Rising gas prices are causing chaos for companies and consumers. Small energy companies are going bankrupt because they are struggling to pay higher wholesale costs. And consumers are likely to see a massive increase in energy bills. This is a vague picture for many struggling families.
Here I take a look at why gas prices are rising, what the UK government can do about it, and what options you as a consumer have if you face an increase in gas bills.
Why is the price of gas rising?
According to the BBC, the wholesale gas prices of fuel companies have increased by 250% this year. This is mainly due to increased demand across Europe and Asia due to last year’s extra cold winter. Prices have risen across Europe due to lower-than-normal gas in storage.
To add insult to injury, there are more UK-specific reasons that increase gas prices. Wind farms in the UK have seen production decline this summer because the weather was unusually stable. And a recent fire broke a power line supplying power from France to the UK.
Why are fuel companies fighting over gas prices?
Fuel companies are struggling financially and many could be ruined. Because they are facing increased costs but cannot charge customers more at present. In the UK, energy regulator OffZem sets a price for how much fuel companies can raise their standard tariffs. Also, many customers have fixed annual contracts that do not expire for some time.
Four small energy companies have already gone out of business. And more companies are likely to get into trouble before the crisis ends.
Will the UK government help?
Will the UK government take steps to help energy companies struggling with gas prices? They are currently under discussion and this is a clever decision.
Cash injection is a risky and very expensive option in failed companies. However, sitting and doing nothing can plunge more families into fuel poverty in the winter. If small energy companies go bankrupt, consumers will suffer because they push with other suppliers toward higher tariffs.
What are your options if gas prices rise?
If you are coming to the end of your contract and your gas price is rising, you can:
- Use an online price comparison website to see if you can get a cheap energy deal. Some power companies have lower gas prices than others.
- Try to use less fuel in winter. Grants are still available for scaffolding and wall insulation support. It’s also worth checking your thermostat times as you head into winter. Can you stop heating 30 minutes before bed or 30 minutes before going to work?
- See if you can work back in the office. It is difficult to save money on fuel if you work from home. But if you go back to work outside the home, you may be able to turn off your heating during the day.
- Create a budget to see if you can save money on gas costs. Do you have any subscriptions that you are not using or you can save money on your grocery shopping?
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