British Gas Raises Prices Again!

British Gas (BG) has once again increased prices for its wholesale-tracker tariff. The latest rise was implemented on March 4th. This tariff follows closely any changes in the price that BG pays for the gas and electricity that it sells to us.

I reported in December that British Gas had raised this tariff, and I predicted that traditional tariffs from British Gas and the other major providers would swiftly follow suit. (Beat January's 13% Gas Bill Rise.) It happened.

Florian Ritzmann from Xelector, which powers our excellent gas and electricity comparison tool, has once again drawn my attention to another rise in the tracker. This time it's just 1% for gas, although it's an extra 5% for electricity.

If these rises filter through to regular tariffs over the next few months, it'll mean that our bills for the year will have gone up by a total of around 20%.

As these latest rises in wholesale costs are relatively low it's possible that suppliers won't increase their regular tariffs as swiftly as normal, i.e. within months. Suppliers might decide against angering customers further by doing it so soon after the hikes at the start of this year.

On the other hand, it hasn't stopped them in the past.

Furthermore, there are very strong indications that the price we pay will rise even further over the next six months.

As I said, last time prices rose they were preceded by BG's wholesale tracker. However, that increase was also preceded by rises in Germany, which Ritzmann tells me is a good indicator for what might happen here.

And guess what? Prices are going up in Germany again.

There's another story, too. The natural gas we use is often a by-product of oil production, which is one of a few reasons why the price of gas frequently follows the movements of oil prices. Gas-price changes typically lag oil prices by four to six months. Last summer the price of oil reached $75-80. About six months later (January and February this year) the majority of suppliers have put up our energy prices.

However, the price of oil has now risen to around $103.

So, in three months we may see another increase in BG's wholesale tracker, based on the German gas-price news, and six months from now we'll see another, bigger increase, based on oil-price changes. Closely following the tracker's movements will be our own, regular tariffs.

Which means: price increases could easily total well over 20% this year.