Despite Vladimir Putin's war in Ukraine triggering a global energy crisis, UK gas prices are currently lower than they were when the conflict began, The Express reports. This has caused many to question whether households will get some relief from incredibly high energy bills.
According to the latest data from Trading Economics the wholesale price of gas in the UK has fallen below its level at the start of the Ukraine conflict. In the first few days of 2023, natural gas futures fell below 170p per therm - the unit of heat energy - whereas it cost over 500p immediately following Putin's invasion, and rose to over 650p in August.
Gas is used to heat up to 80 percent of British households, and is used in just under 40 percent of the country's electricity according to the Office for National Statistics. Prices were sent soaring due to restrictions imposed on Russia, which is the world's largest exporter of the commodity.
The catalyst for the cost-of-living crisis has been energy crisis, with inflation reaching its highest point in 41 years off 11.1 percent in October. The good developments from gas markets has triggered calls to reduce the cost on households.
Experts have said the drop of around 50 percent since mid-December is due to mild weather, which has caused a fall in consumption. Also Europe's gas stocks are reportedly being 90 percent full because of the build-up of reserves ahead of winter, and that a Russian gas pipeline through Poland reopening has steadied supply fears.
UK energy regulator Ofgem say that the largest share of households energy bills are made up by whole prices, accounting for between 40 to 45 percent of the total sum. But the issue of when the benefits of a market price drop will be passed on to business and homeowners is still not determined.
UK suppliers have to buy energy ahead of time, so Ofgem's calculation are based on wholesale prices far before when gas is delivered. Speaking to BBC Radio 4’s Today programme on Tuesday morning, Kathryn Porter, energy consultant at Watt-Logic, said: “Basically what we’re paying now is a reflection of the price suppliers were paying several months ago when they did their hedging programme.”
“We’ll get the benefit of this – hopefully, if it's sustained – later on this year,” she added. Other analysts, however, are less optimistic.
The sustainability of the lower gas prices is uncertain, as government over the past decade have been closing the UK's gas storage facilities, which has left the country vulnerable to price spikes on international markets.
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