Frustration as global energy market increases hit local gas prices

As a result of dramatic price increases in the world energy markets, Manx Gas has today confirmed that it will be increasing the cost of Natural Gas by 1.32 pence per unit (kWh) and LPG by 0.64 pence per unit (kWh) from 1st August.

For domestic central heating customers in the Douglas area using natural gas, prices will increase from 5.863 pence per unit to 7.183 pence.  For Towns Gas domestic central heating customers, prices will increase from 7.947 to 8.587 pence per unit and for LPG Community customers the rise will be 7.047 to 7.687 pence per unit.  Even with these latest increases it should be remembered that gas is still very competitive with oil as a fuel to heat your home. 

Managing Director of Manx Gas, Alan Bates, explained: "We fully understand the frustration and concern of our island customers.  We are equally frustrated but there is no way around the dramatic increases in the price of crude oil and the effect this is having on the world and more importantly the UK wholesale natural gas market.  It was only in January that we were all hearing about the record price of oil at $100 a barrel.  Now we are looking at $150 a barrel. This is affecting every part of our lives, from the price of fuel at the pump, to domestic heating and food prices caused by the increased costs of transportation."

Mr Bates stated that the recent global economic pressures had adversely affected the price of crude oil and the world energy markets: "A weak US dollar is one of the prime causes of rising oil prices. The sharp jump in price since 2005 has reflected the plunge in the dollar against other major currencies. Despite the US Government trying to reinforce their economy, the general fear of global recession seems to nullify their efforts. Financial investors have also had to look for more lucrative investment opportunities than currency trading and oil has been on top of their list. Supply and demand are also obvious factors that affect oil prices. The oil producers fully understand that demand is at an all time high so they are in an ideal position to restrict their output thereby creating an open market for the highest bidder. With emerging economies like India and China forecast to account for 40% of the growth in oil demand by 2030, this looks set to continue.

"Political instability also has a major part to play. The recent tension over Iran's nuclear programme and the instability and violence in Iraq and Nigeria has also affected output and supply. 

Finally, there are the traders and market speculators. The US regulators and the International Monetary Fund are examining the roles of traders in the recent price increases.

"Whilst most market commentators believe that oil prices will continue to increase, a slightly stronger dollar saw a small drop in the price of oil in the first half of July but the price per barrel was still in excess of $135 and has recently reached over $147 again."

Mr Bates concluded: "We know how hard this hits customers, especially those in more vulnerable situations and we maintain our ongoing promise that if the wholesale prices decrease, then this will be passed onto our customers in reduced prices, as we did in April 2007. We would also like to stress that anyone in a vulnerable situation with financial concerns should contact us to discuss ways in which we can help them."

Customers can access the latest prices for their area on www.manxgas.com or check the comparative costs of home heating by different fuels on the Office of Fair Trading website www.gov.im/oft .

 

Notes to Editors:

For further information, please contact Ana Carvalho on 01534 735253 or email ana@directinput.je

 

About Manx Gas
Manx Gas is a multi-faceted gas utility company, working for the Isle of Man and making gas available Island-wide. It operates a one-stop 'shop' for all gas needs, from supplying and maintaining the gas, through to planning and installations, support, plus the sale of new appliances. A round-the-clock safety and emergency service is provided.

Manx Gas directly employs around 100 people and provides regular work for sub-contracted CORGI-registered gas installers. About 200 local companies supply goods and services to Manx Gas. The company operates a fleet of support vehicles, from bulk gas containers to cylinder delivery wagons, mains layers and customer service vans. It maintains more than 250 miles of underground pipelines.