Wholesale energy prices increased significantly from December 2007 as oil prices climbed steadily throughout the year eventually peaking at $147 barrel in July 2008 (Some ‘experts’ were predicting that oil would hit $200 dollars a barrel towards the end of the year). However, the impact of the “credit crunch” drove oil prices down to below $60/barrel towards the end of the year, less than half of their peak in July, and Gas and Electricity prices soon followed.
Arguments you hear from suppliers:
Suppliers argue that in 2008 when prices started to rise they did not pass on the increases straight away, but British Gas raised gas prices by 35% and electricity prices by 9% in 2008 just 6 months after a 16% increase – the only decrease we have seen so far since is a 10% reduction.
Suppliers argue that they have ‘brought’ energy in advance at higher prices. All of the ‘big 6′ suppliers are vertically integrated and the majority of them have enough power generation to cover their supply businesses so they don’t have to purchase from the market regularly (although retail will argue they do).
While suppliers cannot adjust their prices on a daily basis for household / domestic supplies like they can and do for the commercial sector due to the numbers involved, they have had plenty of opportunities over the last year to pass on more of the falls.
What is the betting that suppliers cut their prices by a token percentage after winter 09/10 when they have maximised their profits (as it is the time of year when we consume the most energy).