Explaining rising gas prices - why and what to expect
With rising energy prices hitting the market lately, we wanted to break down what's happening and why.
You’ve probably seen that energy prices have been hitting the headlines recently; from the change to the domestic price cap, to reports of highest gas prices in fifteen years, it’s a complicated picture and one we’re sure all of our customers are following with interest – understandably so.
At CNG, we pride ourselves on being transparent and part of that means presenting market conditions and any implications to you, as plainly as possible. With that in mind, we’re breaking down why price increases are happening and what this means for you.
What is causing the rise in energy prices?
The simple answer is, many varied factors. We’ve broken it down into some easy to digest info that helps you understand why price changes are currently largely out of the hands of suppliers, us included. This is a global issue and has a knock on effect for both the commercial and the domestic markets.
- The Bank of England Monetary Policy Committee has revised the inflation forecast to 4%, which is double the usual 2% target. Energy is a significant factor in inflation.
- Gas prices are at the highest level since 2005 and the highest level for the summer period ever.
- Prolonged winter weather conditions in Europe drained storage earlier in the year at the same time as warm and dry weather elsewhere increased demand for gas because hydro and wind power generation has been impacted.
- Fewer Liquified Natural Gas (LNG) tankers are entering Europe due to Asia paying higher prices.
- Closure of a Norwegian pipeline significantly impacted supply.
- Europe’s stock of gas is much lower than normal in the run up to winter. Russia has not booked capacity through the Ukraine, and a number of supply side outages have also impacted on volumes.
- The timelines for pumping gas through the new Nord Stream 2 pipeline are uncertain.
Will your energy prices go up?
Most likely, yes. Wholesale gas prices are up by around 300% compared to this time last year. These changes are impacting supply and prices for all consumers and simply, there’s no way to avoid this increase in pricing being passed on to you, no matter who your supply is with. If you’re concerned about the increase and being able to afford your gas, please speak to your supplier. If that’s us, we’ll always do what we can to advise, support and assist you.
We appreciate it may be tempting to switch on sight of new pricing, and while that’s always an option, it is vital to note that these pressures and market volatility will impact all suppliers. To CNG customers, be assured our team will work with you to help in any way we can.
You can read more about the market pressures (domestic and commercial) and causes via these links: