Will it be a cold winter in the Northern Hemisphere?
OPEC+ has kept a check on oil supply levels since May 2020 and has aimed both to reduce the 2020 stock levels and balance supply to demand. It has been successful with the result that oil prices have been rising and are over $85/barrel – also due to the spike in natural gas prices.
By adding 400,000 barrels a day each month OPEC+ has eased supply cuts but for the past two months it has been adding less than this quota. This is due to the smaller suppliers mainly from West Africa facing various issues that have prevented them from meeting their quotas but at the moment the larger producers have not taken up the slack.
If gas remains expensive, the switch to oil where possible will put further pressure on demand. Next year the demand could reach over 100 million barrels a day in the second quarter of 2022.
The US Shale production has reached more than 11 million barrels a day and this will increase but supply is also affected by investors needing to see a return on their earlier investments.
There are two issues still to face. The first is the belief that the Northern Hemisphere will face a severe winter in the months ahead and the second is that lockdowns in Europe and elsewhere are not yet over.
So as has been seen before, in March gas prices and possibly oil prices could come down. Also in February the next price cap will be announced, coming into effect on 1st April – unless the system is renegotiated. It is likely that we will end the year with just 10 UK utility suppliers.
What does this mean for the small business and domestic consumer? Right now, the variable tariffs for gas and electricity are better than negotiating any new contract. The utilities are being sold at a loss as the suppliers are working with the Government capped prices from 1st October. Once the prices for April and onwards are known it is worth re-considering a contract in the second half of March particularly if peace of mind is welcomed. A contract can always end up higher than the variable tariff if world prices drop – as happened in 2020. But for many the likelihood is that prices will increase, especially for the non-commodity part of their bill. How will suppliers recoup their losses? Will there be new levies introduced as the country moves towards renewable energy and the supply of gas is phased out?
Each household can look at how they plan to heat their homes and the water in the years ahead. A mixture of different systems will probably be best and so, if solar panels are possible, this is well worth investigating along with storage of the energy produced. Also worth considering are heat source pumps and modern storage heaters with flexible controls. Insulation, reducing bills by changing habits, and a better understanding of the utility bills will all help to shrink bills at home and at work. Here are a few tips:-
- Economy 7 Electricity (where a day and a night tariff exists) is only worthwhile if the night units are at least one third of the total usage of electricity.
- A family that uses a lot of electricity and gas, for example with the washing machine on daily and regular use of a dishwasher, will find that a higher standing charge and a lower unit rate is a better tariff.
- If you still have a hot water cylinder make sure that you are not leaving the extra switch on which is a top up switch if you run out of hot water. This behaves like a kettle in that it is constantly keeping the water up to temperature and will give you very high bills.
- Service your gas boiler at least once a year and if it is making strange noises, cutting out, or not heating the radiators properly, then it needs attention. Check the radiators for cool spots as they may have silted up and insulate your home.
- If you have solar panels, investigate storage for your energy. Between the hours of 11 and 2 you have sufficient daylight to be using your own generated power but spread the use so that you don’t put on all the gadgets at the same time.
- Is there anyone not yet using LED lights? If a light bulb produces heat and light it is not LED.
- Do you leave your mobile phone charger plugged in even when you are not using it? If the plug is warm, you are wasting energy and it is not a safe thing to do. Why not charge your phone when you are in the car if you can.
- My big favourite is a slow cooker for more than casseroles – you can even cook scones in a slow cooker! Because of the way it cooks you can buy cheaper cuts of meat, use up vegetables and create nourishing meals.
- Spend one minute less in the shower or turn off the water while shampooing/conditioning your hair and put it back on to rinse off.
- If you have to empty water from a tumbler drier, what do you do with the water? In the summer it may be to water plants, but in the winter you can put it back into the drawer of the washing machine, especially if it is still tepid in temperature.