Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
THESE are not normal times. Irregular patterns of energy supply and demand during the pandemic coupled with a long winter which heavily depleted gas stores across Europe and Asia has seen gas prices surge.
Gas imports into Europe from Norway, Russia and the Middle East have slowed and this has created a perfect storm that has seen the price of gas shoot up by more than 70% in August alone; a month when demand is usually lower not higher.
The shock has been so sudden and so great that it has already put numerous energy companies and heavy industrial firms out of business.
With about 80% of the UK’s 27.8 million householders connected to mains gas, this is not good news for us. And as the UK relies on gas-fired power plants to generate almost half of our electricity, analysts suggest we could see energy bills rise by as much as £400 within a year.
To compound the problem, low wind speeds have reduced the UK’s renewable energy generation, and the fire at Britain’s main electricity subsea cable last week will, National Grid says, reduce imports from France until the end of March. That incident alone prompted an 18% surge in the price of natural gas, which had already hit record highs in recent weeks. It’s a perfect storm that we could all do without.
This will inevitably lead to a price hike for consumers. Ofgem has already increased the price cap from an average of £1,138 per year to £1,277 from next month for anyone on a standard variable tariff. At the next review in April there are fears that will rise to £1,500, according to The Energy Shop, a price comparison site.
As we have seen over the past 18 months or so, life can throw up some shocks and, while you can’t prevent them, you can at least be as financially prepared as you can.
First of all, if you pay your energy bill by regular monthly direct debit, make sure you haven't built up too much of a credit balance. If your supplier does go bust, being owed money makes it even more alarming and it can take time to get your money back. But if this does happen, don’t panic because Ofgem the energy regulator will switch you to another provider and says you won’t lose your money. Or power, for that matter.
Secondly, this is another reminder to put something away for that proverbial rainy day. A regular sum into your pension for your long-term future and your ISA - from as little as £25 a month with a Fidelity ISA - means you have a financial buffer, come what may.
Price hikes and supply shortages may be out of our control, but you have the power to buffer yourself financially.
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. The minimum age you can normally access your pension savings is currently 55, and is due to rise to 57 on 6 April 2028, unless you have a lower protected pension age. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.
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