Why are gas prices going up? Huge amount your energy bills could increase by in October

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Energy bills for UK households to increase by £139

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A global shortage of gas has forced major spikes in household gas prices, with some people facing bill increases of up to £100 next month. Demand for gas has skyrocketed over recent months, as countries start to prioritise their economies during the ongoing coronavirus pandemic.

Energy bills have started to hit the front pages in recent days, over fears that a global shortage of gas could impact prices.

The gas shortage has also had a knock-on effect for food supplies.

Price rises forced the closures of two large fertiliser plants, which meant the supply of carbon dioxide (CO2) started to dwindle.

CO2 is used by poultry suppliers, as well as for food packaging and transportation.

Why are gas prices going up?

Gas prices are entirely linked to both supply and demand of gas.

Demand for gas initially started to rise last year, during the winter of 2020.

It was a particularly long and cold winter for much of Europe and Asia.

More people were staying indoors than in recent memory, and there was a huge demand for gas heating.

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Fast forward 10 months or so, and gas storage sites are still unusually low in gas reserves.

Combine the depleted stocks with a summer of super-charged activity for European economies, and it’s caused a global shortage of gas.

Gas use for generating power across Europe is also a lot stronger than normal.

Low wind speeds have forced suppliers to look elsewhere for electricity, turning to gas.

As for supply, Europe is receiving less gas than normal from Russia.

Russia could be deliberately holding back some of its reserves, it’s been claimed.

It’s also important to remember that the pandemic has had a huge impact on gas production.

Even in the UK, North Sea gas production has significantly lowered as a result of Covid.

How much could energy bills increase?

Gas suppliers could increase their tariffs by up to 12 percent from October.

Any larger increases would be in breach of the Government’s price cap on energy bills.

The average household could face increases of between £11.58 and £106.42 from next month for those on standard tariffs.

Households that use a prepayment meter are also covered by the price cap, meaning suppliers could increase prices by between £12.75 and £109.09 next month.

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