Gas price surge leaving businesses bankrupt and consumers uncertain

The gas price surge across Europe has led to the collapse of two small UK gas providers. 

Avro Energy and Green, who between them serve just under a million customers, have gone bust due to the recent hike in gas prices. 

I know what you’re thinking… why don’t they just pass it on to the customer in the form of higher prices? If only they could! The energy sector in the UK is highly regulated with the UK government putting a price cap on gas prices. Under normal conditions, this is designed to protect consumers and restrict providers from exploiting them with high prices. 

These are far from normal conditions though! The huge surge in gas prices is a result of increased demand for natural gas from Asian economies as they begin to wake up from their Covid hibernation. This has left natural gas suppliers, most of which are in Russia and Central Asia, with a shortage in supply. Excess demand and a shortage in supply can only mean one thing… Upward pressure on prices! But with the price cap in place, firms are unable to sell gas at a price higher than what they are having to pay for it themselves. 

The UK government is rallying to try and solve the issue, but it’s a complex one. The shortage in supply not only means higher prices and businesses going bankrupt, but also that millions of people could face a very difficult winter. Those on the lowest incomes will be hit hardest, and many will face the choice between less disposable income or a long cold winter.