Business energy: the only way is up!
A number of factors influence business energy prices. In this article, we explain what these factors are and why business energy prices are expected to rise in the future.
Why are energy prices going up?
Currently, there are a range of factors pushing energy prices up:
- The price of wholesale energy (the energy the suppliers buy before they sell it on to you) is increasing.
- Oil prices are hitting over $100 a barrel (compared to $80 a barrel near the start of the year).
- Oil prices are going up due to high demand from rapidly developing countries such as China. The crisis in Libya has cut off their oil exports, further increasing prices. Japan's demand has also dramatically increased since their nuclear power plants were turned off after the tsunami.
- Business gas prices tend to mirror oil prices and, as the UK imports most of its gas, we are feeling the effects more severely than other European countries.
As a result of these factors, winter 2011 gas prices are currently 40% higher than last year.
What's going to happen to prices in the future?
We can't know exactly what will happen to business energy prices in the future - not even the suppliers can know! But there are clues as to what we can expect:
- The big 6 energy suppliers are under pressure to cap domestic energy prices until summer 2012. However - there are no similar proposals for business energy.
- It's possible that, in order to recoup the lost profits from domestic energy customers, energy suppliers will be forced to put their business energy prices up.
- Our oil supplies in the North Sea are running out - the UK will become more and more reliant on expensive, imported energy.
What can small businesses do now?
The overriding message in the news right now is that all energy consumers should be to run a business energy price comparison and switching tariffs if they can.
You can ease the strain of impending business energy price rises by:
- Using less energy where you can
- Comparing your business energy prices as soon as your contract comes up for renewal.
- Avoiding the roll-over trap.
In reality, small businesses are far more at risk from huge price increases by getting caught in the energy roll-over trap. But if you call us when your energy contract comes to an end, we could save your business thousands of pounds a year in a 15-minute phone call.