Gas prices drop to pre-Ukraine war levels – but when will YOU feel the benefits?
The benchmark price of gas in the UK has fallen by almost half since mid-December, as mild weather sees demand cool off.
By Ollie Corfe
11:45, Tue, Jan 3, 2023 | UPDATED: 15:40, Tue, Jan 3, 2023
UK government releases new energy saving advert
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
Putin’s war in Ukraine sparked a global energy crisis that raged throughout 2022. But as 2023 begins, UK gas prices are now actually lower than when the conflict began, sparking debate as to when – or whether – households will get some relief from extraordinarily high energy bills.
- POLL – Would you install a hydrogen-ready boiler in your home?
- Up to 400 Russians killed in huge missile strike, claim officials
The wholesale price of gas in the UK has now fallen below its level at the outset of the war in Ukraine, according to the latest data from Trading Economics.
During the first days of 2023, natural gas futures fell below 170p per therm – the typical unit of heat energy – down from over 500p in the immediate aftermath of Putin’s invasion and a high of above 650p in August.
Gas is an essential commodity for the UK, heating up to 80 percent of British homes and used in the generation of just under 40 percent of the country’s electricity, according to the Office for National Statistics.
Restrictions to the global supply of natural gas as a result of sanctions imposed on Russia – formerly the world’s largest exporter of the commodity – sent market prices soaring.
Energy prices have been the main driver of the cost-of-living crisis – inflation peaking at a 41-year high of 11.1 percent in October. The positive news from gas markets has provoked calls to reduce the burden on households.
The Chancellor has said the Energy Price Guarantee will go up in April (Image: GETTY)
Britain to be hit by biggest recession of all the world’s largest economies in 2023
Britain is set to be hit by the biggest recession out of all the world’s largest economies, according to analysts at insurer Allianz Trade. The UK’s economy is predicted to shrink by 0.9 percent in 2023 while business insolvencies will rise by 15 percent.
What does it mean for the British economy? Find out HERE.
Experts have attributed the price drop of around 50 percent since mid-December to unseasonably mild weather causing a fall in consumption.
Alongside this, Europe’s gas stocks reportedly being 90 percent full as a result of a successful build-up of reserves ahead of winter and the possibility of a Russian gas pipeline through Poland reopening have calmed supply fears.
According to the UK’s energy regulator Ofgem, wholesale prices make up the largest share of household energy bills, accounting for between 40 to 45 percent of the total.
However, the question of when the benefits of a market price drop will be passed on to businesses and homeowners is up for debate.