Oil prices are dropping, so why are bills still high?


Video transcript

Oil prices dropping… why are my bills still high?

Last week, in particular, gas and power prices were very low.

Gas for one day was 35p/th similar to what we were used to

The drop is because Britain is now a major transit point for gas to flow into western Europe and our prices are at a discount to theirs.

The warmer weather in the summer months makes this a low demand time for energy.

We would normally see the filling up of gas storage in preparation for winter.

While short-term gas prices in the UK are currently low, the UK’s lack of gas storage means we cannot capitalise on this in the long term as we simply do not have the capacity to store the cheaper gas.

It would be incredibly expensive to increase our storage to sufficient levels, even when Rough was operational It would have only covered 10 days of winter.

This means over the Winter we will again become dependent on European gas and therefore gas prices are likely to be much higher than we are seeing currently.

The Price Cap, which determines the maximum that a supplier can charge a customer per kwh, is based on long-term prices, and so, the current gas rates will have little to no effect on bills

Related thinking

Energy storage and flexibility

Waiting to connect: the problems and solutions for network connection queues

The number of grid applications has risen significantly in recent years, resulting in increased pressure on the electricity networks to facilitate new connections. In its Energy Security Strategy, the UK government set out ambitions for 95% of electricity to be sourced from low carbon generation by 2030, and for the...

E-mobility and low carbon

2022’s most exciting ‘Charts of the Week’

Some of our team have looked back throughout 2022 and picked their most exciting ‘Chart of the Week’.​Their choices include exploring green tariffs, wholesale gas prices, CfD allocation round 4 and the MHHS Implementation Levy.  It’s My Birthday – Two years of Dynamic Containment Picked by Tom Faulkner, Head of...

Regulation and policy

Energy Market Alerts service and key alerts

Australia’s energy market is rapidly changing, with increasing renewable generation, exiting thermal plants, and new technologies on the horizon, such as hydrogen. Policymakers and regulators at the Federal and State levels are grappling with this transition. As a result, it may seem there are a bewildering number of regulatory changes...

Low carbon generation

62% of respondents think there is a 2 in 5 chance the GB electricity system will be decarbonised by 2035

Our latest Net zero transition: Future of electricity markets online training course was held on 15 – 17 November, where we asked delegates for their thoughts on several aspects of the future of the GB electricity market. The polls can be seen in our newest REMA portal - a hub...

Business supply and services

Predicted fall in the April 2023 Price Cap but prices remain significantly above the EPG  

Our latest Default Tariff Cap (price cap) forecasts for April – June 2023 (Q223) have dropped by over £600 since the last widely released figures on 17 October1. The average consumer is now predicted to pay £3,702 from April, when the Energy Price Guarantee (EPG) comes to an end. Forecasts...

Home supply and services

Cornwall Insight comments on the announcement of the October price cap

If you are a consumer seeking support with their energy bills, please read our blog here: https://www.cornwall-insight.com/support-for-consumers-concerned-about-rising-energy-bills/ The rise in the Default Tariff Cap (price cap) was unfortunately inevitable, as UK bills continue to be the victim of an unstable and unpredictable global market. While there is still some time until...

Home supply and services

What is the price cap?

We release our price cap forecasts in the hope that we can encourage policy change.  We have created this infographic to help people understand the price cap and how we make our predictions. We would also like to clarify that we cannot influence Ofgem to change the amount of the price cap.  You...

Home supply and services

Cornwall Insight release final predictions for October’s Price Cap

If you are a consumer seeking support with their energy bills, please read our blog here: https://www.cornwall-insight.com/support-for-consumers-concerned-about-rising-energy-bills/ Cornwall Insight are releasing our final predictions for October’s Default Tariff Cap (Price Cap) prior to Ofgem’s announcement on Friday 26th August. Predictions show a typical household1 will be paying £3,554 equivalent per year...