2009 was mixed. The Credit crunch denied some consumers the opportunity to take advantage of the reduced energy prices to either take a long term contract or extend their current contracts. Some suppliers wanted monies upfront as some form of security. Many refused to even quote.

This year forecast, is that of higher energy prices than from the second quarter of 2009 as the recession begins to ease and economies are expected on the upward curve this year. In fact the unexpected icy weather from December 2009 has already contributed to rises in the gas energy market. Gas price rises often influence the electricity market in the UK as about 40% of power generators are gas fired turbines.

Based on the Electricity and Gas market analyses we carried out at ERS, we believe 2010 market will see a higher energy prices than 2009. As a result of favourable energy market in 2009, we decided to renew some of our customers contract due for renewal in 2010 or extend the contract of many of our customers that share the same view with us based on the data we provided.

A long term plaining strategy has come to play a major part on how we look at the market and pricing.

Although all the known factors that affects the energy market can be analysed and monitored, it is the unexpected that needed plaining. The sudden double of energy prices in 2008 was unexpected while economies were going into recessions. However it is the margin between plaining ahead for it that comes to matter.

The predictions of peaking of world oil fields reserves may soon come to play a major part in energy daily trading.

2008 was a very difficult year for energy purchasing due to high prices and the credit crunch. Though the price of Crude Oil which often influence the energy market has come down significantly, it affected the pump prices more than Electricity prices due to higher cost of Gas.

The UK generates nearly 40% of its Electricity from Gas fired turbines, as a result when Gas prices are high it effects the Electricity pricing as well.

Many Electricity and Gas suppliers carried out thorough credit checks out on customers in 2008 than before and some customers were simply refused fairer market contracts as a result. In some cases a deposit were demanded.

At the end of 2007, from September there has been price rises in the UK which wipe off the gains from 2006.

Our opinion at ERS is that UK customers of Electricity and Gas, with winter time renewals, should try to move away from the winter circle, historically this is the most expensive period of the year. As energy demands often remains high.

A not so cold winter has help the energy market so far. Stocks remains, the need for a very high demand for energy as was the case in 2005/6 winter period has not been the case this year. As a result the price for Crude Oil remain moderate at in the fifty something dollar per barrell.

The opening of the Norway, UK gas pipeline in October 2006, help calm market uncertainties in the UK. Since, the wholesale of gas and electricity prices in the spot and futures market have been on the downward trend. Although most of the lower wholesale prices was yet to reach the consumers in the UK at the ending of 2006, OFGEM, the market regulator is set to put preasure on the suppliers to make sure the new market reality reflects what the consumers pay for their energy. 2007 will see fierce price cutting competition amongst UK energy suppliers. BG have already made its intention known about their prices reduction in the Spring of 2007. Other suppliers are set to follow.

Gas price goes negative - but stays high for winter. Mark Milner Wednesday October 4, 2006. The Guardian.

Consumers can be forgiven for being confused about energy prices. Yesterday gas prices in a part of the UK wholesale market - albeit briefly - turned negative. Britain had too much gas. Companies were paying someone else to take their gas away. This doesn’t mean the gas bill is about to plummet, not yet anyway. Prices in the wholesale gas market for the months of December, January and February are still running at about 70p a therm - double the level of two years ago. These prices are the ones that have most influence over what we pay when we turn on the heating.

What happened yesterday was restricted to intra-day prices - gas bought for immediately delivery - in the highly specialised on-the-day commodity market. The OCM is a market mechanism designed to keep daily supply and demand roughly in balance. Pushing too much or too little gas into the system is not a good idea. Yesterday the market ran into two exceptional factors: mild weather which meant demand was lower than expected and the flow of gas from a new pipeline bringing gas from Norway which is in the process of commissioning. The market was suddenly "long" on gas. The upshot yesterday morning was prices running at negative levels - at one point the price of gas was minus 4.5p a therm.

National Grid, which has the job of keeping the system in balance, charges companies for putting more gas into the network than contracted for. One explanation put forward for the negative prices was that some players were prepared to pay for their "excess" gas to be taken away rather than face so-called "cash out" penalties from National Grid.

By lunchtime the OCM gas price had turned positive again but yesterday’s events in one corner of the market will encourage those who believe the new gas import infrastructure projects coming on stream will eventually put downward pressure on prices - and customers could end up with lower energy bills.

Gas price rise spiral ’set to end’ Falls due as ’forward’ costs drop. Miles Brignall reports Saturday September 16, 2006.The Guardian.

The rise in gas bills may finally be over - and prices are set to drop over the next two years. That’s the message coming out of the gas markets, where the "forward" price has been coming down rapidly. It has fallen 20% since April and prices are now at almost the same level as this time last year.The chief energy regulator this week warned the gas companies to pass on the price cuts as soon as possible - and promised action against laggards.

But the prospect of price falls means households need to look carefully at price capping deals being touted by gas companies. Be especially wary of "lock-in" deals which tie you to a fixed tariff for a year or more. They may look less good value in 12 months’ time.

New pipelines from Norway and continental Europe have helped ease concerns over winter supplies, as have a drop in oil prices.

The forward delivery wholesale price is key because the price paid now for gas bought on long-term contracts greatly influences prices paid by consumers.

Joe Malinowski of switching service TheEnergyShop.com says: "With prices now at the same level they were a year ago, consumers can start to think that they are over the worst and there is a light at the end of the tunnel."

But this means that capped deals that were popular in February no longer make sense. "As things stand, the range of capped deals is fairly limited and you will typically pay a premium of £240 a year when compared with the cheapest deals available if you switch supplier. While it is possible there will be further price hikes, we do not believe it will be near the 30% level. Consequently, we don’t believe the premium for capped deals is worth it."

Npower currently offers a "gas guardian" tariff, fixed at the British Gas quarterly cash/cheque price for gas at March 1 prices - before its September 4 increase. However, there was no obvious mention of it on its website this week, so it may be about to be scrapped.

Powergen also has a capped price product which on average costs £144 a year more than the standard floating dual fuel tariff. Both should now be avoided, according to Malinowski.

He says British Gas loyalists should switch to its "Fix and Fall" product as this has no lock-ins and customers can switch at a later date.

Since January 2004, average household energy bills have risen by 69% or £407. The average joint bill for gas and electricity now stands at just under £1,000 a year per household. Gas bills alone have risen by 85%. Electricity-only customers have seen 50% rises. In the past year each of the power companies have increased prices twice, with three rises from npower.

TheEnergyShop says that over the past three years British Gas has been the most expensive supplier, while Atlantic Electric & Gas remains cheapest. Scottish Hydro Electric was the cheapest electricity supplier. Npower, Powergen and Norweb were most expensive.

Wholesale price falls tend to take at least six to nine months to feed through to consumer bills. The industry regulator Ofgem this week warned companies that it will act if it thinks they are not passing on the price falls to consumers. It has the power to fine them 10% of turnover if it finds that they are keeping prices artificially high. Culled from, The Guardian, Saturday September 16, 2006

Gas prices are currently unpredictable, compare to electricity prices. The unpredictable prices rises of Crude Oil in the international market and the method of trading the energy is not helping.

The exception from these current price increases, are those lucky enough to have signed a long term contracts with their suppliers between 2002 - 2003, when prices were about 80% better than the current energy prices in the market.

Britain’s trade deficit surged to a new peak of £6bn in November 2005, official data showed, as imports hit a record and the country suffered its fifth monthly oil deficit in a row - the worst performance since North Sea oil came onstream. Source [Ashley Seager, Thursday January 12, 2006, The Guardian].

The Oil exports underran imports for the fifth month in a row, leaving a deficit of £144m. There have not been five months of deficit since 1980, when North Sea oil and gas were coming onstream and the numbers highlight the decline in production volumes from the North Sea. The ONS figures also revealed the worst deficit on gas and electricity trade since 1980, at £373m, confirming that Britain seems to be heading into an era of growing dependence on imported energy after decades of self-sufficiency. Source [Ashley Seager, Thursday January 12, 2006, The Guardian]

In the UK, the recent announcement by British Energy [BE] that they had sold already their 2007 power generation for about £37 per MWH and the 2008 already selling for £45 per MWH in the whole sale market, is a pointer that the current electricity price rises is not about to reach an end. Although BE generates about 20% of the electricity consumed in the UK, this means that cost of electricity at a retail price from the suppliers to the consumers, with the added distribution or transportation cost will increase to about 9.5 - 13 pence per KWH. With the added CCL, Climate Charge Levy cost for cosumers using over 12000 kwh of energy, there are tough times ahead.

OPEC raised their output during the 2005 year. So were countries outside OPEC e.g Russia but demand was also high resulting in prices firmly in the up through out 2005. 2005 also saw the OPEC countries revenue from Crude Oil sales rising steadily. For more information, see: www.eia.doe.gov/emeu/cabs/OPEC_Revenues/OPEC.html for a more detailed information and analysis. Generally, the market price for manufactured goods has remain about the same due to cheap labour the Chinese workforce enjoy hence they were able to sell their goods cheaper in the international market.

2007 could see some European countries deregulating their energy sector of their respective economies. The French government my partially deregulate EDF, which own two supplier energy companies in the UK and a distribution network. Germany may deregulate too, other countries could follow.

Finally, 2007 could be the year, the Iran quest for Nuclear know how question, is finally put to bed. What will the West and Isreal do? If Iran do not blink. What will happen to the world energy market if Iran is refered to the UN Security Council and economy sanction is imposed? What will happen if Isreal, see Iran as a threat and put to use their Airforce? This year could be the year Crude Oil prices jump upto or over One hundred dollars [$100] per barrel. Will the World economies be able to absorb any further energy price rises of politics and threats? 2006/7 could be the year we may have answers to these questions and more. .