation.

The UK only gets 2% of its supplies directly from Russia so we are not likely to run short imminently. However, we will not be immune from wholesale price hikes due to the surge in demand for the remaining gas from elsewhere in Europe, and I think these will certainly delay any reductions we had previously hoped for.

tghe-retford

Colin_London wrote: »

Unfortunately I think we can wave goodbye to those large reductions that were forecast before Christmas - the Government will probably drop their pressure on the energy companies given the changed situation.

I have come across a Reuters report which states that:

Failure to resolve a gas row between Russia and Ukraine could drive up gas prices, Britain's Centrica (CNA.L) warned on Tuesday...

Source: http://uk.reuters.com/article/allBreakingNews/idUKB65613320090106

This is the same British Gas who warned late last year that a prolonged cold spell would also push up energy prices. It all depends on how prolonged the Russia/Ukraine gas crisis and the cold spell lasts, but if this does go on for a while, I had better start tightening the budget further.

filmnoir

Theyve compleley stopped the supplies though the Ukraine now. http://news.bbc.co.uk/1/hi/world/europe/7814743.stm

[Deleted User]

copied:

KIEV (AFP)--Russia on Wednesday halted all shipments of its gas bound for European customers that pass through Ukrainian territory, a spokesman for Ukraine's state gas company Naftogaz told AFP.
"Russia stopped all transit through Ukraine" at 7.44 a.m. (0544 GMT), said Naftogaz spokesman Valentin Zemlyansky.
"Russia has left Europe without gas," he added.