Many businesses have already been affected by the recent price hikes in energy prices and the difficulty in the supply of fuel, and it’s predicted that even more businesses will suffer as a consequence of the knock-on effect. Will your business be one of them?
The unprecedented rise in the wholesale price of gas in the past few weeks has led to the collapse of quite a number of the smaller gas suppliers. The government has refused to bail them out, saying that their business model was poor, they shouldn’t be rewarding businesses for failure or mismanagement, and that clearly these companies were not resilient to fluctuations in wholesale prices. There is a list of other smaller companies that are thought to be at risk, and consequently the government is considering offering state backed loans to the larger suppliers in order for them to take over the millions of customers thought to be caught out by the collapse of the smaller suppliers.
The process for transfer of customers over to a new supplier is in fact well documented and shouldn’t leave customers high and dry, and is to some extent protected by the price cap.
Kwasi Kwarteng (the Secretary of State for Business, Energy and Industrial Strategy) and the OFGEM chief, Jonathon Brearley, issued a joint statement saying: “The recent increase in wholesale global gas prices continues to be a cause of concern for consumers, businesses and energy suppliers across the UK.”
The issue isn’t one of supply – fortunately – but what happens when your business relies heavily on gas (or electricity) and the price increases very rapidly?
In the case of C F Fertilisers, the price hike meant it wasn’t economically viable for them to continue to produce fertiliser. In turn, this meant that they couldn’t produce the by-product – CO2. Then this, in turn, as we all became only too aware, meant that the food industry (amongst others) was temporarily brought to its knees as the gas is vital for a large number of supermarket products. C F Fertilisers supplies around 60% of the CO2 required in the food industry. In some ways they are very lucky. The essential nature of their product meant that the government could step in and they have agreed a three week “rescue” package while the food industry and the company agree new terms.
Will your business be so fortunate?
Smaller businesses are rarely offered the level of protection seen in the case of C F Fertilisers, or offered any handouts by the government to continue trading. If your business is facing such issues, there are insolvency procedures aimed to protect you through these challenging times that offer a breathing space while the market stabilises.
The army has now been deployed to help alleviate the interruption in supply caused by a lack of drivers that continues to cripple the country. Again the fuel giants state that there is no actual problem with the manufacture of fuel, just that they can’t get it to the stations. This has no doubt been exacerbated by the panic buying of fuel. One tanker driver interviewed on Monday 27th September said that his tanker was itself “on fumes” as he was unable to get into a filling station for diesel for his own tanker.
If you’re in the logistics business or have vehicles delivering to customers, this must be significantly affecting you and prompt action might actually save your business. Despite what the fuel suppliers say, this problem is unlikely to go away anytime soon.
If you have any problems within your business, please contact us.
