Energy costs for 2013 so far

The front end of the curve followed gas prices while the back of curve was affected by a drop in carbon price.

Gas prices have followed oil prices across the curve.

The forward curve is a snapshot of future wholesale energy costs at a point in time and is reflective of the market price for each commodity. In practise wholesale energy costs fluctuate on a daily basis.

Since May wholesale costs for electricity have generally increased for short-term periods but decreased for future years. Wholesale costs for gas have generally decreased across most future periods.

Many factors affect the cost of gas and electricity both local (typically supply and demand variances) and global (typically geopolitical). In particular, the cost of wholesale gas is closely linked to changes in the price of oil. Tensions in the Middle East caused the price of oil to rise between May to July but a recent easing of these tensions have caused prices to fall back to May levels.

The first half of the year saw the coldest weather snap for 23 years which led to increased demand for both gas and electricity. Due to this increased demand, gas in storage decreased to extremely low levels which led to an increase in wholesale energy costs. Gas storage levels have recovered over the summer and are expected to be full by November 2013.

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