Why haven't gas prices fallen as the oil price fell?

Tin_of_Beans

When oil prices were rising gas prices rose too because the energy companies said the price of gas was linked to the price of oil.

It seems they are only linked when the price of oil is rising.

Rip-off Britain once again.

[Deleted User]

Gas and electric prices have dropped..get switching, get off prepays, get off standard tariffs

Andy_WSM

sacsquacco wrote: »

Gas and electric prices have dropped..get switching, get off prepays, get off standard tariffs

They certainly haven't dropped in line with oil price drops which was the OPs point, but they never will do. The tie in only seems to work one way as the Op has spotted. The utility companies buy supplies months or even years in advance, so will have paid the higher prices for much of the fuel currently in the system, however, when wholesale prices rise they always up the price immediately, which does seem like a "rip off" but is the only way they can buy future supplies. Labour announced that if they win next years election they would request utility companies freeze prices - fantastic - nice one Labour - all the utility companies are holding out now in the hope they get to keep them at inflated prices with the Government blessing.

tberry6686

If you ran a utilities company, and the next potential government stated that they intended to prevent you from increasing prices, would you drop your current prices to take account of what is likely to be a blip in the price of gas ?

Any company that reduces their price now and is hit with a price freeze in the summer is facing bankruptcy if the price of gas shoots up again as they would have to supply it for less than it costs them. That is why there will be no real reduction in gas prices with this oil price drop.

JezR

Wholesale national gas prices internationally have not moved in the same way as oil. Indeed they actually rose through most of November seasonally. They have though fallen back about 25% in the last 2 weeks, which may be because of the current prospect of a mild winter, some coupling with oil or demand or a combination thereof.

amtrakuk

From what I heard the other day a $20 barrel of crude oil is possible. If so there will be a drop of over $100! However if history runs true, I'm sure the energy companies will have their reasons lined up why there won't be parallel tracking :mad:

Bark01

Oil has less of an impact on bills than a few years ago and there has never been anything like parallel tracking. There are many other factors to take into account. Oil is only seen as impacting the wholesale price which makes up ~50-60% of the final price charged to consumers.

The current wholesale price is low enough to justify price decreases and as people have put above, prices have decreased significantly on products. Engage and switch if you want to see a reduction.

Suppliers won't drop prices on standard tariffs until the threat of a price freeze is removed as the low wholesale price is only forecast to be short term dip.

Pincher

Based on my 20,000/5,000kWh consumption, the difference between Scottish Power March 2015 fix and January 2016 fix is £289 a year, according to Moneysupermarket.com, a 17.7% drop.


The drop has happened in steps over several SP tariffs, in recent months. Assuming the tariff is based on a collection of futures contracts, spread across 15 months, the proportion of older expensive contracts will reduce over time. By June, a one year fix will consist of entirely cheap futures contracts. £899 a year for average consumption must be just around the corner.


Vladimir Putin's "Two years" to work through Russia's economic problems would suggest that he is in cohorts with OPEC, dumping oil to fry the frackers, and the oil price will be back to US$100 in two years, then business as usual.


What I want is a five year fix for £999, before the frackers go bankrupt, supply reduces, and OPEC holds us ransom again.