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Why are gas prices so high and what is happening to fuel bills? | Why are gas prices so high and what is happening to fuel bills? |
(2 months later) | |
The cost of gas on the wholesale markets is soaring again, placing renewed pressure on suppliers. | |
It is also having an immediate impact on some businesses' energy bills. | |
Many thousands of households have seen energy prices rise. after their supplier went bust. Millions are set for a huge increase in prices in April when a new cap comes into force. | |
Why are gas prices so high? | Why are gas prices so high? |
There has been a worldwide squeeze on gas and energy supplies. | |
As a result, wholesale energy prices rose sharply and, in recent weeks, have hit their highest levels of 2021. | |
Reasons include: | |
A cold winter in Europe last year put pressure on supplies and, as a result, stored gas supplies were low | |
A relatively windless summer meant it was difficult to replenish those supplies | |
There's been increased demand from Asia - especially China - for liquefied natural gas. | There's been increased demand from Asia - especially China - for liquefied natural gas. |
There are a number of technical and geopolitical issues at play as well, which means many countries across Europe are grappling with the same problems. | |
However, the UK is hit relatively hard hit because it is one of Europe's biggest users of natural gas - 85% of homes use gas central heating, and it also generates a third of the country's electricity. Storage capacity in the UK is lower than in some other European countries. | |
What's happening to household gas bills? | What's happening to household gas bills? |
About 15 million households saw their energy bills rise by 12% in October. | |
This is because the energy price cap has risen. This sets the maximum price suppliers in England, Wales and Scotland can charge domestic customers on a standard - or default - tariff. | This is because the energy price cap has risen. This sets the maximum price suppliers in England, Wales and Scotland can charge domestic customers on a standard - or default - tariff. |
The cap will go up again in April, after a review by the regulator Ofgem. Industry predictions suggest it could go up by another 50%. | |
In Northern Ireland, there is a separate energy market with two suppliers, and prices have risen sharply for consumers here too. | |
Can I get a cheaper deal or fixed tariff? | Can I get a cheaper deal or fixed tariff? |
Usually, consumers are encouraged to shop around when energy bills rise. | Usually, consumers are encouraged to shop around when energy bills rise. |
But at the moment better offers - including fixed deals - are simply not available. | But at the moment better offers - including fixed deals - are simply not available. |
People already on fixed deals are advised to stay put. | People already on fixed deals are advised to stay put. |
Wrapping up to stay warm as energy bills rise | |
How can I save money on my bills? | How can I save money on my bills? |
Instead of searching for a cheaper deal, householders are being encouraged to improve the energy efficiency of their homes. | Instead of searching for a cheaper deal, householders are being encouraged to improve the energy efficiency of their homes. |
The Energy Saving Trust says that changes to our homes and habits could offset the current price rises. | The Energy Saving Trust says that changes to our homes and habits could offset the current price rises. |
How are energy prices affecting business? | |
Many companies face a considerable rise in their bills. That could mean they have to: | |
reduce or pause production - or even cease trading - which could cause job losses | |
pass their increased costs on to customers as higher prices | |
Energy-intensive industries are particularly exposed, but every company that has to pay energy bills - even if it is just to heat an office or shop - will be affected. | |
Across Europe, governments are asking energy-intensive commercial users to turn down factories in order to make savings and ease the knock-on impact. | |
Which suppliers are going bust? | Which suppliers are going bust? |
Since wholesale gas prices started to spike, more than 20 retail energy suppliers have collapsed. | |
They have been unable to pay higher prices for gas, or pass all of the increased costs on to customers. | They have been unable to pay higher prices for gas, or pass all of the increased costs on to customers. |
These failed firms include Bulb Energy, with 1.7 million customers and which because of its size was put into "special administration", where it is run by the government, through Ofgem. | |
What can I do if my energy supplier goes bust? | What can I do if my energy supplier goes bust? |
Nearly four million customers have been affected. | |
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