With a volatile market currently in our hands and the soaring prices of bills for businesses, the biggest single cost bill is the price of energy. The price of energy is determined by its wholesale cost. IT contributes to 40% of electricity and up to 70% of a gas bill, and these costs are continuing to rise.
Last year, the market skyrocketed to unprecedented highs and saw the collapse of 25 energy suppliers. These highs have continued into the new year and the plummeting temperatures mean there has been a heavier reliance on gas and energy supplies.
Russia has had restrictions on Europe and it is difficult to predict what will happen with future energy prices. As warm weather approaches, energy prices tend to become lower however, this hasn’t been the case since pre-pandemic.
Europe is still in a gas shortage crisis. Russia has decreased its supply of gas, pushing prices to record highs at the end of 2021. Since then, a pipeline that sends gas from Russia to Germany (the Yamal Europe Pipeline) has been in reverse for 3 weeks.
Brent crude has increased following expectations of tighter oil supplies. The EIA reduced its global oil supply forecast and reported a fall in US oil inventories in their Weekly Petroleum Status Report. Demand is also expected to strengthen as global economies begin to recover from the new Omicron variant.
Current price standings:
Brent Crude = $84.47/bbl
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