Price Summary – what’s happened to energy prices over the last 4 years?

As we are all currently facing having to pay double what we used to pay for our business electricity and business gas, we have put together a very quick bite-sized summary of what has happened and what have been the main influencers over the last 4 years.

2019 – 2020: Prices dropped as most of the world was in lockdown during 2020 due to COVID pandemic and demand reduced massively. None of the usual supply and demand models were relevant and we had way too much gas stored and with industry locked down demand fell sharply.

2020 – 2021: Prices started to rise as the world started to wake back up after lock down measures were eased and all of a sudden demand started to outstrip supply and our storage levels were massively depleted. The energy market was just not quick enough to wake back up to meet pre-COVID demand and it put a massive strain on supply.

2021 – 2022: Russia did the unthinkable and invaded Ukraine in September 2022. Just after this they cut off the gas supply to Europe and created the start of the worldwide Energy Price Crisis. We bounced from COVID straight into the energy price crisis.

2022 – 2023: Prices started to stabilise by late 2022 and early part of 2023, as Europe started to get its gas from alternative sources. The issue we were having was meeting high winter demand in the autumn of 2022 and also trying to build stock to take them through into the following winter. This trend continued into the early part of 2023 and May 2023 saw the market drop to the lowest point buoyed with lower demand and a very good level of LNG shipments hitting European shores to help build stocks.

At the time of writing (23/08/2023), we are starting to see prices go back up again as we await news on Australian LNG producer going on strike. Experts say this will account for a 10% shortfall of global LNG shipments if the strike happens.

Fortunately European gas storage is above 90% for the first time in years and the strike affects will only be felt in short term prompt pricing (at the moment).

The prompt/short term price is the most volatile price and can be the most expensive to purchase on the wholesale market. It basically reacts to what is happening today or tomorrow. If there is a short term supply issue, we can see some huge rises on the prompt market.

This is why we always advise our customers to agree contracts at least 30 days before the end of their fixed term. If you leave it late you risk seeing much high rates born from the prompt price.

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We produce an easy to understand price trends report every Monday morning. You can see this report by clicking here.

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