Gas prices hiked by 900% since January – and it may only get worse

Emmanuel Macron says gas prices are providing 'strong pressure'

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Brits are feeling the pinch already ahead of the coldest months of the year, as energy prices are soaring. This has hit Brits at a time when the cost of living has increased – with many waiting on Chancellor Rishi Sunak’s Autumn Budget for further hikes. The cost of gas has increased by a staggering 900 percent compared to January of this year and with forecasters predicting an icy winter, the UK’s gas reserves will be taking another hit.

A plethora of issues has stuck the gas industry in the past few months, forcing energy prices to skyrocket.

With a series of outages in the UK’s electricity system forcing more reliance on gas power plants – prices are not looking to dip anytime soon.

Forecasters are warning of a cold winter ahead, which could lead to gas shortages and exceptionally high prices.

Some firms have warned customers that prices could increase by up to 30 percent this winter.

Now one expert has said the price of gas has increased by a staggering 900 percent since January.

Read More: Gas price crisis POLL: Do you think your energy supplier will go bust?

Chemical Industries Association boss Stephen Elliott told Politico: “If you and I were buying gas in January, we would be paying about 40 pence a therm.

“If we were buying it three weeks ago, we would be paying £1.60.

“And if we were unfortunate enough to have to buy gas last Tuesday morning — that was £4 a therm.

“So, if you take the two extremes, January and last Tuesday morning — that’s a 900 percent increase.”

Smaller suppliers are struggling, with several collapsing in recent weeks as the price of gas surged.

In total 12 suppliers have gone bust, including Utility Point and People’s Energy, Avro and Green.

Bulb is seeking a bailout, while other firms are advising customers to stay put for now – with comparison sites like Uswitch unable to offer deals.

Uswitch’s website has a message which reads: “Now might not be the best time to switch.

“Rises in wholesale energy costs mean suppliers are raising their prices. This has an impact on deals we can offer through Uswitch.”

And things may only get worse in the short term, with experts cautioning a colder than usual winter could drive supplies to “dangerously low levels.

Kim Fustier, an analyst at investment giant HSBC told The Guardian: “A colder-than-average winter could push storage levels to dangerously low levels, raising risks of price spikes and/or shortages in some countries.

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“The UK’s situation is more precarious than its European neighbours because of its very limited storage capacity.”

The UK is one of Europe’s biggest consumers of natural gas, with data showing 85 percent of homes use gas central heating.

The lack of gas is down to several factors, including a cold winter last year worldwide causing an increase in gas demand.

Europe’s stocks were left lower than usual, Asia also saw a colder winter and Russia pipeline gas supplies have sunk below normal levels.

While this would ordinarily not be a problem, lockdown has seen major suppliers having to catch up on maintenance they couldn’t carry out during lockdown.

Calm weather has also contributed, reducing the amount of energy created by wind power.

So what next?

To try and tackle energy companies going bust, Business Secretary Kwasi Kwarteng has issued proposals to the Treasury requesting hundreds of millions of pounds to bail them out.

However, there has not yet been a response from the Treasury on whether they will carry out Mr Kwarteng’s request.

A Treasury spokesperson said: “We will do what is in the best interest of both consumers and taxpayers.”

Prime Minister Boris Johnson is currently on holiday in Spain, however, his official spokesman said he was still “closely involved” in the issue.

The spokesman said: “As you would expect, ministers from BEIS are working across government, including with Treasury, on this important issue, the challenges that are currently facing industry in light of global gas prices, and that will continue.”

And what if your energy company goes bust?

Tashema Jackson, consumer champion and energyhelpline.com has given advice for consumers.

Your energy supply will not stop

If you hear that your supplier is about to go bust, don’t worry, the lights won’t suddenly go off. Your supply will continue, and you’ll be able to heat your home and use your electrical goods.

Don’t cancel your direct debit

It’s important to not cancel your direct debit. The energy regulator Ofgem will move your energy account to a new supplier, and if your direct debit has been cancelled, you will have to go through the process of setting it up again.

Your credit is protected

Don’t feel the need to claim back any credit you’ve built up with your energy supplier, as you will not lose this money if your supplier goes out of business. Any surplus cash you have in your energy account will be automatically transferred to your new supplier.

Get hold of your bill and take a meter reading

Whether you are on paperless or paper billing, get hold of your last bill. It can help make sure you can challenge any queries you have when your supplier is changed. Taking a meter reading also helps with your account being up to date.

Will I pay more than my current tariff

When you are moved to a new supplier, you will be put on a special tariff and there is no obligation for this tariff to match the rate you were previously paying, so you may end up paying more. However, you will not be charged more than the default rate set by the price cap. In the current market, that is one of the best rates you can get.

You don’t need to stay with your new supplier

If you are unhappy with the supplier you’ve been moved to, don’t feel obliged to stick with them. You will be able to move penalty-free to another supplier. It is, however, worth noting that finding a cheap deal at the moment can be challenging, as many providers are only offering expensive fixed tariffs and, in some cases, not offering deals to new customers.

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