Millions of households across the UK are growing concerned about the burgeoning energy crisis. The energy market has undergone one of its biggest crises in recent memory in the last six months, and consumers are the ones feeling the pinch as prices skyrocket to never before seen levels.
How did the energy crisis begin?
The crisis began in August due to a range of factors.
A lack of natural gas and an increase in demand as countries emerged from lockdown restrictions meant reserves were quickly expended.
Supply coming in from Russia to Europe was also lower than expected.
The winter of 2020 to 2021 was also much colder than expected, meaning homes and businesses were using more gas.
Reliance on gas was further boosted as output from renewable sources has been low recently.
More than 25 suppliers have collapsed since August, and there are no signs of the Government taking action to quell rising prices.
The new energy price cap, due to be announced next month, will demonstrate just how much prices have risen – and how much the regular consumer will be paying from April onwards.
“The fundamental composition of the oil market highlights significant dislocations with a two million barrel per day deficit of supply to demand, and in inventories at five-year lows.
“It’s not clear whether new oil and gas exploration will deliver the required returns given the global push to stem climate change by decarbonising the economy.
“As such, many oil and gas companies are being run to generate free cash more than growth, and this dwindling supply is colliding with rising demand to push up prices to, in the case of gas, historic highs.
“The next two years could require nearly all of the world’s spare oil and gas production capacity as demand rises above pre-pandemic levels.”