Why energy price hikes are here to stay
Energy prices won't be coming down any time soon. Here's why.
The price of energy won’t be coming down any time soon – here’s how your business can weather the storm.
Small businesses and consumers have been hit with hefty energy hikes in 2018, with more predicted to come later in the year.
While the weather’s hot, it’s not too much of a problem. But come winter, many households and business premises are going to find their energy costs have escalated unexpectedly.
Wholesale price increases
Driving the price hikes is an increase in wholesale costs. The UK relies on increasingly expensive imports to fuel its energy market, and anticipated disruption to that supply has driven up prices.
Nowhere is this clearer than in our imports of OPEC oil. The Organisation of the Petroleum Exporting Countries, which includes Venezuela, Iran, Libya and Saudi Arabia amongst its ranks, is predicting big disruptions to its oil supply later this year.
Political turbulence in Venezuela has stemmed their flow of oil by 700,000 barrels per day already, with further disruptions expected. Renewed fighting in Libya is lowering their production, and Trump’s threat to sanction Iranian oil threatens that supply too.
And while Saudi Arabia’s energy minister is claiming that production by the other OPEC member-states can be ramped up to cover the shortfall, so far the stock market has disagreed. Traders continue to snap up oil stocks in spite of the rises, in anticipation of an even bigger oil price later in the year.
How to keep your costs low
There’s only two ways of reducing your energy bills: lowering your energy use and getting onto a fixed-rate contract - and quickly.
You can lower your energy use with simple things like switching off computers at night, using energy efficient lighting, and turning off heating and air conditioning during out-of-office hours. But if you run an energy-intensive business, like a chip shop or restaurant, there’s only so much you can reduce that bill by.
Fixed-rate energy contracts can shield you from the worst of the price hikes by fixing prices for up to 24 months at their present rate. And while there’s not much you can do about spiralling energy costs in the long term, a fixed rate will at least mean you aren’t hit by surprise bills this winter.
At XLN Energy, we offer low-cost, fixed-rate deals exclusively for small business customers. You can find out more at https://www.xln.co.uk/energy.