The effects of Covid-19 have driven parts of the world to a stand-still, and with the ever growing impact across the UK, we wanted to provide an insight into how this may be influencing the energy industry. We spoke with LASER’s Energy Market Analyst, Dominic Simmons to uncover what impacts this epidemic has had on the energy markets.
Which areas of the energy industry have been most impacted?
It’s more so on the Oil and financial markets, with a little bit on gas. Oil forecasted demand has completely crashed, with a price war between Saudi Arabia and Russia further adding to the oversupplied market. A 55% price fall has been seen since the new year. Secondly, LNG demand in China has seen Force Majeure of contracts exercised, where China no longer legally has to take the gas, thus leaving more for the open and European markets.
How are gas and electricity prices effected?
Strangely, we haven’t seen the gas and power markets fall off as expected, with the severity and volatility seen elsewhere. Commodity prices falling, often brings gas and power prices down in conjunction, yet markets are currently so low and bouncing around historic lows that they could be bottoming out. We have however, seen some minor price falls and wider fundamentals still lead the long-term neutral-to-bearish run.
Which other areas have been effected?
The Financial Times Stock Exchange (FTSE), US, Asian and European markets have completely crashed at record rates; with a fall in financial markets, usually demand in those countries for manufacturing, production and therefore Oil/gas and power fall in line. We have seen the US stock market cease trading for 15 minutes (due to the market crashing more than 7%) three times in the past 10 days, something that has not been triggered since 1997. Global economies look to be heading into recession.
Self-isolation and WFH
Following recent Government advice on the contagion, many businesses around the UK have been actively looking for employees to work from home (WFH) if possible in an attempt to limit social contact. Working from home has a number of advantages, however, this can impact your energy costs. Below are 3 useful tips in staying energy efficient during this worrying time.
Keep the heating off
Working from home can cause temptation to switch your heating on during times that you would not usually do so when out of the house. The simple fix is to choose your wardrobe wisely. Dressing in pyjamas may sound tempting, however, staying warm is an important way to reduce the need for central heating, saving you unnecessary costs.
Reducing water waste
We all need a nice hot beverage to calm ourselves during this worrying time. However, making your teas and coffees strategically can save you a significant amount on your water costs. When boiling the kettle, only boil the amount of water needed for the desired number of drinks. Avoiding the constant filling of a kettle can make a huge difference in the amount of water saved/wasted.
Turn off unnecessary appliances
Many people find working from home very isolating and lonely. However, turning unnecessary appliances on such as the TV can not only cause a distraction to your work, but also consumes a needless amount of electricity during your working day. Only use these additional appliances when taking a break to save on your energy spend.