BBC Radio Norfolk interview: The drop in oil price and the potential effects on customers bills

Craig Lowrey, one of our Senior Consultants, was live on BBC Radio Norfolk’s airwaves discussing the recent drop in oil prices, following a dispute by Russia and Saudi Arabia over reducing oil production.

Craig told listeners that last Friday in response to the Coronavirus hitting global demand for oil, there was a failure to agree on the cuts to production. As a consequence, Saudi Arabia announced it would reduce prices for its oil. This has seen oil prices drop off quite sharply with a lot more volatility in the last few days.

Discussing what this will mean for energy customers’ bills, Craig said: “We have seen a drop in the wholesale prices for gas and electricity, and that has the potential to feed through into household and business bills for energy.”

On this point, the presenter Chris Goreham asked if it was just a perception that energy bills rose faster than they fell. Craig agreed that is partly perception. However, he explained that many companies buy their energy contracts in advance, so price moves take time to filter through as a result. Going further, Craig explained that those on fixed-term tariffs would only see the potential drop in prices when “those deals come to an end”. However, given the general uncertainty in the market, the potential for lower bills will certainly help customers, Craig said.

The presenter took the opportunity to ask Craig about the effects of the Coronavirus on the markets. He explained it was a rapidly evolving situation, with the oil market in uncharted territory, due to the uncertainty surrounding impacts of the virus. Speaking further, Craig said that until we get “clarity that uncertainty is going to dominate”.

Don’t worry if you missed it, you can catch the whole interview here, with the conversation starting at 2:19:57.

You can also read more on Craig’s thoughts on the topic in this blog.

Related thinking

Business supply and services

Have we given up on competition in the retail market?

“Q: How does 2pm on Wednesday sound? A: Assuming we still have a functioning energy market that'd be great”.  It’s not really what you expect to see in an email at 5pm on a Friday when trying to arrange a call. But then these are certainly not normal times. In this Energy Perspective, we will...

Commercial and market outlook

Be the change you want to see – my takeaway from this year’s BIEE conference

On 13 September, I spoke at the British Institute of Energy Economics (BIEE) Energy for a net zero society conference. The conference considered the legacy of the Covid pandemic and how the means of recovery will influence the pace and direction of the net zero transition. The timing of the...

Business supply and services

Power prices for SME’s reach record highs

According to our latest Pricing in the SME power market report, Small and Medium Enterprises (SME) power prices have continued to rise in Q221, reaching the highest level since our records began in Q212. On average, prices have increased by 24.8% year-on-year at the PC3-6MWh and PC3-15MWh consumption points and...

Regulation and policy

How will consumers take to Market-wide Half Hourly Settlement?

Ofgem published its decision to implement the move to Market-wide Half Hourly Settlement (MHHS) on 20 April. This confirms plans to move to new settlement arrangements over a four and a half year time period, with the Elexon-led Design Working Group’s Target Operating Model to be used as the blueprint. Meters...

Announcement

BBC interview | Robert Buckley discusses Ofgem’s price cap

Robert Buckley spoke to Felicity Hannah on BBC Five Live’s Wake up to Money programme ahead of Ofgem’s announcement to increase the default price cap by £96 to £1,138. Robert explained that a combination of a rise in wholesale prices and policy costs for renewable electricity, as well as the inclusion of £23.69...

Commercial and market outlook

A look back at 2020

As we take our first steps into 2021, we look back at the biggest developments in the UK energy markets in 2020, setting us up for the significant year ahead. As 2019 turned into 2020, we were still waiting for the Energy White Paper (EWP), a document which had been...

Business supply and services

Responses to COVID-19 boost energy suppliers’ reputations with customers

2020 is, unfortunately, proving to be a year that we will never forget. It has been a year of change and adaptability for us all, including domestic energy suppliers, with many suppliers having had to adapt to increasing numbers of customers in distress while operating at reduced capacity and/or with...

Regulation and policy

Finding best practice in Ofgem’s compliance engagement outcomes

The past few months have involved a shake-up of the status quo for all of us, with the ramifications of COVID-19 having a disproportionate impact across society. Being an essential service, energy has been at the forefront of policy-makers minds as suppliers have sought to ensure that those most severely...