How business gas prices are calculated

The reason for price spikes - What suppliers say

According to leading gas suppliers, the price of domestic and commercial gas is worked out based on how much the gas company must pay for wholesale gas. In recent years, there have been revelations that energy prices have increased by more than a quarter, and this is cited as the main reason why many consumers of both commercial and domestic energy users have experienced huge increases to their bills without increasing their consumption. There are many variables that can be used to justify the price of gas in general.

Availability

Within twenty five years, it is estimated that we are set to lose a quarter of our non-renewable energy resources. Though the UK has its energy shelf in the North Sea, around a decade ago, our shortage of energy meant that we had to run pipes to Norway and Belgium so that gas and electricity suppliers could tap into their resources for a fee. The fact that our ability to supply non-renewable energy in-house is dwindling means that more money is spent on transportation and this is reflected in the price of the final product.

Calorific Value

The calorific value of fuel is used as an indicator of commercial quality, to judge the state of the global gas market.  It indicates how much heat it produces when a regulated volume is combusted at constant pressure under (standard testing conditions). Calorific value is usually expressed in either mega joules per cubic meter or in British thermal units per pound (lb.)

Summary

The price of gas for businesses is dictated by a multitude of components, and price spikes are likely to continue until experts come up with a way to replenish the energy that we stand to lose when aging nuclear plants are forced to close. As energy becomes more available, after we have switched to more environmentally friendly sources of energy, such as solar panels, wind power and hydro-power, it is hoped that energy prices will level out. Until then however, the market remains incredibly unpredictable, and energy calculations are expected to fluctuate.