Wholesale Gas Prices Down Approximately 73% over last 12 months

Vaio147

According to the BBC website Gas prices are down 73% since last December so why are we not seeing lower energy costs?

MattMattMattUK

Vaio147 said:

According to the BBC website Gas prices are down 73% since last December so why are we not seeing lower energy costs?

Do you mean one of the articles floating around from months ago as there do not see to be any new ones on gas prices today? If you mean the historical ones they almost always conflate spot price and futures/hedged price. Energy suppliers need to buy gas for use on an ongoing basis, they need to buy deliveries hourly/daily/weekly well into the future, those contracts are down, but nowhere near 73%. You also have to factor in that energy prices last December were heavily subsidised, that subsidy has stopped, which means that whilst there has been a drop in wholesale prices the price paid by consumers had not dropped as much due to the removal of subsidy. Finally there has been another year of double digit inflation pushing up other costs separate from the wholesale cost. 

The_Green_Hornet

MattMattMattUK said:

Vaio147 said:

According to the BBC website Gas prices are down 73% since last December so why are we not seeing lower energy costs?

Do you mean one of the articles floating around from months ago as there do not see to be any new ones on gas prices today? If you mean the historical ones they almost always conflate spot price and futures/hedged price. Energy suppliers need to buy gas for use on an ongoing basis, they need to buy deliveries hourly/daily/weekly well into the future, those contracts are down, but nowhere near 73%. You also have to factor in that energy prices last December were heavily subsidised, that subsidy has stopped, which means that whilst there has been a drop in wholesale prices the price paid by consumers had not dropped as much due to the removal of subsidy. Finally there has been another year of double digit inflation pushing up other costs separate from the wholesale cost. 

I think the OP means this.

MattMattMattUK

The_Green_Hornet said:

MattMattMattUK said:

Vaio147 said:

According to the BBC website Gas prices are down 73% since last December so why are we not seeing lower energy costs?

Do you mean one of the articles floating around from months ago as there do not see to be any new ones on gas prices today? If you mean the historical ones they almost always conflate spot price and futures/hedged price. Energy suppliers need to buy gas for use on an ongoing basis, they need to buy deliveries hourly/daily/weekly well into the future, those contracts are down, but nowhere near 73%. You also have to factor in that energy prices last December were heavily subsidised, that subsidy has stopped, which means that whilst there has been a drop in wholesale prices the price paid by consumers had not dropped as much due to the removal of subsidy. Finally there has been another year of double digit inflation pushing up other costs separate from the wholesale cost. 

I think the OP means this.

Ok, thanks. That data is so vague as to not really be useful, there are dozens of UK Natural Gas Futures available, loads of EFTs, I had a look on Morningstar and trading platforms and the closest I can get to that price is the two month delivery future (Feb 24) so I suspect it might be those, although it does not track exactly. 

Mr._Dan

The Office for National Statistics (ONS) says "In the year to October 2023 gas prices fell by 31.0% and electricity prices fell by 15.6%". I've had an email from OVO Energy saying they are bumping up my charges:

Electricity:

Standing Charge (per day) from 53.96p to 54.35p 

Unit rate (per kWh) from 26.85p to 28.12p 

Gas:

Standing Charge (per day) from 29.11p to 29.60p 

Unit Rate (per kWh) from 6.81p to 7.34p

I can reduce that increase by half if I move to their one-year fixed deal. However, if energy continues to fall on average, wouldn't fixed deals be more expensive overall? 

QrizB

MattMattMattUK said:

Ok, thanks. That data is so vague as to not really be useful, there are dozens of UK Natural Gas Futures available, loads of EFTs, I had a look on Morningstar and trading platforms and the closest I can get to that price is the two month delivery future (Feb 24) so I suspect it might be those, although it does not track exactly. 

The BBC chart is a good match to Trading Economics, who chart the month-ahead price. So, in January they chart prices for february, then in Feb they chart prices for March, and so on.

https://tradingeconomics.com/commodity/uk-natural-gas

If you look at the longer duration version of that chart, you'll find wholesale prices now (for January) are roughly double what they were in April 2021. And in April 2021, the Ofgem gas cap was about 4p/kWh, roughly half what it is now. So if you want to play that game, it isn't that prices today are high; it's that prices in January 2023 were abnormally low.

superkoopauk

Another way of looking at it is the market stabilisation charge has increased this week which suggests a larger fall in wholesale from the cap

https://www.ofgem.gov.uk/publications/market-stabilisation-charge-dashboard

ecraig

Vaio147 said:

According to the BBC website Gas prices are down 73% since last December so why are we not seeing lower energy costs?

This time last year it was costing 14p kwh (before EPG) for gas and now it’s more like 7p, less depending on your tariff.
So that sounds like gas prices have come down by quite a lot!

EssexHebridean

ecraig said:

Vaio147 said:

According to the BBC website Gas prices are down 73% since last December so why are we not seeing lower energy costs?

This time last year it was costing 14p kwh (before EPG) for gas and now it’s more like 7p, less depending on your tariff.
So that sounds like gas prices have come down by quite a lot!

Exactly - people need to factor in not only the EPG, but also the £400 that was paid out to households last winter too. Not having that this winter is the reason why martin has been making the point that in real terms, in spite of energy prices being lower, many households will see higher bills this winter than last.