Increasing Commodity Prices
2020 was a unique year with prices flooring through lack of demand caused by Covid. But as the vaccine was introduced and the world started looking forward, energy prices began rising and they have continued to do so ever since.
Today commodity prices are at a 16 year high which isn’t good news for consumers, the supply industry and associated supply chain businesses like us here at Ginger Energy.
OFGEM in February announced an increase to the price cap. At that point, prices were 33% higher than they were in the previous 6 months. Fast forward to August and the wholesale costs are 50% higher than they were in February. This gives you some indication of the universe working against us for both the supply industry and its consumers.
Many of our supply industry colleagues have commented on how the OFGEM price cap isn’t working for the domestic industry. Add to that that it’s this time of year for ROCS and those Suppliers, who have hedged incorrectly who do not have sufficient financial backing start hearing the whispers of SoLR.
For commercial consumers, delay signing contracts waiting for prices to drop are having to bite the bullet and sign to avoid out of contract prices. In essence, caught between a rock and a hard place. Experts predict that there will not be any significant decline until the new pipeline, Nordstream2 comes into operation in Autumn 2022! Isn’t welcome news.
As for us at Ginger; seeing the prices drop, our procurement solutions team encouraged our client base who could, to extend existing contracts or renew for +24 months so to avoid any aggressive recovery in 2021, some listened, those that didn’t perhaps wish they did, but even we didn’t expect the acceleration to be so high or aggressive.
The rises have caused us a great deal of anguish and additional pressure for our team as our clients rely on our advice to tell them what and when to buy and importantly when not to buy. Certainly, it’s not the most desirable time to be an Energy Consultant, Consumer or even Supply business.
Ginger Energy are Here to Help
Well done to our customer-facing procurement Ginger ninjas @Chrisfelgate @LeminhTran and now @JoeEwers. 2021 has been our most challenging year to date. It’s never nice to be the bearer of bad news but with a bespoke approach that offers a variety of contract options we do everything we can to minimise the impacts for our clients.
Given that our clients have stuck with us, speaks volumes about your dedication, support and expertise.