According to Chris O’Shea, chief executive of British Gas company Centrica, the present energy crisis might last another two years. He told the BBC that we shouldn’t expect rates to fall “anytime soon” and that there’s “no reason” for them to.
Mr. O’Shea expects the present situation of the energy markets will last for the next 18 months to two years. He did, however, argue that many people’s fears about bills increasing by more than 50% to more than £2,000 were “misplaced.”
Mr. O’Shea also asked for more to be done to assist customers who are suffering with rising expenses, particularly those who would be forced into fuel poverty.
The ‘transition’ to green energy is also creating high pricing
Whereas we know that the global recession caused by the pandemic, as well as lower gas supplies around the world, have played a significant role in these rising costs, Mr O’Shea also mentioned how there has been a notable increase in global demand for gas as nations move on to using greener alternatives – which has pushed up demand even more and sent prices skyrocketing.
“As we approach closer to net zero, gas is an important transition fuel.” As a result, as other nations shut down coal-fired power plants, there isn’t an oversupply of gas that can be turned on rapidly.”
In addition, Mr. O’Shea voiced reservations that the present issue might have been averted or at least lessened if the UK had its own gas reserves or expanded supply from the North Sea.
“I’m not convinced an increase in UK supply would have brought the price down from £3 per therm in December to 50p a year ago.”
“We import gas from the United States, Norway, Europe, Qatar, and other areas.” As a result, we are unable to treat the United Kingdom as a separate energy market. We operate in a worldwide market.”
Three potential cost-cutting strategies
If asked what might be done to improve the issue, Mr O’Shea told the BBC that the government should adopt three measures to make life simpler for UK households:
- Rather of adding it to our bills, postpone the costs spent by surviving suppliers in taking on clients from the many enterprises that have gone bankrupt.
- Remove the 5% VAT on energy.
- Transfer charges used to pay a green transition from bills to general taxes.
He further said that these changes “could be adopted very fast” and would “take care of half the price hike,” allowing the government to offer more assistance to those who need it the most.
Other possibilities that the administration might explore
The government has indicated that it will make a decision on what assistance it would provide to UK consumers before the new energy price limit is announced on February 7th. However, this new limit is projected to rise again, and customers are now unable to conduct an energy comparison and transfer tariffs since the best energy offer available right now is the existing energy price cap, even from the country’s finest energy providers.
Some energy businesses have requested further financial assistance in the form of a fund or a loan that corporations in the sector may utilise to reduce expenses when wholesale prices are high. These would then be reimbursed over a longer period of time via client bills, avoiding such extreme price increases in the near term. However, no system to accomplish this has been agreed upon or publicly proposed as of yet.
As a result, particularly in light of Mr. O’Shea’s prognosis for the next two years, many will be looking for some type of government assistance. Meanwhile, consumers worried about their energy expenses may want to verify their eligibility for existing programmes such as the Warm Home Discount, Winter Fuel Payment, and Cold Weather Payment.