In the last 12 months, the energy market has fluctuated by as much a 3.5p/kWh or 30-40%. Why has this happened and what is the best thing to do with my up-and-coming renewal?
COVID-19 has impacted pretty much everything over the last 18 months and energy bills have been heavily impacted by its wrath. Lockdown 1 was a massive shock to the industry and resulted in the aviation, hospitality and pretty much all non-essential businesses closing. As a result, consumption both in the UK and Europe fell sharply with prices following suit. By June 2020, the market had fallen well over 1p/kWh.
By Summer 2020 oil use had fallen by almost 10million barrels a day and OPEC had moved to remedy the excess oil output by cutting the production of oil. This resulted in price falls slowing and eventually stabilizing. With the rule of six coming into force in September, prices started to rise a began a trend that has not stopped since.
Other factors have assisted rises including the oil tanker blockage in the Suez Canal, optimism of a “return to normal” and the vaccination rollout progress throughout the UK and Europe whilst the continued roadmap out of lockdown at a time where energy consumption normally falls is seeing prices rise at an alarmingly high rate.
Looking forward it is difficult to see a reduction in prices any time soon. Reasons for this are that core commodity prices are still rising including Brent Crude Oil, Carbon, and LNG and with the Winter period only a few months away the likelihood of prices falling is not impossible but looks slim.
NFU Energy