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As exports of gas increase and prices plateau, is a new era of cheap business gas dawning?
The ‘dash for gas’ has transformed the US energy sector. As more countries jump into fracking and exports from traditional gas extraction methods increase on the back of floating liquefied natural gas (FLNG) transport, the nature of gas production and consumption is changing.
The most obvious change has been the shale gas extraction – known as fracking – successfully developed by US oil and natural gas producers.
The primary beneficiaries of lower gas prices have been US businesses, especially energy intensive industry. While neighbours like Mexico have also gained (something that is often overlooked), US gas exports have not directly impacted other markets.
The obvious consequence has been a reduction in US demand for imports and driving prices down through low prices at the Henry Hub in Louisiana. Henry Hub is an important benchmark for international commercial gas prices. But, while it used to track the prices of imported gas, now much of the gas passing through the four intrastate and nine interstate pipelines is domestically produced.
US gas suppliers have actually been hurt by the low price of gas, especially as oil prices have recently plummeted (some LNG contracts are linked to the price of crude oil).
Exporting liquefied natural gas (LNG) is widely hoped to make US shale gas viable. Billions of dollars are being spent in the US on liquefaction facilities to produce LNG for export. But, as already mentioned, international prices have also fallen, making it increasingly challenging for the US LNG export gas business.
Other LNG business gas suppliers are facing a similar squeeze, including Australia and Qatar (who are both spending on LNG facilities, some of which are ‘floating LNG’ or FLNG). And conventional gas supply (via pipelines) continues: despite unrest in Ukraine, gas from Russia continues to flow into Europe, with Gazprom going on a buying spree. In the medium term, other supplies of business are coming online, from new discoveries in the North Sea, to a new ‘superfield’ in the Mediterranean and the resumption of gas exports from Iran.
This glut comes just as the biggest consumer, Japan, is reducing demand by restarting nuclear reactors.
Some in the industry fear a race to the bottom as gas for business prices fall further. Suppliers with high production or transport costs could quickly go to the wall.
LNG suppliers’ may be seen to herald a ‘golden age’ for UK SMEs, with the best business gas in recent years. Certainly, those who have not made a business gas comparison in the last 6–12 months may be surprised at the deals on offer.
But waiting for further reductions could be the wrong strategy. An array of unpredictable events can influence business gas tariffs, but an extra 5% of supply can have only a limited influence on business gas rates.
Perhaps most obviously, few SMEs will be willing to wait three years for a modest reduction in gas prices. And a business price comparison doesn’t have to be onerous: just 20 minutes is enough for us to quickly compare business gas suppliers and switch you to a new deal (with us taking care of the paperwork). Give us a call on 0330 0100 251 (or request a call back using our form).
Find out more about business gas at our dedicated page.
"Very easy. Bea Luseni very efficient & knowledgeable."This review was posted by Alan Duffy on the 31st of March 2017
Super helpful and easy to work with
"Recommend this company in a heartbeat - Nicole Borneuf was super easy to talk to, was not pushy in the slightest, very helpful and replied with all my questions very professionally and did all she could to help. I had to deal with a few companies to sort my business energy out, all but Nicole were too pushy for my liking and I refused to follow through with them. Thank Nicole - you are a credit to your company, thank you for making the stressful energy change so easy."This review was posted by Mia Drew on the 29th of March 2017
An Extremely Competent Company
"Switch my business has not only helped my SME secure a good energy deal for the second year running but Jessica swiftly found a alternative supplier for me when I was let down on the day of switching by the new contractual provider I had chosen some 4 months previously. Being suddenly out of contract and without provider is everyone's energy nightmare. Greatest thanks."This review was posted by S McMillan on the 29th of March 2017
Helpful, friendly and we saved lots of money!
"Jessica Purnell was helpful and friendly, she made the whole process easy and simple AND we saved lots of money thanks Jess"This review was posted by Melanie Baker on the 23rd of March 2017
Quick & Easy
"Kabibi was very helpful and the whole process was very efficient. The one small reservation I had was that I was phoned up by Kabibi almost immediately having received my online quote - which wasn't enough time for me to finish reading the quotes! Fortunately she was able to assist me in a greater savings on both Gas & Electricity, and so as long as the switchover is seamless I will remain very happy with the service."This review was posted by Amanda Brown on the 21st of March 2017