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The gas fuel crisis

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If you’ve noticed your gas bill soaring in recent weeks, or your energy supplier has gone bust - you're not alone. The wholesale price of gas has skyrocketed, leaving the industry in a sorry state. Ofgem has confirmed that gas bills are set to increase by 54% in April 2022, which will likely push an extra half a million people into fuel poverty. Since this is a very worrying time for many, we’re looking at what’s going on, and what you can do to try and minimise what you’re paying out.

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If you’ve noticed your gas bill soaring in recent weeks, or your energy supplier has gone bust – you’re not alone.

The wholesale price of gas has skyrocketed, leaving the industry in a sorry state.

Ofgem says that gas bills are increasing by 54% in April. This will likely push an extra half a million people into fuel poverty.

Since this is a very worrying time for many; we’re looking at what’s going on; and what you can do to minimise what you’re paying out.

How much have gas prices increased?

The wholesale price of gas has increased by 250% since January 2021. It rose 70% from August to September, according to trade association Oil & Gas UK.

At one point during the autumn, wholesale gas prices soared by a mind-boggling 400%!

The full impact of the price rise hasn’t been fully been felt by consumers yet. This is because of the consumer energy price cap. This cap limits what companies can charge per unit of gas.

Since companies have not been able to pass on the full costs to consumers, many of them have gone bust.

That’s certainly not to say that consumers haven’t been feeling the pinch too.

The price cap rose by 12% at the start of October to reflect increasing prices. Ofgem has confirmed it will go up by around 54% in April 2022.

So how much more will I be paying for my gas?

Energy firms can increase your bills by 54% when the new price cap is introduced in April.

The amount your bill will go up depends on how much energy you use, and what tariff you’re on.

Households on standard tariffs will see an average increase of £693 – from £1,277 to £1,971 per year.

Around 4.5 million prepayment customers will see an average increase of £708 – from £1,309 to £2,017.

Is the government offering any support?

So far, the government says it will offer extra help worth a total of £350.

In April, you’ll get a one-off £150 discount on your council tax bill, if your home is in band A-D.

In October, if you live in England, Scotland, or Wales, you’ll receive a £200 rebate on your energy bills. This is basically a loan. You’ll have to repay £40 a year for five years, starting in April 2023.

The warm house discount scheme is also set to be expanded. This may give households on low incomes up to £140 off their annual electricity bill.

Why have gas prices increased so much?

So, what’s to blame for these eye-watering price rises? There isn’t a single answer to this. Instead, there’s been a perfect storm of factors which have resulted in the current crisis:

We have a heavy reliance on natural gas

The UK has become more and more reliant on natural gas. It’s currently used to heat 85% of homes in the UK. We also heavily rely on it to generate our electricity.

Aimee Broseley, Professor of Energy Policy at Sheffield Hallam explains that natural gas makes up about 40% of our energy; oil about the same; renewables (primarily wind) about 15%; followed by a small amount of nuclear energy; and an even smaller amount of coal-based generation.

This reliance on gas has left us vulnerable to price hikes.


Dare we mention the B word?!

Yep, Brexit has played its part in the crisis. Although gas prices are high in Europe, the member states can trade gas between themselves. This helps to balance out price hikes. We no longer have this luxury, and again, are more vulnerable to price hikes.

Up-tick in global demand following Covid-19

As countries (especially across Asia and Europe) reopened their economies following the Covid-19 pandemic; the demand for global gas rose sharply.

We had a long cold winter

Thanks to climate change, we also had a much longer and colder winter in 2020-2021.

According to the EU’s Copernicus programme; it was the coldest April in the UK since 1922; and the coldest in Europe since 2003.

Since 85% of UK homes rely on gas to heat their homes; the colder temperatures caused an increase in our demand for gas. This created an unusually large reduction in our supplies – and we don’t really have enough gas storage either…

We don’t have enough gas storage

The UK has a much lower gas storage capacity than other countries in the EU. We only hold 1% of Europe’s total available storage.

The Netherlands can store more than nine times the amount that we can. And Germany’s stores are 16 times the size. And when supply is low and demand stays the same, prices rise.

Labour MP Stephanie Peacock has accused the government of leaving the UK “vulnerable” to the gas fuel crisis. She says it was a mistake to close our main gas storage site.

In short, the UK’s been increasingly operating a “just-in-time model”. This means it’s more vulnerable to price fluctuations in the wholesale gas market.

Asian and South American nations are buying more gas

A solution to our shortfalls would usually be to buy more liquified natural gas. But Asian nations including China; Japan; and South Korea; have been buying huge quantities of LNG to try and replace their reliance on coal.

If you’ve read our blogs: What is Boris Johnson taking to COP26; and Key outcomes of COP26; you’ll know that coal is being phased out.

We’ve had problems with our other sources of power

To add to our woes with gas; we’ve had more than our fair share of struggles with most of our other sources of power too!

We’ve had power outages at our nuclear reactors; a major fire at the site which brings electricity from France to the UK; and we’ve produced less wind and solar power than expected this year.

The reduction in energy production from other sources caused an increase in demand for natural gas to produce electricity. It even forced us to reopen coal-burning stations to keep up with the demand.

The Nord Stream 2 gas pipeline’s approval was suspended

The Nord stream 2 natural gas pipeline goes under the Baltic Sea. It was designed to double the amount of gas that Russia sells to Europe.

It took 5 years to build and was finished in September 2021. However, in November, Germany’s energy regulator suspended approval of the pipeline, saying it was non-compliant with German law.

This suspension of the pipeline caused wholesale gas prices to rise by 17% in the UK and Europe.

Why are gas companies going bust?

As we mentioned earlier, companies are collapsing amid the ongoing surge in gas prices. This is because they are being forced to sell gas for much less than they bought it for (because of the price cap).

Thirty energy companies have ceased trading since the start of September. This has left over four million households reliant on Ofgem to maintain their supplies; and protect their credit balances while it moves them to a new supplier.

What happens if my supplier goes bust?

If your supplier goes bust, don’t panic – your gas supply won’t just be cut off!

Ofgem will keep your energy flowing and will find you a new supplier. You won’t need to do anything. Your accounts will be moved to the new supplier; and any customer credit balance that you may have should stay in place.

The trouble is, you can’t choose the new supplier. You might be put on a higher tariff than the one you were on previously.

Whilst it’s possible to change suppliers once the transfer is complete; you’re unlikely to find a better deal for the foreseeable future.

Price comparison site Uswitch has acknowledged that with prices as they are; the usual advice to shop around doesn’t stand now. People already on fixed deals are advised to stay put.

Are there any ways that I can save money on my energy bills?

Yes! Instead of searching for a cheaper deal (which currently don’t exist!); the Energy Saving Trust is encouraging householders to look at maximising the efficiency of their heating systems. and making changes to their homes and habits to help offset current price rises.

Let’s look at some of the steps you can take:


Reduce your energy bills by investing in a new efficient boiler

When gas prices are sky-high, you need a boiler that’s going to give you the most bang for your buck.

The last thing you want is your old inefficient boiler wasting your precious gas by burning more than it needs to.

A new efficient boiler needs to burn less gas to keep you comfortable and will therefore save you money on your energy bills.

According to The Energy Saving Trust, you could save as much as £340 a year on your gas bill if you’re trading in an old-style non-condensing boiler for a new condensing one.

If you’re wondering whether it’s time for a replacement, you might like to read our blog: Does my boiler need replacing? And remember that it needs to be sized correctly to optimise its efficiency.

And once you have an efficient boiler, keep it that way by getting it serviced annually by a Gas Safe engineer.

Reduce your energy bills by reducing your heat loss

When you’re paying a premium to heat your home, that last thing you want is for all of your lovely warm air to be escaping.

But that’s precisely what will be happening if you don’t have decent insulation, and you don’t deal with draughts.

According to the Energy Saving Trust (EST) topping up your loft insulation from 120mm to 270mm will save around £12 a year on energy bills.

If you have uninsulated cavity walls, adding cavity wall insulation could save you up to £150 a year off your energy bills (based on a typical 3-bedroom semi-detached house).

If you have solid wall insulation, you can save around £260 a year off your energy bills (based on a typical 3-bedroom semi-detached house).

Draught-proofing around windows and doors could save you around £20 a year, and if you have an open chimney, draught-proofing your chimney when you’re not using it could save around £15 a year.

For more detailed tips on saving money on your energy bills, check out our related blog here.

Check if you’re eligible for the Warm Home Discount

You could get £140 off your electricity bill for winter 2021 to 2022 under the Warm Home Discount Scheme. The money is not paid to you – it’s a one-off discount on your electricity bill, between October and March.

You may be able to get the discount on your gas bill instead if your supplier provides you with both gas and electricity. To find out if you’re eligible, you need to contact your supplier.

Check how you manage your energy account

It’s often worth managing your account online and paying your bills by Direct Debit, because some suppliers will charge you more for sending out paper bills and for receiving payment in other ways.

Get a smart meter installed

Getting a smart meter installed or sending regular meter readings to your supplier will help to ensure that your bills are accurate and not being overestimated.

Talk to your energy supplier

If you’re really struggling with your bills, please don’t struggle alone. You need to talk to your energy supplier. They must agree to a payment plan that you can afford.


Unfortunately, gas prices are on the rise. So, it’s more important than ever to optimise the energy efficiency of your heating system.

If you’re wondering about replacing your current boiler with a more efficient model, but are confused about the future of gas boilers, check out our related blog here.

For tailored advice on your options, contact one of our friendly team at The Heating People today.

Useful links:

Ofgem statement on price increase from April 2022

inews: Why are energy prices rising?

The Guardian: How UK energy policies have left Britain exposed to winter gas price hikes

The Conversation: Causes of the energy crisis

The Eco Experts: Reasons for the UK gas price increase