External factors that affect the price of power

Believe it or not, energy providers do not increase or decrease their providers solely due to the supply and demand of customers. Of course, economic factors will always play a part in the price of power, but there are several external factors that can affect how a provider charges its consumers. If you are looking to save money, or just stay in the know with what is going on, then keeping track of these external factors can help you understand the market better.

In this article we are going to run through the top 5 external factors that can affect the price of power:

  • Imports/Exports: If you are in a country or state where oil and gas is readily available, it is going to cost to import to then be turned in to power for a geographical area. Exports can also play a part in this, as if there is not enough demand for a countries export, they will, in turn, lose capital and must charge customers more for imports.

 

  • The Government: Like all governing bodies, even the slightest change can make a huge impact. Take Brexit in the UK as an example. British people are already feeling the strain of a government decision in their daily commodities. Power is not exempt from this, and a government decision can either increase or decrease the price.

 

  • Weather forecast: Yep, you heard it here first. The weather (predicted or actual forecast) can affect market prices. If there is a dangerous forecast that is going to affect power companies, this could impact the pricing in the long and short term.

 

  • Global oil: If there are fluctuations in oil supply, and who Australia is importing oil from, this will ultimately impact the price of power. Although there are a lot of renewable energy providers out there, there is still a huge emphasis on oil and other fossil fuels being used to generate power.

 

  • Finance: If there is financial speculation that has a direct impact on power providers, then it will affect the price point for the customer. Sometimes this is inevitable and is influenced by supply and demand factors.

It is important to note that you will not be able to follow every change that can affect the price of your power, but it is good to be in the know of factors to watch out for, especially if you are looking to switch providers.

Knowledge is power (pardon the pun) and being able to predict when there may be a spike in price can give you peace of mind as a consumer and allow you to put extra money aside and be ahead of the curve.

The best way to keep on top of things would be to be informed of what is going on globally through watching the news or reading it online. Also, by using price comparison websites that can give you accurate and timely price points of what the market is looking like.

This will show you what is best for you in the short, the medium and the long term.

Author: Claire Stapley
Claire Stapley is ElectricityComparison.com.au's Energy Editor, based in Melbourne Australia. Claire is a founding member of ElectricityComparison.com.au News and Energy Team.