Why aren’t energy prices falling faster?

holywellman283

A quick search of gas wholesale prices and it’s clear to see the prices are falling back in line with 2020 prices. So why are we still paying so much on our energy bills?! Can anyone explain?

BarelySentientAI

Because daily spot gas wholesale price isn't the same thing as domestic energy retail price.

MattMattMattUK

holywellman283 said:

A quick search of gas wholesale prices and it’s clear to see the prices are falling back in line with 2020 prices. So why are we still paying so much on our energy bills?! Can anyone explain?

It depends how you define "wholesale", there is futures, spot price etc. Spot prices can fluctuate, eg. high wind they get a lot cheaper because there is less need for generation from electricity. Other global factors, delivery schedules etc. can have an impact as well. 

la531983

They arent back in line with 2020 prices at all. Between May 19 and Sept 20 wholesale gas never went above 45p. In the last year its never been below 54p

holywellman283

I did say “falling” so looking at the above chart they are getting there. Thanks for your answers though. I still believe they should be doing more to bring down prices. Making profit is fine but not on the ridiculous scale that’s being reported by energy companies.

BarelySentientAI

holywellman283 said:

Making profit is fine but not on the ridiculous scale that’s being reported by oil and gas producers.

Fixed that for you.  What profit % do you think your supplier should be allowed to make?  What profit % do you think other companies make?  Tell us that, and then we'll tell you what they actually do.  Don't fall into the trap of a big headline number, which usually doesn't actually refer to the company you think it does and even a tiny profit seems big when multiplied by a massive number of customers.

The other bit that you are missing is that domestic prices were capped by the government and so we never saw any of the actually high prices in that market feeding through to your bills.

Chris_b2z

I'm not an accountant but the energy sector profits do look fairly healthy to me - 

https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

Qyburn

Chris_b2z said:

I'm not an accountant but the energy sector profits do look fairly healthy to me - 

https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

Not suppliers.

MattMattMattUK

Chris_b2z said:

I'm not an accountant but the energy sector profits do look fairly healthy to me - 

https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

The profit is being made on global operations of oil and gas exploration companies, not on domestic supplies, where the profit is capped at three percent. 

born_again

holywellman283 said:

A quick search of gas wholesale prices and it’s clear to see the prices are falling back in line with 2020 prices. So why are we still paying so much on our energy bills?! Can anyone explain?

Get yourself on Octopus Agile or Tracker. 👍

Chris_b2z

MattMattMattUK said:

Chris_b2z said:

I'm not an accountant but the energy sector profits do look fairly healthy to me - 

https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

The profit is being made on global operations of oil and gas exploration companies, not on domestic supplies, where the profit is capped at three percent. 

According to the report, the Gas Distribution Sector in UK is defined as firms which 'operate the low-pressure gas distribution mains that carry gas from high-pressure transmission pipelines to end users'.
The Electricity Distribution Sector in UK is defined as firms which 'operate the low-voltage electricity distribution networks that carry power from high-voltage transmission lines to end users'.

Which companies in either of those sectors are involved in oil and gas exploration?