WHEN YOU GO TO USWITCH, GO FOR A FIXED TARIFF – NOT A TRACKER! Tracker tariffs TRACK the price cap, so they will go up if energy prices rise!
The conflict between US-Israel and Iran has sent global oil prices through the roof over the last week and with today’s announcements I’m worried about energy prices. Whenever wholesale fuel prices spike like this, electricity and gas costs usually follow.
We’ve seen this play out before. And when it happens, the window to lock in a good energy deal slams shut fast, with little-to-no warning.
Let me say this now, get a fixed tariff as soon as possible if you’re not on one – otherwise you’re subject to the whims of Ofgem’s price cap!
We’ve already been through this once
Please remember that in January 2023 the UK energy price cap reached a staggering £4,279 a year for a typical household. Bills had risen so dramatically that the government had to step in with the Energy Price Guarantee, effectively paying around half of people’s energy bills to stop costs spiralling completely out of control. But this meant higher taxes for us all, because the Government had to recoup that money.
That crisis was driven by Russia’s invasion of Ukraine and the blockade we put in place on their gas. Trump’s war on Iran is blocking 20% of the world’s supply of oil from getting out of the Strait of Hormuz.
When global tensions disrupt oil and gas markets, the effects ripple across the entire energy system. Even though the UK doesn’t rely directly on oil for most electricity generation, fuel markets are deeply interconnected. Rising oil prices tend to push up gas prices, and gas plays a ridiculously large role in how our electricity is priced.
Prices are still relatively low — for now
The important thing to understand is that there are still tariffs available today. They’re not the cheapest we’ve seen in the last couple of months, but they are way cheaper than the £4,279 price cap we saw during the last energy crisis!
At the moment, the cheapest fixed-rate tariff listed on Uswitch is £1,637 a year for a typical household. Compared with the peak of the crisis just a few years ago, that’s dramatically lower.
But markets are forward-looking, and energy suppliers move quickly when wholesale costs start climbing.
If the current geopolitical tensions continue to push fuel prices higher, suppliers will start adjusting their deals to protect themselves. That usually means pulling cheaper tariffs from the market and replacing them with more expensive ones.
Fixed tariffs can vanish quickly
During the last energy crisis, fixed-rate tariffs were completely removed from the market for more than a year. Suppliers simply stopped offering them because wholesale prices were so volatile that locking customers into long-term rates became too risky. Not only that, the price cap was so expensive that most energy suppliers actually saw record profits (British Gas famously had a year-on-year growth of over 10 times their profit from 2022 to 2023, going from £72m to £750m!
That lack of choice made budgeting incredibly difficult. People had no way of protecting themselves against further increases because fixed deals simply weren’t available.
It’s exactly the kind of situation we should all try to avoid if another period of energy volatility begins.
The window may not stay open for long
Right now, fixed-rate tariffs still exist and some are relatively competitive compared with recent years. But history shows how quickly that can change when energy markets turn volatile.
If fuel prices continue rising because of geopolitical tensions, suppliers are likely to review their tariffs and remove deals that no longer make financial sense for them.
The result is simple: fewer choices for consumers and higher prices for anyone who waits too long.
No one can predict exactly how the current crisis will unfold, I could be wrong. But the last energy shock showed how quickly costs can spiral and how suddenly good deals can disappear – and really, what’s bad about securing a decent deal now, there is no downside!
With tariffs around £1,637 currently available, you still have the chance to secure a fixed price before markets react fully.
