Analysts have predicted that wholesale gas prices will continue to fall in 2016. While this seems like good news, will we see the knock on effect on business energy prices in the near future?
Prices dropped as a mild winter in the UK meant a lower demand for energy along with lower prices globally thanks reduced demand for liquefied natural gas (LNG) in Japan causing an oversupply worldwide. With increased global production, specifically in the USA thanks to shale exploration, it looks like the glut will continue.
Ben Wetherall, the head of Gas at ICIS, explains: “With a deep liquid gas market and plenty of capacity to regasify LNG imports, Britain is anticipated to be a key beneficiary of the global LNG oversupply.”
But before we all start celebrating the imminent price crash of gas, we need to look more closely at how gas prices are made up. While a drop in wholesale costs is certainly a win, suppliers will be slow to reduce prices and the decrease will be small, due to the hefty taxes placed on energy by the government.
Wholesale costs only make up 35% of your total energy prices so with this is mind, business energy rates won’t plummet like the media has suggested. Add in the fact that demand for gas has now spiked dramatically now the icy weather has set in and we expect suppliers will keep prices stable and maximise on demand.
We advise customers to compare deals with a reliable business energy broker and make sure they’re not paying too much.
Business Juice can help. We don’t operate supplier bias or have quotas to fill, we just find our customers the best business energy deal on the market for the length of time they are comfortable with.
We’ll even terminate your old contract making your switch as pain free as possible and you don’t have to lift a finger.
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