With 2011 proving to be a particularly turbulent year for worldwide energy prices, heads are now turning to what to expect in 2012.

With civil unrest in the Middle East unlikely to ease, mixed with increased export capabilities, wholesale prices are expected to fluctuate heavily. European leaders look likely to impose an oil embargo on Iran, with Tehran warning of rising tensions and likely retaliation.

With one fifth of worldwide oil passing through the Strait of Hormuz, closing the doors would have huge economic implications around the world.

Increase in Exploration

The ever increasing demand for natural resources had led to fierce competition in the discovery for new supplies. Whilst the South China Sea is yet to be fully explored, estimates suggest oil reserves of over 200 billion barrels. Graeme Sheils, oil and gas partner believes, “Whilst there are risks to establishing operations [in the area], the potential rewards could be even greater. Oil and gas companies have, in recent months, been pushing the boundaries by expanding their exploration in contested waters”. Should these reserves become developed, a positive trend in price reduction should be seen.

Chris Huhne, UK Energy Minister, has recently reached agreement with Norway to show “commitment to support the industry in the future development of our oil and gas resources in the North Sea”. The enhanced relationship ensures joint development of the remaining North Sea resources with a keen eye to make renewable energy generation more profitable.

Most importantly, it provides a stable supply of natural gas from Norway, in theory meaning price stability for domestic and business customers in the medium-term future. Norway is currently the largest foreign producer of oil and gas to the UK and has proven to be a reliable natural gas supplier. Please click here to view the joint statement.

Ofgem Monitoring Suppliers

From a UK perspective, Ofgem are closely monitoring supplier behavior so improvements should be seen in terms of contract ‘roll-overs’ and objection handling. 2011 saw reduced back office support for all of the Big 6 Energy suppliers, making use of the Torse Client Services team a fundamental necessity for many of our clients.

So with rising uncertainty, volatile wholesale prices and vague supply agreements what does this mean for Torse’s clients? Essentially, it places increasing importance of securing your energy contracts at the correct time, with the correct supplier. Energy costs are now the second highest outgoing of many organisations, reducing costs and providing greater efficiency will become key to the success of many UK SME’s.

Renewable Energy

Historically, renewable energy was simply unaffordable and unfeasible for UK SME’s. This cost is now being reduced and Torse are able to procure 100% renewable energy contracts. Although the costs are slightly greater, many clients are finding increased turnover due to the brand awareness renewable sources brings. Please contact Torse for more information.

Smart Meters

The UK wide roll-out of Smart Meters to domestic and commercial properties has already started, with an estimated completion date of 2020. The new technology allows customers to control their energy consumption, save money and cut carbon emissions in the long-term and ensure accurate billing.

The transfer of meters has already started, many suppliers are installing the meters at ‘no charge’, however the costs are recouped on an ongoing basis hidden in post-installation supply rates.

Please contact Torse before agreeing to what could be a costly ‘upgrade’.