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Factors that Affect the Price of Business Gas in the UK

Gas and electricity prices in the UK fluctuate quite often. If you own a business, this is sometimes frustrating when you only have a fixed budget to spend on monthly utility payments. It is critical to understand that there are factors which inevitably impact fuel prices. But contrary to common assumption, much of what gets added to your bill does not come from a supplier’s desire to increase profit margins.

Knowing what impacts the business gas price in the country will guide you when you need to compare business gas price and tariff offers from different suppliers. You will also be able to predict when prices are about to change and why.

The effect of weather on business gas prices

You may think that it is odd to consider the weather as one of the significant factors that affect business gas prices, but it does. The main reason why climate is a factor is that a large portion of gas supply gets imported from other countries. If distribution lines and transport highways get blocked due to a weather disturbance, supplies will run low, and distributors will charge the cost to the consumer.

Aside from this, extreme weather conditions will also impact the demand for fuel. For example, during frigid winters, expect your company to use more gas for heating. Similarly, during warm months, you will also likely use more gas for keeping your workplace cool. The sudden spikes in demand will, in turn, affect the wholesale gas prices.

Effect of energy generation on business gas prices

Just like any commodity, business gas prices are also affected by the law of supply and demand. For example, when the EU began their initiative for clean fuel, the demand increased, but very few suppliers were able to provide for the requirement. In the same way, some forms of fuel are more expensive because of limited supply. In the coming years, businesses should expect the price of crude oil to keep increasing, so there is a need to look for alternative and renewable sources. If your company can afford greener initiatives and fuel sources, it will be cheaper in the long run.

The effect of business gas infrastructure on prices

Suppliers and distributors maintain plants and facilities that incur additional costs which also impact business gas prices. What you pay for in your energy bill goes to maintaining, operating, and constructing these facilities. Additional charges may also arise when suppliers need to recover internal expenses that reduce their profit margins.

The effect of world events on business gas prices

It is not surprising that specific world events impact gas prices. Political conflicts, war, and natural disasters may impede production and transportation of fuel. When supply diminishes, and the demand continues to rise, companies should expect an increase in prices. If you keep an eye on what happens around the world, especially in areas where crude oil comes from, you can anticipate when prices are expected to go down and when prices will remain high.