Gas vs Oil price increase per unit (kWh) with the New Price Cap Increase

Alfster

Hi,

So there's a recent announcement I'm sure you are all aware of that the price cap will go up by 80% by the first quarter of 2023 (70% by october) - 

https://www.moneysavingexpert.com/utilities/what-is-the-energy-price-cap/

They says this is a strong prediction so is likely to be accurate. I can't find any specifics on kWh hour price increases; it's all reported by average annual increase per household. I have done the following rough sums and based on these wanted some advice on buying heating oil (as this is what we have):

Gas went from 4.07 to 7.37p per kWh which is an 81% increase. 
Electricty went from 20.8p to 28.34p per kWh which is a 35% increase

The overall energy increase on average was reported as 54% in April. 

Since it is going up by a further 80% in Q1 of 2023 that 1.5 times more than April's increase so:

81% increase in gas becomes 122% increase in gas bringing the price up from 7.37p to around 16.4p per kWh
35% increase in electricty becomes 52.5% increase in electricty bring the unit price up from 28.34 to about 43p per kWh

Do these calculations sound about right if it does go up by 80% come the start pf next year? This is NUTS. I am of course assuming the proportions of how much gas and electricity go up by is the same as in April which may not be the case?

Now to my main question. NRG have just quoted me 78p/L of heating oil for August. Online most sources seem to say 1L of oil with a modern boiler is 10kWh so 78p/L is 7.8p per kWh if this is correct. Is it therfore worth getting as much oil now as we can? What are other oil users thinking about these forecasts? If gas could be 16p per kWh in a few months and oil is about 8p currently seems prudent to invest what we can in getting as much oil as we can? I know oil doesn't doesn't follow the same pattern as gas and electricity prices but it always goes up in the winter and if electricity is soaring up as well I don't want to be stuck buying oil in the winter alongside mad electricity prices. I mean we have 1200L now and our tank has a 2500L capacity. We could make sacrifices elsewhere and buy more now. If the price caps were not due to increase I definitely would not be thinking about getting anymore oil until we run out. Would appreciate any advice and what other oil users are thinking. Thanks. 

lohr500

It's a tough decision. By the way, is the £0.78 per litre including the 5% VAT? Best I can get at the moment in my area for 1500 litres is £0.84 plus VAT (with a 4 wheel tanker delivery due to access issues).

I had hoped the oil price would have fallen further a couple of months ago, following the immediate spike after the invasion of Ukraine. But it didn't.

I still think it will fall a bit more in the next 2 months, despite the weakening of the £ to the $, as pressure mounts on OPEC to assist. That being said, I doubt if we will se a return to the sub £0.50 levels from autumn last year. 

Longer term forecasts on crude oil prices don't offer much comfort.

I bit the bullet in June and paid £0.94 per litre for 1200 litres to top up our 2500 litre tank. At the time, with all the uncertainty,  it seemed like a good idea, but with hindsight I should have waited a bit longer.

In the same situation today, I think I would do the same again for peace of mind. Or watch the pricing like a hawk and place an order at the 1st sign of any increase!!

BUFF

Alfster said:

Since it is going up by a further 80% in Q1 of 2023 that 1.5 times more than April's increase so:

81% increase in gas becomes 122% increase in gas bringing the price up from 7.37p to around 16.4p per kWh
35% increase in electricty becomes 52.5% increase in electricty bring the unit price up from 28.34 to about 43p per kWh

Do these calculations sound about right if it does go up by 80% come the start pf next year? This is NUTS. I am of course assuming the proportions of how much gas and electricity go up by is the same as in April which may not be the case?

it is worse, the averaged prediction for next year is gas ~ 16,6p, electricity ~ 60p ...

shinytop

I think oil (and LPG) will follow gas and electricity upwards and won't end up significantly cheaper. 

pinkteapot

shinytop said:

I think oil (and LPG) will follow gas and electricity upwards and won't end up significantly cheaper. 

I've been staggered so far that Calor hasn't yet increased our LPG price. We came out of our first two-year contract last autumn and it did increase slightly for the new two-year contract, but not by that much compared to what's happening to mains gas. I was waiting for a letter whacking the price up before our fill a month or two ago, but none came, so we got filled at not much more than we've been paying since 2019. That fill will last us till around February 2023, so we've totally dodged a bullet when it comes to gas costs until then! 

They haven't even put the standing charge up yet either. 

I fully expect either the /litre price or standing charge (or both) to shoot up before our next fill though. 

Alfster

shinytop said:

I think oil (and LPG) will follow gas and electricity upwards and won't end up significantly cheaper. 

Yeh it’s annoying they make so much information available for gas and electricity forecasting but nothing for kerosene. I would imagine someone in that Cornwall Insight that’s making all these predictions for gas and electricity knows exactly how much oil will be this winter. 

Alfster

lohr500 said:

It's a tough decision. By the way, is the £0.78 per litre including the 5% VAT? Best I can get at the moment in my area for 1500 litres is £0.84 plus VAT (with a 4 wheel tanker delivery due to access issues).

I had hoped the oil price would have fallen further a couple of months ago, following the immediate spike after the invasion of Ukraine. But it didn't.

I still think it will fall a bit more in the next 2 months, despite the weakening of the £ to the $, as pressure mounts on OPEC to assist. That being said, I doubt if we will se a return to the sub £0.50 levels from autumn last year. 

Longer term forecasts on crude oil prices don't offer much comfort.

I bit the bullet in June and paid £0.94 per litre for 1200 litres to top up our 2500 litre tank. At the time, with all the uncertainty,  it seemed like a good idea, but with hindsight I should have waited a bit longer.

In the same situation today, I think I would do the same again for peace of mind. Or watch the pricing like a hawk and place an order at the 1st sign of any increase!!

Thanks for this. Do you think oil will follow gas? Surely not. If gas climbs from 7.37p to 16p that would put oil at £1.60/L in January? 

No that quote from NRG was without VAT. I have attached a picture of the quote for 1500L which is 80p/L I think. 

Do you put an additive in at delivery? Doing some research some people swear by them and other don’t. Most people that swear by them have an agar and we don’t. 

dunstonh

Thanks for this. Do you think oil will follow gas?

Nobody can predict the price.

Do you put an additive in at delivery?

Additives can be useful every few fill-ups but wasteful if done each time, unless you are low user and you do not fill up multiple times a year.   However, it is typically cheaper if you buy the additive and pour it in yourself rather than from the supplier.   

lohr500

I have always added this stuff to our regular kero delivery over the past 4 or 5 years :

https://www.amazon.co.uk/gp/product/B08HLYLFFH/ref=ppx_yo_dt_b_asin_title_o02_s00?ie=UTF8&psc=1

No idea if it makes any difference, but I was always surprised how clean the nozzle and burner were on our old boiler when I serviced it up to a year ago. It may be snake oil, but for the cost it seems like a reasonable punt. Still using it with the replacement boiler and the deliveries we have had since it was installed.

dunsonh is quite right is saying nobody can predict the price, but I see no reason why it should follow the gas price, which if I understand geopolitics, has rocketed due to the uncertainty over supplies from Russia.

Different market drivers. If Russia turns off the tap, big problems. If OPEC get too greedy they will kill the golden goose.

From this website, Russia produces significantly more gas than oil : https://www.worldometers.info/gas/gas-production-by-country/

Alfster

lohr500 said:

It's a tough decision. By the way, is the £0.78 per litre including the 5% VAT? Best I can get at the moment in my area for 1500 litres is £0.84 plus VAT (with a 4 wheel tanker delivery due to access issues). 

Well, it’s gone up already today:

pochase

Here are the KWh prices based on CU predicitions for reference.

As @buff much worse than you thought.