When will Australia's energy prices drop?
As the world rebounds from the height of COVID-19 lockdowns and restrictions, there are a series of domestic and international factors that are driving up the cost of living.
For example, global supply chain issues and inflation continues to impact the price of basic goods and services.
Meanwhile, the war in Ukraine is wreaking havoc on the distribution of gas, oil, and petrol prices on a global scale.
In fact, the United Nations believes the price of crude oil has risen by 22 per cent since January. Meanwhile, the cost of natural gas has seen a 246 per cent increase.
"This crisis, coming during the global COVID-19 pandemic, is accelerating existing vulnerabilities and widening inequalities across the world," said Rebeca Grynspan, who is the Secretary-General at the United Nations Conference on Trade and Development.
This devastation is landing in the letterboxes of Australians, in the form of increasingly high energy and gas bills.
How Is Australia Responding?
Thermal capacity is coming back online amid a steep decline in contracts for 2023, which is expected to bring some relief to consumers.
In addition, Australia is heading into the warmer months, which will bring reduced demand for energy consumption and a rise in solar output.
In line with these expectations, the Federal Government recently committed to reducing emissions to 43 per cent below 2005 levels by 2030.
"It will unlock $52 billion of private sector investment in Australian industries. By the end of this decade, renewable energy will make up 82 per cent of our National Energy Market," said Prime Minister Anthony Albanese.
This commitment is reciprocated at the jurisdictional level, with all Australian states and territories committing to net zero by 2050.
This opens the green light for a gas and energy sector that is less reliant on volatile international conditions and the overall market conditions.
When Will Gas Prices Drop?
It's tough to look at the crystal ball and make assessments about Australia's energy market.
However, there is some cause for optimism in the medium-term as seasons change, and wholesale prices reduce.
"If retailers were able to effectively hedge against these price spikes, we would be able to see a reduction in the energy bill. But since there is a delay between the time of a decline of wholesale prices and the time of a reduction of the electricity bill, low prices cannot be easily achieved in a short term, but hopefully in the medium- to long-term," said Associate Professor Katja Ignatieva from UNSW Sydney.
In the long-term, Australia's emissions reduction strategy towards net-zero is expected to secure a cheaper energy sector and stabilise some of the current price fluctuations.
What Can I Do Now?
If these longer-term strategies seem too far away, then you may wish to consider a shift from your existing energy provider.
Once you receive your next power bill, the helpful team at compare & connect can help to point you in the right direction.
The best part is that we take the guesswork out of choosing a service for you. We also communicate directly with your new provider to ensure that you are undisrupted.
You can compare a range of electricity and gas providers with compare & connect online.