Cost of gas going down since August, why such high bill?

[cantheydothisreally]

Seen on C4 news tonight 'cost of gas has been tumbling since August'

Why, oh why are we being charged so much for gas?

Same with petrol, RAC suggested we are payment about 10p + above what we should.

Profiteering!!!

I may not be right but I think there are two gas prices and they aren’t that linked. Todays price and a price for gas delivered x days in the future. Due to uncertainty about both supply (war) and demand (weather). The longer term price is much higher than todays and that is what prices are set from.

I heard this on the news yesterday and that it was partly due to the mild Autumn meaning reserves are better than expected.
my DDebit increased by £30 on the same day!

It’s because the gas you’re using now was bought months ago when the price was higher.

Thanks for the replies

I wonder will they pass these savings on to customers at some point?

Although just heard Shell have made record profits 🤷‍♀️

Domestic energy supply companies buy in bulk at wholesale prices.

If when the price was rising in August they had a forecast that orices could increase by a further 50% over the next year, they might negotiate a deal to buy their next 6 months worth of gas at a price that is 105% of the price on the day that they did the deal, and if their forecast was correct they saved their customers £££.

If their forecast was wrong and the price drops, they are still locked into the 105% contract so their customers won't get the benefit of the price drop until their next 6 month deal.

The lower gas prices you saw will feed into the January price cap, as there is an Energy Price Guarantee you won’t see any difference. Although prices are lower, they aren’t low enough to reduce the EPG. The government is still paying billions to subsidise it, albeit lower than they were expecting fortunately.

The reason for the lower prices are that gas storage facilities are full, and it’s quite warm, so demand is lower. If it gets cold, prices will fly up again, so it’s not the end of the issue.

it’s actually next winter that suppliers are worried about now, if the second half of the winter is cold and gas storage is depleted, prices will rocket again - this is expected hence why longer-term price curves are still high. Unfortunately a short-term fall doesn’t manifest itself immediately, or significantly in terms of price.

Ultimately we are at the mercy of the weather !

I wanted to correct my guidance above. Day to day falls in prices (spot prices) are basically irrelevant - suppliers buy energy based on forward prices which are still really high, they haven’t come off to the same extent. There might be occasions when day ‘spot’ prices are low because demand is lower (warmer weather, full gas supplies) but this does not mean energy companies only pay this amount for it - their long-term contracts use a forward price.