What’s happening to energy prices? Well we all know that they are going up and the trend is still upwards. June is when we reached record price levels for the past few years and for those businesses that are coming out of 2 & 3 year contracts the increase in electricity price is going to sting.
What’s causing the increase in energy prices? Well factors such as subsidies towards the generation of green power combined with grater transportation costs is one factor. However, as a good proportion of our electricity is generated by gas and as this fuel rises in price so does the price we pay for electricity.
The price of Oil rose by 7% during the last week of June and gas by almost 4% increasing the cost pressure on the energy market.
Nervousness in the Oil market also does seem to be the major driver, mainly through the USA’s impact on Iran’s ability to market its oil output and some other international restrictions on supply. The announced production increases by Saudi did not seem to provide the market with real confidence. So, increases in the price of oil will continue to ripple through to gas and gas on to electricity. There are forecasts that Brent Crude could rise towards the $100 a barrel mark by the end of the year, a level not seen since August 2014.
What can we do to limit the increase in energy costs? Well we will all have to accept that we will be paying more for our gas & electricity than we have in the past. That said there are measures that all businesses should be taking and that is to take a good hard look at where and how they are using their energy. Businesses may not be able to control how much they are paying for energy but they can influence how much they use. Measures such as investing in LED lighting will reduce the amount of electricity used.
Also there is no substantive commercial reason to delay signing gas and electricity supply contracts for two to three years and protecting your future price now.